The collapse in the Baltic Dry Index continues. As we have noted before, the inability of cargo shippers to secure letters of credit (and the unwillingness of banks to accept L/Cs from other banks) is play a significant role in the plunge in trade transport. From the Financial Times: The cost of shipping bulk commodities […]
Read more...Money markets showed a small improvement overseas once again today, again showing that massive central bank interventions are having an effect only around the margin. While overnight lending rates showed a fair bit of movement, rates at the three month level are still elevated, and more important, all signs are that very little in the […]
Read more...Citigroup’s $2.8 billion third-quarter loss came in at only half the expected level, while the Merrill release came in slightly worser than projected. The Citi report comes from the Wall Street Journal: Citigroup Inc. swung to a third-quarter loss — its fourth straight quarter in the red — as it wrote down another $4.4 billion […]
Read more...One of the biggest focuses of worry has been UBS, which is highly levered even by investment banking standards, a major derivatives player, and widely seen as too big for the Swiss government to rescue. The measures announced before the opening of the market in Europe are clearly hopes to put doubts about the Swiss […]
Read more...Boy, that was short lived. The massive EU and US rescue efforts to pump equity into banks, the TARP, the increase in the Term Auction Facility (from $150 billion to $900 billion), the Fed offering unlimited dollar swaps to foreign central banks, and those monetary authorities themselves engaging in liquidity operations, appears to have come […]
Read more...John Kay, in “Banks got burned by their own ‘innocent fraud’,” argues that banks got themselves and the world at large in a heap of trouble via self delusion. Had the bets embodied in their products been presented in simpler terms, they would have recognized that they were bogus and bound to lose money. But […]
Read more...Since the TARP has a very big checkbook and a very broad mandate (it can buy any kind of dud loan it chooses to, plus bona fide assets), it has become a magnet for industries that have belatedly recognized that it could provide a handout. The latest is the poster child for rust-belt hardship, the […]
Read more...Per Bloomberg, Treasury operatives have admitted, despite Henry Paulson’s protestations to the contrary, that the government can only hope for the best in how the nine banks given a collective $125 billion cash infusion early in the week make use of the loot: Treasury Secretary Henry Paulson persuaded nine major U.S. banks to accept $125 […]
Read more...These statements occur within a mere six paragraphs of each other in a Wall Street Journal story, “Devil Is in Bailout’s Details‘: Upending the government’s relationship with the financial sector, the Bush administration outlined a plan Tuesday to prop up banks by injecting $250 billion into U.S. financial institutions…. The government is making clear it […]
Read more...The Baltic Dry Index, which some use as a proxy for the outlook for global manufacturing, has been falling since late June, not long before the commodities bubble burst in July, and has been in retreat since then. What is particularly worrisome is its steep dive in the last two days, despite Herculean efforts to […]
Read more...Although the stock market has taken considerable cheer from the monumental action by central banks to try to restore interbank lending to something resembling normalcy, the results to date have been meager. However, hope remains that improvement will continue, albeit at a slow pace. From the Financial Times: The costs for banks to borrow money […]
Read more...This Bloomberg story tries to take an oddly cheery tone, when in fact, it reports in effect, than an analyst forecasts that the heroic measures taken to unfreeze interbank lending will not lead to much in the way of a rate reduction. However, if any lending were to take place at the three month tenor, […]
Read more...The backlash is starting to get serious. It is one thing for the man on the street to fulminate about the excesses of financiers. And even those who try to harness that anger find themselves checked. John McCain, who has said that he is going to fix the economy by (among other things) going after […]
Read more...George Magnus, a strategist for UBS, was one of the early popularizers of Hyman Minsky and was similarly one of the lonely few to worry about the financial and economic fallout of dealing with unsustainable levels of debt. His comment in today’s Financial Times, “Is there time to avert a Minsky meltdown?” is cautiously optimistic […]
Read more...The Treasury Department is expected to announce its bank rescue program, which entails making use of its authority under the $700 billion Trouble Assets Repurchase Program to buy pretty much anything it wants to. The Wall Street Journal provides the latest reading on what the plan might entail:The initiatives will likely supersede many of the […]
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