Banks are falling over like kingpins. Not good at all. First, on the Fortis salvage operation: Belgium, The Netherlands and Luxembourg invested 11.2 billion euros ($16.3 billion) in Fortis, Belgium’s biggest financial-services firm, to restore confidence in the bank after shares fell 35 percent last week. Belgium will buy a 49 percent stake in Fortis’s […]
Read more...See here, sports fans. At least it isn’t three pages long any more. I haven’t gotten past noting that it is a “discussion draft”. Hope to have more substantive comments in due order. The Troubled Assets are initially limited to commercial and residential mortgages and instruments based on them. The Treasury has to go to […]
Read more...Apparently there has been a pretty weird announcement. Progress is being made to sound like resolution. Since the House Republicans weren’t part of the photo op, it isn’t at all clear whether this is real. First sighting from Clusterstock, will add updates as they come in: Update (12:35 a.m.): Nancy Pelosi speaks first. She says […]
Read more...The mainstream media, giving reports from Barney Frank and Nancy Pelosi, who said last week there was a bailout deal imminent, are giving similar chipper reports of progress with appropriate caveats. From the New York Times, “Consensus on Rescue Plan Is Said to Be Near“: After a tumultuous week, including a contentious meeting at the […]
Read more...Gretchen Morgenson in the New York Times reports that Goldman and no other Wall Street firm was involved in the AIG rescue talks and an AIG failure would have created a hole as big as $20 billion in Goldman’s balance sheet. This is special dealing, pure and simple. Even if AIG needed to be salvaged […]
Read more...The quote above comes from Robert Bennett (Senate, R-Utah) and while no doubt narrowly true (presumably it’s Wachovia), implying that the bank will go under due to the failure to implement the Paulson plan is just plain dishonest. The bank has been wobbly for a very long time and t isn’t at all clear that […]
Read more...The IMF just released a study that analyzed 124 banking crises, and I wish everyone in Congress (well, at least their staffers), the Treasury, and the Fed read the paper. It provides insight into what worked and didn’t work in past banking crises, and gives an idea of what we might expect from various policy […]
Read more...Some readers would have a go at me whenever I’d post articles by the Telegraph’s Ambrose Evans-Pritchard. Although he has a tendency to hyperventilate and sometimes oversimplifies, he regularly points to data and research that I haven’t seen covered elsewhere. More important, his major calls this year have been correct. He predicted the oil price […]
Read more...The Times Online tells us that even blue chip companies are having trouble raising money in the commercial paper market. By way of background, commercial paper is an unsecured short term debt (there is another version, asset backed commercial paper, but that’s not the one under discussion right now) that companies and financial firms use […]
Read more...As we reported earlier, central banks have been providing emergency liquidity, but it has not coaxed nervous investors off the sidelines. From the Wall Street Journal’s MarketBeat: “There is extreme lack of liquidity in the short-term markets,” Kevin Giddis of Morgan Keegan told Dow Jones Newswires, noting he has seen no commercial paper trade so […]
Read more...Hope you like the smell of napalm in the morning. Otherwise, this will not be your sort of day. I have to turn in, but the early morning sightings, as expected, are not at all pretty. What is particularly troubling is that central bank interventions may have become unproductive. Banks have quit lending to each […]
Read more...Tim Duy at Economist’s View tells us that the economy is slowing down markedly, and that that will lead to a lot of false causality. Whether the bailout plan gets done in some reasonable form or not, the slowdown will be blamed on its failure, or the fact that the rush to get it done […]
Read more...Oh, we are in for a wild ride today. Oddly, the reaction in Pacific rim stock markets seems comparatively subdued (the Nikkei is down only 134 points, but the Hang Seng has fallen over 2%), but the credit markets are stumbling badly. Central banks are rushing to the rescue, but their efforts aren’t having much […]
Read more...Mirabile dictu, one of the Fed governors is expressing reservations about the stalled bailout proposal. Richard Fisher’s concern is that it would push Federal debt precariously high. From Bloomberg: Dallas Federal Reserve Bank President Richard Fisher said the proposed $700 billion rescue of financial institutions backed by Fed Chairman Ben S. Bernanke would plunge the […]
Read more...Readers Dean and Dwight wrote to tell me that CNBC is reporting that Senator Shelby (R-Alabama, and the ranking member of the Senate Banking Committed) came out of the White House waving the University of Chicago organized letter from economists objecting to the plan and said there was no agreement. Given the apparent momentum to […]
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