I hate it when I get contradictory information from supposedly reliable sources, which happens upon occasion when the topic is CDS. The latest Institutional Risk Analytics newsletter is again after one of its favorite objects of ire, credit default swaps. One of its beefs is that the collateral posting rules are a joke. Key excerpts: […]
Read more...To call Paulson response to the credit crisis improvised does a disservice to artists. Improvisation still requires a sense of direction and purpose, the thrust of a musical piece or the likely frictions between two characters. By contrast, the Treasury/Fed program looks completely reactive, an attempt to stabilize a system when they lack a good […]
Read more...Two of the most accurate forecasters of the credit crisis anticipate that economic conditions will deteriorate further. Nouriel Roubini, who has been consistently been on the dire end of the opinion spectrum, characterizes our current situation as stag-deflation. Meredith Whitney, who was the first banking analyst to call the crisis in financials, and has made […]
Read more...I came up with this in revising an article. The US circa 1929 and China now: Alpha creditor.
Read more...Readers no doubt recall that the Fed announced the creation of the Term Asset-Backed Securities Loan Facility, which will lend as much as $200 billion against new or recent vintage asset backed securities collateralized by “student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration.” One wonders if the order […]
Read more...You simply cannot make this up. I found a section of this priceless commentary from the Reserve Bank of Zimbabwe via Marc Faber’s latest newsletter (hat tip reader Dean), and had to verify it. The original provides an even richer mine of material. From the Reserve Bank of Zimbabwe (boldface theirs): As Monetary Authorities, we […]
Read more...I am puzzled by some recent market anomalies, which are breakdowns of established patterns: 1. Long dated Treasuries rising (a deflation signal) as stocks stage a dramatic rally 2. Dollar weakening while long dated Treasuries rise (the dollar and bonds usually go together) 3. Oil stocks rallying more than the S&P (28% versus 18%) when […]
Read more...How can you give cash compensation to an executive, yet claim it is not a salary or bonus? You call it a “retention bonus,” No, I am not making this up. Note that AIG chose to make this disclosure the day before Thanksgiving, clearly choosing a time when it would attract the least notice. Not […]
Read more...Willem Buiter is never one to mince words, and today his message is that the financial system is not operating: In a decentralised market economy, financial intermediation between economic agents with financial surpluses and those with financial deficits (or, more accurately, between economic agents who would like to run financial surpluses and those who would […]
Read more...The situation described in this Financial Times story is not earth shaking in dollar terms, but illustrates that corporate bankruptcies leave a trail of destruction in their wake. A number of funds were caught when Lehman failed, and the UK bankruptcy process may take a decade to resolve, leaving assets frozen in the meantime: Several […]
Read more...Let’s see, Bloomberg said yesterday that the Federal government had committed $7.4 trillion to lending facilities and guarantees. The total is now $8.2 trillion thanks to new programs announced today to aid borrowing by consumers, small businesses, and homeowners. Stocks have rallied, and the 30 year bond is also up three points, due to a […]
Read more...We have been less than enthusiastic about the choice of Timothy Geithner to be the next Treasury Secretary. Granted, the idea that we will have someone who is intelligent, knows a thing or two about the markets, and is not from Goldman Sachs makes him a big improvement over the Bush incumbents. However, competence should […]
Read more...Remember how, post 9/11, President Bush urged patriotic Americans to go to the mall? It appears the officialdom is fond of time-tested remedies. Bloomberg tells us that the Fed and Treasury have a plan,, using TARP funds, to get consumers to spend again by supporting consumer lending. There are a few problems with this approach: […]
Read more...One topic we’ve mentioned from time to time is the near disappearance of the debtor in possession financing market and why that is a more serious matter than its dry name might suggest. When large companies seek to use Chapter 11, typically they are broke (duh) as in out of cash. Chapter 11 takes time, […]
Read more...As correspondents and readers have pointed out, Fed chairman Ben Bernanke and the rest of DC is increasingly resorting to the playbook he suggested in various papers on Japan’s deflation. The Federal government has said that it is willing to lend or backstop up to $7.4 trillion to get the credit markets moving again. This […]
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