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 […]
Read more...Readers may know I am a big fan of Kenneth Rogoff and Carmen Reinhart, his frequent research partner and co-author. One of my reasons is that he is much more empirically-oriented than most Serious Economists. One recent bit of Reinhart/Rogoff research that has gotten some attention (but in my mind, still not enough) is their […]
Read more...Merrill’s surprising, mere ten days after its last investor combo writedown/fundraising announcement still has financial analysts toting up the collateral damage. Remarkably, the US stock market staged a peppy rally, clearly choosing to ignore the implications. The cause for pause was the sale of $30.6 billion in face amount of super senior CDOs at a […]
Read more...It would be nice if Fannie and Freddie would have the good taste to stay out of the spotlight, particularly since bad news is a sign of higher odds that Things Are Not Going Well, Especially for Bagholders Taxpayers. However, it looks like we may not be so lucky. Bloomberg’s Jonathan Weil did some digging […]
Read more...Many readers over the weekend commented on National Australia Bank’s stunning writedown of A$830 in “super senior” CDOs, which resulting in a valuation of ten cents on the dollar, and speculated that this move had implications for US banks. Then Merrill announces a surprise writedown, out of sync with its reporting cycle. Could the two […]
Read more...Even though the Fannie and Freddie near crisis, which produced a few days of panic in the credit markets, now seems to have abated, money market investors are still on edge. The Financial Times warns that various risk measures remain at elevated levels: Libor, the measure of inter-bank interest rates that is a key barometer […]
Read more...From the New York Times today: The covered bond markets in some European countries have suffered to some extent from house price declines, but the markets have not closed down as the private-label securitization market has in this country. From the Financial Times last November: Volatility is virtually unknown in the near 240-year-old market for […]
Read more...Wow, Merrill is raising cash like there is no tomorrow. Which of course makes one wonder what they know that the rest of us don’t yet know. From Bloomberg: Merrill Lynch & Co. said it will record $5.7 billion of pretax writedowns in the third quarter because of additional losses on the sale of collateralized […]
Read more...It no doubt seems absurd to question the idea that deleveraging in underway. We’ve had three heroic central bank interventions, starting in August 2007, to reverse seize-ups in the money markets. The asset backed commercial paper market has been almost in run-off mode. Leveraged buyout loans have been scarce to non-existent. Banks have cut home […]
Read more...Former regional Fed president William Poole argues forcefully in a New York Times op-ed today that Fannie Mae and Freddie Mac are not only unnecessary but also distort the financial markets and should be wound down. This program would also be consistent with a strategy of minimizing risk and cost to taxpayers. Probably due to […]
Read more...Tonight brings some useful commentary on the prospects and possible remedies for the banking industry. Roger Ehrenberg offers a good overview, highlighting an area that hasn’t gotten the attention it deserves, namely, proposals to change the Bank Holding Company Act to attract more investors. Reader Steve sent an e-mail that relates to some of the […]
Read more...Bond maven Bill Gross has raised his estimate of losses from the credit crunch to $1 trillion. One has to note that his firm is a large holder of Freddie and Fannie debt and he issued this pronouncement the day after the GSE rescue bill passed the House and looks certain to become law. Note […]
Read more...I must be missing something here. Not too long ago, Goldman was wiling to act as a principal in LBO financings for deals the firm did and would then syndicate the deal. Now admittedly that was the sign of a bull market peak, that an investment bank would take that sort of risk, but bear […]
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