Category Archives: Credit markets

Entering a New Mercantilist Era?

While we have enjoyed a period of relative calm after the 2007-2008 financial crisis, the improvement in economic conditions exists in parallel with growing geopolitical tensions. None of the causes of the crisis have been resolved. We still have global imbalances. We still have powerful, predatory, and unconstrained capital markets players firmly in control of […]

Spitzer/Rosner: “Lehman Scandal: Where’s the Follow Up?”

By Eliot Spitzer, former governor of New York who blogs for Slate.com and guest posts on New Deal 2.0, and Josh Rosner, the managing director of an independent financial services research firm It doesn’t take a rocket scientist — and certainly not an accountant — to deduce one thing from the Lehman scandal. The misleading […]

Lehman and the Primary Dealer Credit Facility: Audit the Fed Push Right, Arguments Wrong

The so-called Valukas report on the Lehman bankruptcy has put a harsh light on the final months of the floundering firm and the regulators who stepped up their oversight, in particular, the New York Fed. Some of the NY Fed’s moves have been so indefensible as to in and of themselves warrant full bore investigation. […]

SEC, Fed Alerted By Merrill of Lehman Balance Sheet Games in March 2008

So which theory is it: stunning bureaucratic incompetence, wishful thinking and denial (a better gloss on theory #1) or a cover up? Or a combination of the above? No matter which theory or theories you subscribe to, the continuing revelations of how the SEC and perhaps more important, the New York Fed conducted themselves in […]

Lehman: Regulators Chose to Deny, Extend and Pretend

The Lehman Examiner’s report gives an unintentionally damning portrayal, both of the the structure of financial regulation in the US and how regulators failed to use the powers they had effectively. Section III.A.6: Government shows that even with its imperfect grasp of the situation, the authorities recognized Lehman had a large negative net worth. Yet […]

“Not Only Repo 105”: Total Return Swaps Also Used for Window-Dressing

A reader wrote to tell me his firm had been shown transactions at the end of 2007 from an investment bank (not Lehman) that he was confident were to tart up its balance sheet. This confirms the hardly shocking idea that window dressing was not limited to Lehman: Around Dec 2007 bank I work for […]

Rob Parenteau: Data Challenges Deficit Terrorist Beliefs

By Rob Parenteau, CFA, sole proprietor of MacroStrategy Edge, editor of The Richebacher Letter, and a research associate of The Levy Economics Institute This 2009 analysis by UBS, presented in FT Alphaville, debunks a central tenet of the deficit terrorist camp: If the deficit terrorists were correct, there should be a much more defined population […]

Are Rising US-China Tensions Pointing to a Rupture?

Relations between the US and China have been deteriorating. Although both sides have poked each other in various ways (Obama meeting with the Dalai Lama, China dissing Obama in Copenhagen by standing him up for a meeting, some tit for tat on tariffs), the major, unresolved bone of contention is China’s pegging of its currency, […]

Frank Partnoy: Lehman Examiner Punted on Valuation

By Frank Partnoy, Professor of Law and Finance University of San Diego School of Law and author of Fiasco, Infectious Greed, and The Match King The buzz on the Lehman bankruptcy examiner’s report has focused on Repo 105, for good reason. That scheme is one powerful example of how the balance sheets of major Wall […]

Book (and Other Hot Topics) Chat on FireDogLake

I chatted at the Book Salon on FireDogLake on Saturday (yes I screwed up completely in not notifying Naked Capitalism readers). The conversation was hosted by masaccio and led to a wide ranging discussion. The chat started with his summary of the book: Yves Smith brings the same clear and concise writing to ECONned: How […]

NY Fed Under Geithner Implicated in Lehman Accounting Fraud Allegation

Quite a few observers, including this blogger, have been stunned and frustrated at the refusal to investigate what was almost certain accounting fraud at Lehman. Despite the bankruptcy administrator’s effort to blame the gaping hole in Lehman’s balance sheet on its disorderly collapse, the idea that the firm, which was by its own accounts solvent, […]

Why is Geithner Lobbying EU on Behalf of Hedge and Private Equity Funds?

A war of words has broken out between the Treasury Department and the EU over proposed EU financial services regulations. The first salvo in this dispute occurred earlier this week, when, as reported in the Guardian, American banks were excluded from the sovereign bond market, which means new issues (they obviously cannot be prohibited from […]

Tom Adams: Department of “Huh?” – BlackRock’s Larry Fink as Hero?

By Tom Adams, an attorney and former monoline executive I’m usually cynical about these “genius of Wall Street” articles, but the Vanity Fair article “Larry Fink’s $12 Trillion Shadow” by Suzanna Andrews, about the head of the world’s largest money manager, BlackRock, raises the cliche to another level. My skepticism results both from the disconnect […]

Guest Post: TED gets furious, tells Yves to go away and, errm, not be so furious

By Richard Smith, a London-based capital markets IT specialist Hmm, I wonder if Yves’s resolution authority post will become the econoblogosphere’s equivalent to Clochemerle’s shattered urinal and its entourage of rioters. Surely not; yet it’s impressive how often such modest, utilitarian objects – a pissoir, a blog post about a financial reform proposal – can […]