Moody’s is dismissing its structured finance chief, Noel Kirnon, for lapses in ratings of constant proportional debt obligations. Bloomberg notes that $4 billion of these instruments were rates AAA, and some fell in value by as much as 90%. This move nevertheless seems odd. True, this was a very large value destroying event in percentage […]
Read more...A workmanlike piece in the Financial Times, “A re-emerging market?” by Gillian Tett, Aline Van Duyn and Paul Davies gives a cautiously optimistic outlook for the revival of the securitization market. However, it’s a bit disappointing that the article skips over a couple of key elements. The first is that the explosive growth of securitization […]
Read more...Larry Summer’s latest comment at the Financial Times, “What we can do in this dangerous moment.” is troubling both for its analysis of our economic mess and its remedies. Start with his first paragraph: It is quite possible that we are now at the most dangerous moment since the American financial crisis began last August. […]
Read more...A story in the UK’s Times give a recap of the gloomy forecasts for the US and world economy, including a particularly cheery prediction by a SocGen strategies that foresees that the Dow will drop to 4500 and the S&P 500 to 500. Not included in this forecast is a grim warning from Barclays and […]
Read more...Tom Lindmark sent me a link to a post on his blog, a write-up of the main things he learned at the IMN Distressed Real Estate Conference in Las Vegas. Remember, this event is for those in the industry who LIKE messy, ugly situations. But it gives the impression that the industry is close to […]
Read more...Perhaps it’s merely the result of drafting in a bit more haste than usual, but the latest offering by Nouriel Roubini, “The delusional complacency that the “worst is behind us” is rapidly melting away…and the risk of another run against systemically important broker dealers,” is unusually heated in tone, to the point where it distracts […]
Read more...Alert readers pointed us to new sightings of heightened credit market worries from Barclays via the Telegraph and Bill Fleckenstein via Calculated Risk. What distinguishes them from normal patter about the debt markets is the urgency of their alarms (hat tip Dwight and doc) The irony here is that the Fed, as Tim Duy points […]
Read more...Yesterday, the two big bond insurers got what they wanted, but the victory now looks Pyrrhic. MBIA and Ambac both asked rating agency Fitch to stop issuing ratings after the rating agency was the first of the major scorekeepers to downgrade them below AAA. Fitch has decided to withdrew ratings, since the monolines are denying […]
Read more...Even though the Fed has cut short term rates, those in the real estate business know too well that mortgage rates are rising. What is worse, an article in Bloomberg suggests that despite price declines, housing has become less affordable. In other words, even with the drop in purchase prices, the monthly cost of mortgage […]
Read more...The Financial Times reports on a new, troubling credit crunch phenomenon. Companies carrying a lot of LBO-related borrowings walk a tightrope since the high debt burden gives them little room for error. But in this downturn features an unanticipated rises in raw materials, plus in some cases, cuts in credit facilities that were important buffers. […]
Read more...The Fed’s decision to stay on hold with interest rates is an indirect acknowledgment, despite some brave talk otherwise, that the banking system is plenty fragile (has everyone forgotten that the Fed facilities are a form of life support?) and the concomitant economic downturn may only be in its early innings. There have been some […]
Read more...When Pilate saw that he could prevail nothing, but that rather a tumult was made, he took water, and washed his hands before the multitude, saying, I am innocent of the blood of this just person: see ye to it. Matthew 27:24 It no doubt sounds extreme to compare the SEC’s proposed changes in regulation […]
Read more...Although a Bloomberg article, “Bernanke Plays `Dangerous Game’ Balancing Rate Talk With Action,” focused on the Fed’s rate dilemma, it also in passing revealed a sharp difference of opinion on the central bank’s likely actions later this year between economists and market participants: While Bernanke’s warning that the Fed will “strongly resist” a jump in […]
Read more...A comment in the Financial Times, “Our need to sustain the ‘great moderation’,”by Stephen Cecchetti, professor of global finance at Brandeis, set my teeth on edge. I suspect many readers will react the same way. Let’s start: The US housing market has collapsed, placing severe strains on the financial system and, as a direct consequence, […]
Read more...The story in today’s Financial Times, “Bond insurers want $125bn of cover wiped out,” seems more that an tad inconsistent with bond insurers’, particularly MBIA’s, claim that everything is hunk-dory with their financial condition and contention that the rating agencies were mean and capricious. The story in brief: Bond insurers such as Ambac, MBIA and […]
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