Reader FairEconomist left a short comment on an earlier post which we hoisted along with some other material, on why the bailout bill could make the illiquidity in money markets worse. He left a longer comment j that sets forth the issues, as he sees them, in more detail. I hope readers do not mind […]
Read more...Imitation is the sincerest form of flattery. The bailout bill discussions in the US have apparently emboldened politicians on the other side of the pond to suggest massive rescue efforts. As we have said, one of our colleagues who has high level regulatory contacts in the US and Europe has been telling us for quite […]
Read more...Boy, I wish I had thought of this, and why no one else save some smart readers have focused on the mechanics of the Paulson plan operations is beyond me. This bill is moving ahead like the Titanic…..with high odds of similar outcomes. Hoisted from comments, we turn the mike over to reader Don: The […]
Read more...Here’s a clip: Boy, do I need to get better at looking at the lens. FWIW, this is all done with a computer camera (unlike videotaping or TV) so you only have a teeny light to look at, and you clearly need to keep your eyes locked on it not to look peculiar. Better luck […]
Read more...This comes from an e-mail titled, “It’s worse than I thought,” from a reader with a good deal of inside-the-Beltway experience: It’s Christmas…This has NOTHING TO DO WITH THE ORIGINAL CONCEPT. In fact very little has really been changed with respect to the original Paulson plan…The new PIG has everything to do with Senate Finance. […]
Read more...Despite the hue and cry among the officialdom in favor of the bailout bill, the reading we have gotten from professional investors, some of them with very high level connections, and economists among our readership and personal network is strongly negative. Nevertheless, by making the bill a de facto ultimatum (“do this or we do […]
Read more...This message comes from a savvy reader/investor/economist, and is refreshingly succinct: At this stage, I think the bailout complicates matters enormously, because the immediate problem is 1) Preventing further runs on banks and money market funds by extending deposit insurance & mmmf insurance 2) Reviving the interbank market by placing the Fed as counterparty and […]
Read more...Markets continue to be roiled by the upset of the effort to pass the touted Paulson bailout bill. As of this writing, the FTSE and Dj Stoxx 50 are up slightly, but money markets took a beating, the reaction worsened by end-of-quarter factors. From Bloomberg: The cost of borrowing in dollars overnight surged the most […]
Read more...Bloomberg gives a recap of the some of the credit market reaction in Asia, which is that borrowing has become, not surprisingly, more costly. Rates moved up even in Japan, whose banks are virtually unaffected by the financial crisis (out of a total $1 trillion plus in subprime debt, only an estimated $8 billion went […]
Read more...Our reader and sometimes contributor Lune worked on the Hill and was so kind as to send us his take on the choices facing the Senate and House leadership on the bailout bill, His position on it is rather clear: While many of you may be popping champagne bottles tonight in honor of the bailout […]
Read more...This report from Bloomberg: Rates in the $7 trillion-a-day market for borrowing and lending securities show that the logjam in credit markets is approaching the level seen after the March collapse of Bears Stearns Cos. Securities that can be borrowed at interest rates close to the Federal Reserve’s target rate for overnight loans between banks […]
Read more...I’m actually quite surprised. The stock market in a panic. I wonder whether Paulson and Bernanke have a Plan B. Jamie Galbraith outlined a good interim idea (needs tweaking but has merit) in the Washington Post last week. Hope someone paid attention. From Bloomberg: U.S. stocks plunged and the Standard & Poor’s 500 Index tumbled […]
Read more...The numbers attached to various emergency interventions just keep getting bigger and bigger. From Blooomberg: The Federal Reserve increased the size of previously arranged currency swaps with foreign central banks to $620 billion from $290 billion to make more dollars available to banks worldwide. Banks and brokers have slowed lending as they struggle to restore […]
Read more...We had grumbled last week that the Treasury had left its money market guarnatee program in the never-never land of “we’ll get back to you with details. The program is now in effect on a short-term basis. One hang up with any program of this sort is that the powers that be do not want […]
Read more...An excellent comment in the Financial Times by Wolfgang Munchau discusses how the gold standard for handling banking crises, the Swedish model, would take even more discipline to implement in the US and how we are dong the reverse of what is needed.It is a levelheaded analysis which stands in stunning contrast with a bit […]
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