Category Archives: Credit markets

Deutsche Analyst: High Yield Defaults to Reach 53% Over Next Five Years

Note that the 53% cumulative default rate for junk bonds over the next five years foreseen by Deutsche Bank analyst Jim Reid is nearly twice the level forecast by Moodys of 29%, It is also well in excess of the rate during the S&L crisis, which produced a nasty but comparatively short recession. From Bloomberg: […]

Hedge Fund Bridgewater Says No to Public Private Partnership Program

The nays on the public private partnership program, the Treasury’s gimmick program to relieve banks of toxic assets, won positive comments from the obvious beneficiaries, namely banks and possible fund managers, and quite a few negative reviews from those worried about the benefits relative to the cost to the taxpayer (such as Nobel prize winners […]

Japanese Expert Criticizes US Wishful Thinking on Economic Crisis

The George Santayana saying, “Those who cannot learn from history are doomed to repeat it,” is so oft repeated as to verge on cliche. Yet the US variant of this syndrome is to be aware of history, then rationalize how it does not apply to us. Japanese policy makers from the early days of the […]

Eric Dinallo: "We modernised ourselves into this ice age"

To his credit, Eric Dinallo, the New York Superintendent of Insurance, did take the brewing mess at bond insurers MBIA (under his jurisdiction, and completely intransigent) and Ambac seriously enough to try to Do Something About It. In the end, his efforts came to nought, swept aside in the tidal wave of credit messes. But […]

Munchau: Banks Sinking Faster Than Governments Are Bailing Them Out

Wolfgang Munchau often has a dour outlook, but his Financial Times comment today, “A new plan needed as the cycle grows vicious” is gloomy even by his standards. Munchau argues that the heroic seeming measures to aid the banks are insufficient to compensate for the losses they are and will continue to suffer, and that […]

Fewer Companies Likely to Emerge From Chapter 11

We’ve warned for some time that this downturn is likely to see more companies entering bankruptcy wind up being liquidated rather than continuing to operate thanks to Chapter 11, which allows companies to hold creditors at bay, renegotiate debt and restructure operations, with the idea that an ongoing concern will be able to provide better […]

On Cuomo’s Forays Against Financial Chicanery at the Big End of Town

Since I haven’t put together a detailed timeline, I run the risk of having the sequence wrong and therefore being at risk of putting foot in mouth and chewing too. But from where I sit, the only person in the US who seems to be doing anything meaningful to try to contain the looting of […]

Has the Gaming of the Public-Private Partnership Begun?

It certainly looks as if Citigroup and Bank of America are using TARP funds, not to lend, which was one of the primary goals of the program, but to scoop up secondary market dreck assets to game the public private investment partnership. And it fleeces the taxpayer a second way: the public has spent enough […]

AIG Aircraft Lease Unit Says Survival at Risk, May Need Government Funding

When AIG first went to the government for rescue funding, the insurer had said it would pay the proceeds of the emergency loans from the sale of assets, meaning some of its subsidiary businesses. As we now know, that effort did not bear fruit. One unit that was a candidate for sale, AIG’s aircraft lease […]

More Musings on Geithner Plan

There have been plenty of takedowns on the plan (Leo provides a good recap in an earlier post tonight). Nevertheless, I thought I’d add a few further thoughts Aside from being busy, I didn’t weigh in because I don’t see that much has changed (obviously, Mr. Stock Market disagrees vehemently, but bonds didn’t move much […]

Treasury to Seek Power to Seize Non Banks (Trojan Horse Alert)

The Washington Post reports that Treasury will seek the power to take over insurers, hedge funds, and investment firms. Given the Treasury’s reluctance to assume control over clearly insolvent banks (Citi assuredly, probably Bank of America), it seems curious indeed that it is asking to extend authority that it is patently reluctant to exercise. Moreover, […]

Fed Rescue Programs: No Exit?

The Wall Street Journal tonight, in “As It Starts Programs, Fed Weighs How to Stop Them,” broaches the touchy subject of how Federal Reserve unwinds all the “support lending” initiatives it has underway and is on the verge of launching. In general, this piece is more wary of party line than the typical WSJ offering, […]

Guest Post: Is Obama Running Interference to Protect Bankers’ Pay?

Submitted by Rolfe Winkler, CFA, publisher of OptionARMageddon.com According to the NYT, the administration is considering all kinds of new rules in the wake of the AIG bonus scandal. These include tougher rules for mortgage lenders, new oversight powers for the Fed, and a new exchange/clearinghouse for derivatives trading. Most interesting in terms of intra-governmental […]