As James Galbraith points out in today’s Washington Post (hat tip reader Marshall), the Paulson bailout plan wasn’t necessary, and any rescue could have been handled by expanding existing programs: Now that all five big investment banks — Bear Stearns, Merrill Lynch, Lehman Brothers, Goldman Sachs and Morgan Stanley — have disappeared or morphed into […]
Read more...From the Washington Post: House Financial Services Committee Chairman Barney Frank (D-Mass.) said the bailout deal reached by key lawmakers calls for dividing the $700 billion pricetag into three parts: Paulson would receive $250 billion immediately and another $100 billion upon White House certification of its necessity. The final $350 billion could be dispersed without […]
Read more...While we have focused on the fact that the Treasury bailout plan, which with some tweaks, is moving towards approval. is a covert and inefficient recapitalization of the banking system, other observers see another goal for the plan. The contend that its main purpose is to circumvent mark-to-market accounting. The belief is that mark to […]
Read more...While there have been various reports during the day that a version 2.0 of the Treasury bailout bill was moving towards passage, the agreement in principle now appears to be official. From the Wall Street Journal: A bipartisan group of House and Senate lawmakers left a two-hour-plus meeting in the U.S. Capitol on Thursday saying […]
Read more...Vikas Bajaj of the New York Times is an able reporter and I have often enjoyed his work. I was therefore taken aback when I read his article, “Plan’s Basic Mystery: What’s All This Stuff Worth?” since it misleads readers as to the intent and thrust of the so-called Troubled Asset Relief Program. This is […]
Read more...As we said when the idea of this bill was first mooted, bye bye US AAA rating, bye bye dollar. Not overnight, but the die is cast. We have also said that the eagerness to pass this measure is based on the faulty premise that this package will actually do something to solve the problem. […]
Read more...The International Swaps and Derivatives Association reported that the notional amount of credit default swaps outstanding fell from $62 trillion to a bit under $55 trillion as dealers worked to eliminate offsetting trades. This is a step forward, although it is hard to assess how significant it is. While the reduction in systemic risk is […]
Read more...The bank funding market continues to be under stress. To some degree, this was anticipated, as various market participants saw signs that the year-end liquidity squeeze, and the months preceding it, would be worse than last year, which was bad enough to lead to the creation of the first special liquidity vehicle, the Term Auction […]
Read more...Ken Ohmae, former head of McKinsey’s Tokyo office (disclosure: I have a passing acquaintence with him and he was enormously well regarded in his day despite being a tireless self-promoter) says that the Paulson program is grossly inadequate and the magnitude of the US crisis is so large that a $5 trillion international facility is […]
Read more...Nothing like a turf war to wake up a sleepy regulator. It seems rather telling that Cox has developed a sudden interest in the credit default swaps market a mere day after New York State announced that it will regulate the product (to the limited extent it can) starting January of next year. (Although the […]
Read more...It appears no sector of the economy is immune from the credit crunch. The Wall Street Journal reported over the weekend that luxury goods and services are taking a hit (a slowdown in plastic surgery, quelle horreur!). Natural gas producers are also seeing the impact. From Platts (hat tip reader Michael): Chesapeake Energy CEO Aubrey […]
Read more...It is becoming clear that Bernanke simply does not get it. Just as he once thought subprime was contained, and has continued to misread the nature and trajectory of the credit crisis, so too he has said that there is a way out of it that involves little or no cost in terms of growth. […]
Read more...I’m glad someone is trying to keep his eye on the ball. With serial bailouts artists Paulson and Bernanke working full bore on their showstopper, they’ve somehow managed to overlook the most obvious culprit for a systemic crisis, namely, the credit default swaps market (yes, rescuing AIG was an effort to keep that market from […]
Read more...Readers may recall I included an excerpt of an e-mail from a Congressional staffer in our weekend takedown of the bailout bill, which got pointed to widely, including on some political sites. This in turn has elicited more observations from insiders, this one a Congressional aide. Not only do the markets not like the bill, […]
Read more...Aha, Congress isn’t being so supine after all. Christopher Dodd, who in his initial press comments seemed to be behind the Paulson bailout plan, instead appears to be supportive of the general concept of Doing Something, as opposed to the particular embodiment served up by the Administration. Dodd is circulating a draft bill of his […]
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