Ratings agency Standard & Poors has managed a stunt which to my knowledge has no precedent in the history of the dark art of ratings. It downgraded some not all that highly structured commercial mortgage bonds last week to an eyepopping degree, from AAA to BBB-, just this side of being junk. Then they restored […]
Read more...CIT appears to have reached an out-of-court restructuring, which includes having current bondholders provide financing. From Reuters: CIT Group Inc has reached a tentative deal with a bondholder group for $3 billion in rescue financing, which the lender hopes will help it avoid bankruptcy,… The bondholder group, which includes Pacific Investment Management Company (Pimco) and […]
Read more...One of the good things about those of the Austrian persuasion is that they serve to protect the flanks of the merely skeptical like me. I am not exactly keen Ambrose Evan-Pritchard’s prescription, which is greater monetary easing with more fiscal restraint. I put banking industry reform (of the root and branch sort) very high […]
Read more...For those who have not come across him, Satyajit Das is a hard core derivatives expert, having worked with them in enough markets and enough vantage points to very well versed, which in his case means thoroughly jaded. His book for laypeople, Traders, Guns, and Money. manages to be very informative, somewhat geeky, yet engrossing […]
Read more...Nicholas Nassim Taleb and Mark Spitznagel have a provocative comment up at the Financial Time today, In some ways, it is isn’t surprising for those familiar with his work on risk and uncertainty. On the other hand, it is an eye opener to see what an internally consistent, reasonably comprehensive solution to our mess looks […]
Read more...We have a juicy tidbit on the wires tonight. The Department of Justice is conducting an investigation into whether Markit’s clients traded on its research prior to its being made public, As much as I would love to see the credit default swaps market reined in, or better yet, shut down, this move is puzzling. […]
Read more...Submitted by Richard Smith, a somewhat jaded capital markets IT professional, aviator and amateur mathematician who lives in London. He has been watching the capital markets from the sidelines for over twenty years. He frets over his ducklings, and should probably get out more. The indefatigable Barry Ritholtz is a fund manager and TV talking […]
Read more...The Washington Post has a pretty bizarre story up tonight. The Administration is thinking about releasing TARP funds as loans to small businesses. Stress the thinking part. As in big-time thinking. As in long way from action. Which begs the question as to why this is a news story. Since I am of the view […]
Read more...China has had two failed bill auctions this week, due to fears the government, which has started to raise rates, will continue down that path to curb money supply growth. Yet with growth flagging (anything under 8% is inadequate to absorb new workers), choking off stimulus now does not seem well timed. From Bloomberg: China […]
Read more...While recent news reports have tried to put a cheery face on the AIG bailout as asset sales are moving forward haltingly, the end game appears no better than it did some months ago, at least according to Citigroup. Note that the amount authorized for bailout is $180 billion,”only” $134 billion has been committed to […]
Read more...One of our pet peeves is that the powers that be are desperate to recreate status quo ante, as far as the financial crisis is concerned, when that is what created the mess in the first place. And the tinkering being done around the margins is not sufficient to remedy many of the shortcomings. Take […]
Read more...An article in the Financial Times give a useful recap of what happened to the financial bugbear of days gone by, namely, the SIV, or structured investment vehicle. Henry Paulson’s failed plan to rescue these not-so-of-balance-sheet entities was front page news for most of the fourth quarter 2007. By the sound of it then, if […]
Read more...Goldman and Barclays are out touting old structured credit technology, apparently collateralized debt obligations, and claim they have been tamed and repurposed and are now virtuous. I am skeptical of these assertions, and welcome informed reader comment. CDOs in particular were leverage on leverage vehicles, and indeed, that seems again to be the reason for […]
Read more...In case you haven’t figured it out, Ed’s post on Sweden highlights an important and troubling development. It seems that central banks have locked themselves into “if the only tool you have is a hammer, every problem looks like a nail” behavior with the move to negative rates. Since they are best able to dispense […]
Read more...Dear readers, we are NOT setting out to have a Willem Buiter-fest this weekend. It’s simply that this is a slow news period and Buiter has a good post after the first video clip I’ve ever seen of him. So if there was more activity, the Buiter-density would be lower. The Anglophile Dutch economist has […]
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