The new meme from big embattled banks, starting with Citigroup’s leaked Pandit memo yesterday and Bank of America CEO Ken Lewis’ declaration that the bank will be profitable in 2009, is that things will be OK and all this talk of nationalization is unwarranted. I’ll reserve judgement till the fat lady sings. The record of […]
Read more...Readers may recall that during Lehman’s demise, a pitched battle was underway between some short sellers, epitomized by David Einhorn of Greenlight Capital. Einhorn raised questions about Lehman’s financial statements, specifically, inconsistencies and rosy looking valuations. The struggle became weirdly peronalized, as Lehman sought to burnish the image of charmismatic CFO Erin Callen, as contrasted […]
Read more...In case readers haven’t figured it out, I am a big Willem Buiter fan. Even when he is wrong, he is at least forthright and colorful. He does have an appetite for showing off his formidable intellect. Nevertheless, his best qualities are his willingness to take on orthodoxies and authorities, and his vivid, trenchant style. […]
Read more...Even though I often take on the Wall Street Journal’s depiction of new stories, the flip side is that it does break significant news stories. Today is one of those days, although I wonder about an item this juicy hitting the wires on a Friday evening. Remember that the reason for shoring up AIG was […]
Read more...We have sometimes pointed to a paper by Nobel prize winner George Akerlof (of “markets for lemons” fame) and Paul Romer on the phenomenon of looting. Forgive us for repeating ourselves, but this paper was written in the wake of the savings and loan crisis, and was clearly ignored, because if anyone had heeded their […]
Read more...The Treasury today announced its so-called “Making Homes Affordable Program”. I am clearly an old fart. The fact that the Treasury bothered to have a logo created for the program (do consumers and servicers really need brand imaging when having money shoved at them?) gives me more than a little pause. I will nevertheless try […]
Read more...When trade started falling off in the later half of last year, this blog commented from time to time that the scarcity of trade finance, particularly letters of credit, was playing a meaningful role. That line of thinking was sometimes met with skepticism. Trade related funding has gotten even more scarce and costly, to the […]
Read more...Faithful readers, I know the blog has become more polemic in tone over the last few months. We are in the stage of the cycle, as Warren Buffet put it, the tide has gone out and we are seeing who isn’t wearing a swimming suit. Worse, as the powers that be are desperately throwing funds […]
Read more...As many readers may know, when credit default swaps trade on an “upfront” basis, meaning a premium has to be paid immediately for the contract to be effective, when the risk of default is perceived to be high. Also note in this case that the upfront payment applies to GE Capital, which is NOT the […]
Read more...I had refrained from commenting much on the latest iteration of retrading AIG’s deal with Uncle Sam, save to observe that each of its predecessors had resulted in an arrangement more favorable to AIG, and I saw no reason to assume this time would be any different. One of the features of this revamp was […]
Read more...As readers probably know all too well, we are in the middle of another period of eroding confidence, frazzled nerves, and risk aversion. Equities have taken a tumble, with losses on the S&P today flirting with 4% after a 4.5% fall last week. Bloomberg reports that traders are increasingly looking to buy longer term downside […]
Read more...Analysts, regulators, and politicians are beginning to recognize that most if not all of the widely touted benefits of modern finance redounded only to its purveyors. The decidedly retro Canadian banking system, with simple products, high equity requirements, and relatively modest securities operations that focus on domestic customers, is the soundest in the world. As […]
Read more...Let’s see, the credit default swaps market, due to some netting, is now somewhere north of $30 trillion (as opposed to its earlier “north of $60 trillion” level). Investment banks were believed to have hedged most of their exposure via offsetting contracts, but AIG wrote naked protection. And as jAIG itself is at risk of […]
Read more...Apologies for the terse posts tonight; out of town, will be lighter than usual today and tomorrow. The Financial Times has been keeping tabs on the results, or perhaps more accurately, the lack thereof, of collateralized debt obligations. A couple of weeks ago, it highlighted research by Morgan Stanley and Wachovia that concluded that nearly […]
Read more...I wish I had the time to analyze this deal, but my travel schedule is cutting into blogging time, In addition, I don’t have a feel for whether the units mentioned in this article are merely suffering in accord with the crappy financial environment, or may have suffered additional, perhaps lasting damage. Two observations: First, […]
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