It isn’t surprising to see spreads on credit card debt on the increase. In fact, it might seem odd that it has taken this long. However, one perverse effect of the 2005 bankruptcy bill is that it is easier for consumers who are not eligible for a Chapter 7 bankruptcy to walk from their mortgages, […]
Read more...It’s hard to discern what took place in a closed-door session at a remove, but some of the tidbits coming from last weekend’s Federal Reserve conference at Jackson Hole were worrisome. Note I didn’t have this sense about last year’s meetings, based on a reading of Jim Hamilton’s commentary (which may simply mean Hamilton was […]
Read more...We wrote yesterday about Japanese retail and institutional investors exiting Freddie and Fannie holdings, and didn’t consider it as worrisome as it might seem on the surface, since at this juncture, the funding of our current account deficit is coming almost from central banks and to a lesser degree, sovereign wealth funds. Tonight, the Financial […]
Read more...Although one robin does not make a spring, the increased reluctance of Japanese retail and institutional investors to hold GSE debt is worrisome. Bloomberg reports that Japanese retail and institutional investors are unloading foreign debt due to currency volatility and are particularly leery of Fannie and Freddie securities. Admittedly, as Brad Setser has pointed out […]
Read more...Bloomberg reports that today’s sale of $3 billion of GSE debt went well, which investors took as a sign that a GSE crisis is not imminent. However, even this striving-to-be-upbeat article had some threads that bode ill for the longer term. And DealBreaker pointed out earlier this week that there is a profitable arbitrage on […]
Read more...Yes, it’s the end of the summer, but the Fed boys worked over the weekend, so what’s the excuse of Hank Paulson & Co.? The saber rattling for the Fannie and Freddie rescue program to be unveiled is getting louder and louder. We had an unmistakable demand from the Chinese over the weekend, if you […]
Read more...While the Fannie/Freddie crisis has come to the fore, the money markets continue to signal heightened worry about risk. Indeed, expert opinion and forward trading suggest that the year end crunch will be worse this year than last. Normally, liquidity starts to fall in December as banks start to square their books; last year, it […]
Read more...Forgive me tonight for relying more heavily on other people’s material than usual, but 1) it’s good stuff, 2) it’s an end of summer weekend, and I’m suffering from diminished productivity (the Olympics haven’t helped), 3) I foolishly wasted a lot of time and energy corresponding with a reader who was mightily unhappy with my […]
Read more...When you think you’ve read everything worth considering on a given topic, once in a while something comes along to prove you wrong. A case in point is this post by Charles Calomiris at VoxEu on the subprime mess. It is longer than the standard VoxEU offering, but well worth your attention. Calomiris not only […]
Read more...I’m told that alcoholics and addicts have to hit bottom before they are able to renounce their self destructive ways. Ironically, their personal collapse makes them more capable of change than scientists, who, according to Thomas Kuhn in his landmark, The Structure of Scientific Revolutions, were so incapable of abandoning core beliefs that it would […]
Read more...A story in the New York Times warns, “Some Fear Commercial Property Loans Will Be Next Stage in Downturn.” This is news? I’m in a lazy mood, so I will merely search old posts. Fitch warned in April 2007 (yes, the year is no typo) of the lousy quality of commercial real estate loans and […]
Read more...Warning: Josh Rosner is controversial in some circles. He co-authored a simply terrific paper with Joe Mason, “Where Did the Risk Go? How Misapplied Bond Ratings Cause Mortgage Backed Securities and Collateralized Debt Obligation Market Disruptions.” If you haven’t read it, do so now. If you don’t have the time, we summarized it here. However, […]
Read more...Another day of nervousness and not-exactly-positive developments on the Fannie and Freddie front. What is remarkable about the situation now is that at least some of the trouble elements were entirely predictable, which suggests that a bit of aforethought might have led to a better plan and less bad outcomes (I’m not such as optimist […]
Read more...Go read this very good (and disconcerting) post on AIG by Sam Jones at FT Alphaville (hat tip reader Richard). Key sentence: Goldman won’t say it, but we will. AIG is going the way of the monolines… but on a much larger scale. Boldface his. Note that the Bloomberg story on the same Goldman research […]
Read more...James Carville, Clinton strategist, said, I used to think if there was reincarnation, I wanted to come back as the President or the Pope or a .400 baseball hitter, but now I want to come back as the bond market. You can intimidate everybody. If a politico like Carville recognized the fixed income market as […]
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