The bad numbers get bigger all the time. This eyepopping $534 billion figure for the amount of debt that Standard and Poor’s plans to either downgrade or put on negative watch was released a couple of hours ago after the exchanges were closed (sorry, I saw it but was unable to post till now). The […]
Read more...John Dizard, in “Prepare for return of a direct lending world,” argues that central bankers believe that securitization is not coming back in any meaningful way in the foreseeable future, and banks will therefore have to roll up their sleeves and do old-fashioned lending in much greater volumes than before. That may seem like a […]
Read more...While there was not much in the way of new developments on the bond insurer front on Tuesday, the media chatter features some interesting cross currents. On the one hand, the Financial Times, which had some relatively upbeat coverage the day before, had an article on the impressively large level of short interest in the […]
Read more...$14 billion? I thought I’d be inured to big negative numbers coming from investment banks by now, but I caught my breath when I read the headline of the Bloomberg story reporting that UBS is taking a further $14 billion in writedowns, resulting in a $11.4 billion loss for the fourth quarter. Remember, when UBS […]
Read more...Reader Carl about ten days ago had sent me a link to a Federal Reserve data series “Aggregate Reserves of Depositary Institutions Adjusted for Reserve Requirements.” The series goes back to 1975. What caught Carl’s attention was that the “”non-borrowed reserves” column, under the “not seasonally adjusted” heading, to the right, shows negative values for […]
Read more...Readers know that we’ve expressed doubts that a rescue plan for the struggling bond insurers will even come into being, so the idea that it would be too late is safer bet. Although it is possible the rating agencies will be pressured into holding off further on their long-overdue downgrades, they’ve been under that sort […]
Read more...Despite the seeming absence of news on the bond insurer rescue front (the only development reported was the selection of the boutique M&A advisory firm Perella Weinberg to assist the State of New York in its efforts to put a deal together), the Financial Times has four articles on it today, from the neutral to […]
Read more...While the question of whether the Fed will lower interest rates again after its emergency cut last week is still up in the air, it is pretty clear that further cuts in the Fed’s target rates are in the offing. And the markets believe the Fed will continue to cut quickly, putting the odds of […]
Read more...Blackstone’s pending $6.4 billion acquisition of Alliance Data Systems, a major credit card processor, may become an unexpected victim of the credit crunch. The deal is foundering not for the usual reasons, such as difficulty in raising debt financing or a change in business conditions leading the buyer to try to renegotiate the deal. In […]
Read more...There has been a fair bit of discussion of the so-called Minsky Moment, when an economy that has build a house of cards of speculation and over-leveraged “Ponzi units” (creditor that could never make good on their commitments, and are viable only by finding new suckers to give them new debt to pay old lenders) […]
Read more...Why have the rating agencies failed to deliver on actions they promised to take? Remember the announcements that helped feed into the overseas market rout last Monday? This story ran January 16 on Bloomberg: Standard & Poor’s will start a new examination of bond insurers, one month after affirming the companies’ AAA ratings, because losses […]
Read more...We’ve discussed before how credit default swaps, which is in essence insurance against the default of particular issuer or index, poses risks to the financial system via counterparty failure. The notional amount of CDS is $45 trillion, but much of that is believed to be fully or nearly fully hedged via offsetting positions. The problem […]
Read more...I try to avoid being too dependent on a single news outlet on any particular day, but it is Sunday, and the New York Times happens to have a higher hit rate than usual on relevant pieces. Reader Independent Accountant chided me for not pointing to the artilce below by the reliable and thoughtful James […]
Read more...Here we go again. We have another Ben Stein column, “Can Their Wish Be the Market’s Command?” which says, I kid you not, that we have a bear because a whole bunch of traders got together and made it so. Since undue contemplation of Ben Stein logic is bad for anyone’s mental health, I will […]
Read more...In today’s New York Times, Yale economist and author of Irrational Exuberance Robert Shiller says, in effect, that the problems in the financial system are large enough to call for large scale, possibly even radical remedies. Shiller admits to not having a notion of what those measures should be. He does call for some changes […]
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