Readers may recall that we hated the TARP from its inception. Recall that the TARP was so named because the TA stood for “troubled asset”. The plan was to buy crappy assets from banks because this would leave them with nice pristine balance sheets and they could go forth and be reckless lend once again. […]
Read more...The 30 year Treasury bond has fallen from roughly 140 to its current level of 125-ish, so absent an intensification of deflation worries, one might surmise that at least some of the air has come out of the Treasury bond bubble. One might also take the view that the Chinese played this one astutely (or […]
Read more...Willem Buiter, who had a ringside seat at the Iceland meltdown, warned that the UK could follow back in November: With the pound sterling dropping like a stone against most other currencies and credit default swap rates on long-term UK sovereign debt beginning to edge up, this is a good time to revisit a suggestion […]
Read more...Color me suspicious (as if that would be news to readers). Fiat and Chrysler have been talking about a deal that by all appearance might get the US automaker off government life support. That is probably a good idea, because if push were to come to shove, Chrysler would be the number one candidate to […]
Read more...When the Federal Reserve went “all in” as wags liked to put it on December 17, with its declaration that it would use “all available tools” to fight looming deflation. The bond and currency markets both took note, with the dollar falling sharply before rebounding and mortgage interest rates falling (nicely done, to get much […]
Read more...Steve Waldman offers a radical and unconventional cure to our financial mess. Stop lending. Waldman is deadly serious and thinks our attachment to lending is based on dangerously flawed premises: I am glad that the banks, for all the hundreds of billions of dollars we are giving them, are not lending. That is not because […]
Read more...Now we know why John Thain was so eager to sell Merrill. That comment isn’t entirely fair (the deterioration in the securities firm took place in the fourth quarter, while the sale was negotiated in September). But directionally, the former Merrill chief saw the downside risks and did what was best for the firm. The […]
Read more...One of the reasons I am partial to Australians is that they are critical thinkers, not easily cowed by authority or conventional wisdom. In the US, one of the reasons that Fed chair Ben Bernanke is given so much deference (aside from the fact that we treat people in positions of power with kid gloves) […]
Read more...Even though China’s trade surpluses continue at record and near record levels (imports are falling faster than exports), China’s foreign exchange reserves are not even close to keeping pace. Readers may recall that a massive amount of money flowed into China, a good bit of it disguised (FDI was one of the suspect categories) because […]
Read more...The irony is rich, and a bit sad. I had Citi as a client in the 1980s, and served them in a small way in their efforts to make inroads into investment banking. It looked like a quixotic effort with commercial banks seeming likely to remain relegated to the margins: smaller clients, simpler deals. JP […]
Read more...Junk bond yields were recently as high as 20% (they’ve improved a bit recently). Some commentators considered the record spreads to be overdone. I don’t have a point of view as to whether a particular junk bond interest level is cheap or dear, but I have commented from time to time that there was good […]
Read more...The Wall Street Journal tonight says, “Citigroup Takes First Step Toward Breakup.” But what does that mean, exactly? Or had the Journal gone a bit far with the notion that the bank is doing some way, way overdue housecleaning? The eye-popping bit is that the asset dispositions are reportedly at the instigation of the Federal […]
Read more...Economists Carmen Reinhart and Kenneth Rogoff have been publishing various findings from a large-scale data set they have constructed of past financial crises. They have looked back as far as 800 years, but not surprisingly, most of their output has consisted of analyses of modern crises (you can find some earlier discussions here and here). […]
Read more...Wellie, the incumbents are not yet out of office, yet the Bush Administration blame shifting spin doctoring is already in high gear. Henry Paulson gave an interview to the Financial Times that appears either to have been remarkably brief (even the 10 minute Bloomberg videos typically yield more quotable material) or Paulson has gotten very […]
Read more...A useful piece at the Wall Street Journal discusses the poor prospects for the US banking industry, which will in aggregate post a fourth quarter loss despite heroic interventions by the Fed and Treasury. The article makes much of recent and almost-certain-to-get-worse bank credit losses as the economy continues to deteriorate. Commercial real estate vacancies, […]
Read more...