Does being a former Fed chairman mean never having to say you’re sorry? In Oslo, Greenspan maintained that the housing bubble was not due to negative real interest rates in the US, but instead was a “global phenomenon.” He is thus arguing that housing price appreciation in various markets resulted from a common source that […]
Read more...Charles W. Calomiris, the Henry Kaufman professor of financial institutions at Columbia’s business school, has an interesting but ultimately frustrating post at VoxEU in which he argues that the trouble we are seeing in the credit markets is not yet a Minsky moment (in very simplistic terms, the point at which an overlevered and highly […]
Read more...Some state governments have implemented programs to rescue mortgage borrowers in danger of losing their homes. Eight states have committed a total of $900 million to these plans, but a Boston Globe article reports that the uptake has been very low, with only 100 families getting refinancings. If you assume an average mortgage of $300,000, […]
Read more...A reader chided me for being late to this story, but it appears not to have been widely covered yet. Moreover, I would hazard that it means less than the out-of-character reporting in the Financial Times suggests (this “leak” is a PR plant). First, the FT article: BlackRock, the asset manager 49 per cent owned […]
Read more...We didn’t pay much attention to the$2 billion investment by Bank of America in mortgage lender Countrywide at the time because we didn’t like it: I will confess I haven’t studied the details of the deal for a simple reason: I’m appalled that B of A would even consider it. The two banks had reportedly […]
Read more...Companies that provide credit enhancements to bond deals, such as monoline insurers MBIA and Ambac, as well as other type os financial guarantors, have come under a great deal of scrutiny of late as the rapid deterioration in certain types of structured finance products had made their guarantees look less solid. However, lowering their credit […]
Read more...Henry Paulson is becoming the spokesperson for half-baked proposals, first the SIV rescue plan, and now his idea for what sounds like standard-form loan modifications for stressed mortgage borrowers. Paulson’s fondness for Big Schemes That (Purport To) Fix The Problem With A Master Stroke may be a sign of grandiosity. Doesn’t he understand that the […]
Read more...It looks like I am in the process of being proven wrong, but even if I am wrong, it is because I underestimated the stupidity of policymakers and the short-sightedness of the mortgage industry. In September, Shiela Bair, chairman of the FDIC, had called on mortgage servicers to freeze teaser loans at their introductory rates. […]
Read more...Federated Investors has joined Bank of America in investing its own funds in a short-term fund to prevent investors from suffering losses. While BofA’s salvage operation is estimated to have cost as much as $600 million, the damage to Federated has not yet been disclosed. Note that the fund in question is an enhanced cash […]
Read more...Having made a few back-of-the-envelope calculations in this blog, and then having had readers jump on me, I know what fraught exercises they are. But at the same time, a lot of information is bandied about, and you can learn a lot by connecting the dots (although sometimes what you learn is that you didn’t […]
Read more...One of our ongoing beefs is that with all the ink that has been spilled on our snowballing credit crisis, there are almost no decent proposals as how to keep it from happening again. Too few commentators and policymakers have gone beyond either fixating on the size and complextion of the mess, and when they […]
Read more...These days, a mere $1 billion writedown is such an penny-ante event as to not merit much interest. Indeed, what made the fact that Swiss Reinsurance Co., the world’s biggest reinsurer, lost that much on mortgage related derivatives noteworthy was the fact that it was engaged in that activity at all. It turns out the […]
Read more...Perhaps I am attributing too much importance to a single speech, but the Minneapolis Fed President Gary Stern’s “Credit Market Developments: Lessons for Central Banking,” reveals a lot of what is wrong about the way policymakers are thinking about our credit crisis. And if Stern’s position is widely held within the Fed, we are in […]
Read more...University of Oregon professor Tim Duy is featured on Mark Thoma’s Economist’s View with his latest prognostication: “Fed Watch: Headed For Another Game of Chicken?“ Readers may recall that Duy provided a great analysis prior to the Fed’s last FOMC meeting, and concluded the Fed shouldn’t cut, which he took to mead the Fed wouldn’t […]
Read more...The story, “Support for SIV superfund grows,” in today’s Financial Times, is curious. Let’s give you the key bits and then go over why it’s odd: The plan for a $75bn superfund to buy assets from cash-strapped structured investment vehicles appears to be gaining support among sceptical institutions, amid concern that SIVs might start dumping […]
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