As this Bloomberg article discusses in detail, the Fed has violated promises it made to Congress, both regarding the amount it would lend (the amounts are vastly in excess of anything envisaged) and its commitments about transparency (which have gone completely by the wayside). Bloomberg has petitioned to get certain details disclosed via a Freedom […]
Read more...The Wall Street Journal reports, as was rumored on Friday, that AIG appears on the verge of approving a considerably enlarged and sweetened rescue package from the government. We were less than happy with the idea when it first surfaced (see our rant “The Black Hole Gets Bigger: AIG Back for Yet Another Bailout“). Let […]
Read more...We have been reporting from time to time on the impact of the credit crisis on international trade. The main focus has been on how buyers and sellers of cargos are finding it increasingly difficult and costly to obtain letters of credit. However, a second effect is on shipowners themselves, both directly (via plunging freight […]
Read more...The Financial Times reports that AIG is up to its old tricks, back again to the trough for more money. Christmas The Iceland credit default swaps settlement is coming soon, you know. The worst is that AIG is pretending to act as if this is a negotiation as opposed to extortion. Get a load of […]
Read more...Bloomberg has a good report today explaining why the DTCC report saying the credit default swaps market is only $34 trillion in notional outstanding isn’t all that it is cracked up to be. We muttered darkly at the time that some might read more into the DTCC report, released yesterday, than it deserved. Useful is […]
Read more...Although Asian markets opened up nicely on the Obama victory, Europe is focusing on credit market woes, and US futures are down at this hour. From Bloomberg: Credit markets are still creaking even after the biggest decline on record in the rate banks say they charge each other to borrow dollars. The London interbank offered […]
Read more...Early 2007 was a frenzied period for commercial real estate (the February sale of Equity Office Properties Trust by Sam Zell to Blackstone was the market peak), but the 2008 drop, even by the standards of the sometimes-volatile New York City real estate market, is still dramatic. And of course, the credit crunch is immediate […]
Read more...A story by Andrew Ross Sorkin and Michael de la Merced, “Debt Linked to Huge Buyouts Is Tightening the Economic Vise,” covers the fact that private equity deals, which as a matter of course feature high leverage, are starting to hit the wall as the economy sours. This is hardly surprising; it’s happened in past […]
Read more...We have noted that Treasuries (and the dollar) are the remaining bubbles, although some doubts are starting to surface on the Treasury front. Paul Amery at Prudent Bear gives a good recap: The tectonic plates underlying the whole superstructure of debt have started to shift. On the surface nothing remarkable is happening – the 30 […]
Read more...In a move the stock market greeted with considerable cheer, JP Morgan announced that it was widening its program to modify mortgages. From the New York Times: JPMorgan Chase became the latest big bank to pledge to cut monthly payments, by lowering interest rates and temporarily reducing loan balances for as many as 400,000 homeowners. […]
Read more...One of the widely criticized features of Japan’s approach to its post-bubble crisis was that its regulators tried for some time to avoid the recognition of bank losses. In a deflationary environment, it was not clear how this would lead to a better ending, since with a flagging economy and no inflation to reduce the […]
Read more...Investment banks? What investment banks, says the alert reader. They are all gone, either bought by big banks, dead, or forced to become them so as to be able to pull funds from the Federal Reserve more readily. The Financial Times report that the changes to the bankruptcy law in 2005 may have played a […]
Read more...Let’s see, AIG had to ask to be included in the Fed’s new commercial paper program. AIG was reported to have said it needed a wee bit more money, but no more than $10 billion. No reasons were given in any news stories. Now we find out the intended use. From Reuters (hat tip reader […]
Read more...As the economy weakens, a predictable result is an increase in corporate defaults. In the early 1990s, the default rate on high-yield bonds peaked at 12+% (note some define the universe differently and come up with somewhat lower figures) The most recent Standard & Poor’s forecast, while noting a marked deterioration in the economy and […]
Read more...Before we debate the merits (more accurately, the lack thereof) of the latest trial balloon of a plan being floated to rescue overextended mortgage borrowers, we need to consider a few not sufficiently discussed facts: 1. The problem is that banks are not making loan modifications as they did in the past. That is turn […]
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