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 […]
Read more...Readers know that we have been suspicious of Lehman’s claims that they were on sounder footing that the market was giving them credit for and had put the worst of their financial woes behind them. Our doubts were fueled by the number of open questions surrounding their claims of deleveraging and their extremely aggressive spin […]
Read more...The real estate recession has arrived, with a vengeance, in London and environs. While fading prospects for City employment and pay levels is no doubt part of the equation, the proximate cause is the dearth of mortgage finance, which bodes ill for the market’s prospects. Indeed, the headline item reflects a drop in asking prices, […]
Read more...While even moral hazard hawks generally agree that some sort of government intervention would be needed in the event of financial trouble at Fannie and Freddie, the most compelling reason was that the US, chronically dependent on foreign funding, would be ill advised to treat its money sources badly. Of the GSEs’ $5.2 trillion in […]
Read more...Reader Saboor was kind enough to send me an August 1 report by Stephen Roach, former chief economist of Morgan Stanley, now chairman of its Asian operations. It’s noteworthy in two respects. First, although Roach remains a long-term dollar bear, he made a well timed call that it was oversold, due for a rally, and […]
Read more...Here we go again. Even though equities are theoretically forward-looking (Barry Ritholtz has pointed out that that ain’t as true as most people believe), bonds are more often the canary in the mineshaft, typically going into a funk before stocks do. Even though the credit markets started getting the heebie jeebies in early June and […]
Read more...Bloomberg reports that Lehman is in talks with BlackRock to spruce up its balance sheet by disposing of a big chunk of its commercial real estate portfolio. The article indicates that the firm intends to sell slightly less than half of its $40 billion holdings. Ladenburg Thalmann’s analyst Richard Bove anticipates the losses (presumably from […]
Read more...Ah, how distant early 2007 seems. Remember how the private equity business was going gangbusters, M&A was at record levels, and no deal was too big to get done. Then the credit markets hit the wall, leaving a lot of investment banks holding LBO debt that they hadn’t sold (the most common mechanism had been […]
Read more...This Bloomberg piece, “Banks’ Subprime Losses Top $500 Billion on Writedowns” has some sloppy writing, but I am featuring it nevertheless because it presents some useful data and its headline factoid will no doubt be misconstrued. The headline refers to subprime when in fact the article tallies total creidt crund losses and writedowns, not just […]
Read more...Something’s in the air…news of recession everywhere. Or so it seems this evening. First, readers Michael and Scott sent us Jeremy Grantham’s latest newsletter. Grantham is known as a perma-bear, and his call that a major bank would fail in the next five years (this about two years ago) was seen as a symptom that […]
Read more...This exchange from Institutional Risk Analytics is a bit light on the vitriol, but the observation is acute: The IRA: But speaking of certainty, don’t you believe that it is impossible to give our leaders a pass with respect to the mortgage bubble? How can we look at Alan Greenspan, Larry Summers or Bob Rubin […]
Read more...The lawsuit filed by the Connecticut state attorney general against rating agencies Moody’s, Standard & Poor’s and Fitch over their unduly tough marks for state and municipalities (their policies have claimed the ratings are uniform) is peculiar indeed. While I am sympathetic with the wronged public issuers, the fact is that the rating agencies enjoy […]
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