Nouriel Roubini has consistently been accurate in predicting the course of our snowballing credit crisis, and has also made some important intellectual contributions to the discussion. such as how the breakdown of the Bretton Woods system has lessons for the future of our Bretton Woods 2 currency program. But in my view, Roubini’s post today […]
Read more...The end-game for what was very briefly the nation’s biggest mortgage lender, IndyMac, seemed inevitable, although the signals even as a of a few days ago were that a takeover was not imminent. The timing, coming in the midst of Famnie and Freddie worries, is particularly bad. One can only conclude that this action could […]
Read more...Henry Kaufman, aka Dr. Doom for his prominence and prescience in reading the bond markets during the painful early 1980s credit crunch, said not surprisingly that the Federal government needed to assist Fannie and Freddie. Unfortunately, the more important part of Kaufman’s message is likely to be ignored. The former Salomon Brothers chief economist also […]
Read more...There is a very good op-ed at the Wall Street Journal today by Adam Levitin, who we have often quoted at the blog Credit Slips. It offers a clear explanation of why the Dodd-Frank housing bill won’t accomplish much in the way of borrower relief. Many of our readers will regard that as a good […]
Read more...The Wall Street Journal (hat tip Saboor) sends mixed signals in a page one story for tomorrow, “U.S. Mulls Future of Fannie, Freddie.” The Journal reports that contingency planning in case the two GSEs get into trouble has stepped up, yet go to some lengths to take a reassuring tone: The Bush administration has held […]
Read more...According to Moody’s, the ratings implicit in credit default swaps on Fannie and Freddie treat the government-sponsored enterprises as if they are mere single As, versus their official AAA ratings. Now the real question is: do these marks reflect doubts about whether the implicit government guarantee will be honored, or is this an early warning […]
Read more...We haven’t been covering the spectacle of Indymac twisting in the wind, since highly-regarded blogs like Calculated Risk and Housing Wire follow the mortgage lenders closely. However, the panic yesterday about Fannie and Freddie perhaps having to come up as much aswith $75 billion in equity ($75 billion?) diverted attention from what on any other […]
Read more...Some readers may think I am unduly fond of negative forecasts to be featuring the views of a mere PR maven, one Gershon Kekst, along with those of famous investors like Jim Rogers, Marc Faber, and George Soros. Ah, but there is a reason Kekst’s views are significant. Very few advisors, be they top lawyers […]
Read more...Paul Kedrosky posted on a report published in a Swiss paper (he courteously provided the English translation) of the results of a study prepared for hedge fund Bridgewater Associates that projects that total losses to the financial system from the credit crisis will reach $1.6 trillion. Note that losses taken to date are only $400 […]
Read more...Gretchen Morgenson of the New York Times has a story on proposed new reporting rules for credit default swaps that in passing raises the question that if implemented on the envisioned schedule (becomes effective in fiscal year financial statements after November 15, 2008, so the impact could be soon in coming), it may lead banks […]
Read more...Readers no doubt recall that the Federal Reserve loaned $30 billion to JP Morgan against certain Bear Stearns assets to, ahem, induce the bank to go forward with the deal. The arrangement got reworked on the fly, and in the end, the Fed loan was reduced to roughly $29 billion as JP Morgan agreed to […]
Read more...Readers have taken to throwing brickbats when I post material that suggests that raising interest rates (at least in advanced economies) might not be a good move right now. We’ve said before that the reason the Fed kept rates too low too long was it looked at inflation as strictly a domestic phenomenon and ignored […]
Read more...When the question of guaranteed investment contracts and their implications for monolines first came up on this blog, a reader jumped all over us when we ventured that the fallout from GICs might affect claims paying ability. We were told that making a fuss over GICs was tantamount to focusing on a withdrawal by a […]
Read more...Yet more signs of consumer stress. From Bloomberg: Consumers fell behind on loans secured by their homes at the fastest pace in two decades in the first quarter, signaling deeper distress in the U.S. economy, the American Bankers Association reported. Home-equity lines of credit at least 30 days past due rose 14 basis points to […]
Read more...Why is it that in finance, nothing succeeds like failure? Witness LTCM’s John Meriwether’s ability to raise a new hedge fund after the biggest financial blow-up in history, or Geoff Boisi and Vikram Pandit’s ability to sell not-hugely-successful funds to banks, then perform unspectacularly in management roles (although in fairness, Boisi had been a leader […]
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