An article in the Financial Times reports that a meeting to get more financial institutions to join the proposed SIV rescue plan, called the Master Liquidity Enhancement Conduit, or MLEC, didn’t go very well. Two revelations are surprising. First is that, despite indications in the Wall Street Journal that a few firms, including Wachovia, Fidelity […]
Read more...It’s impossible to tell if this is an isolated event or the beginning of a trend, but a page one story in the Wall Street Journal today, “How London Created a Snarl In Global Markets,” labors to paint SIVs as a UK problem. The difficulty with this spin is that anyone with an operating brain […]
Read more...The Financial Times and Bloomberg report tonight that the formerly $8 billion Cheyne Financial Plc, an SIV managed by hedge fund Cheyne Capital Management, will not longer pay debtors and will either liquidate or refinance. Four banks are bidding on the assets. Cheyne was in receivership as of September when the SIV needed to sell […]
Read more...The prospective SIV bailout plan, officially called the Master Liquidity Enhancement Conduit (MLEC) or informally called The Entity, retreated a bit from the public eye yesterday as the perps, whoops, organizers, seemed to be focusing their energies on firming up arrangements so that they can announce progress and have the appearance of momentum. (if you […]
Read more...An excellent post by Angel Ubide, an economist for Tudor Investments as well as for the Center for European Policy Studies, at Vox EU (you need to click through to Telos to read the full text). He starts with a simple premise, that this crisis can’t be about liquidity because aggressive injections of liquidity haven’t […]
Read more...Remember basic macroeconomics? The current account, which consists primarily of trade in goods and services, is supposed to be offset by the capital account, which is largely capital transfers but also includes the purchase or sale of “non-produced goods” like mineral rights and intellectual property. And the story of the US has been that our […]
Read more...In the absence of an announcement by Citigroup, JP Morgan, and Bank of America on the structure of their proposed SIV bailout vehicle, the MLEC, today’s news consisted mainly of reactions by interested parties, many of which were revealing. However, there were a few substantive developments (then to the commentary). First was the leaking of […]
Read more...As we have discussed, the traditional and still most attractive way to deal with troubled borrowers, including mortgage borrowers, is to ascertain whether it is more attractive to modify the terms of the loan or foreclose. Quite often if the borrower has reasonably steady income, a workout is a better solution. However, in our Brave […]
Read more...I’ve been having so much with SIVs that I am late to this piece from Bloomberg. It describes how Paulson will face a great deal of criticism from his G-7 peers this week due to his stance on regulation (more accurately, the desirability of a lack thereof) and the dollar. The writer believes Paulson is […]
Read more...At the Economics Club of New York, Fed chairman Benjamin Bernanke, gave a nuanced speech about the economy (meaning he showed as few cards as possible without pulling a Greenspan of hiding behind tortured sentence structures). But nevertheless a few revealing statements were made. The Wall Street Journal and Bloomberg both focused on his cautionary […]
Read more...Although the details of the planned SIV rescue program, the so called Master Liquidity Enhancement Conduit (MLEC) have yet to be announced, enough has been leaked to allow us to speculate with slightly greater confidence. Since this whole enterprise has a hall of mirrors quality to it, in the spirit of Lewis Carroll, we’ll start […]
Read more...In a fine comment in today’s Financial Times, Wolfgang Munchau argues that central bankers need to straighten out our current credit mess, since they created it in the first place. He argues that many of the alleged causes are actually secondary, and the underlying source was negative real interest rates, which is guaranteed to produce […]
Read more...Bad enough that we have to worry that any further Fed fund rate reductions will lead to increases in long bond rates. That happened with the September 18 50 basis point cut, since investors regarded the move as inflationary. But further Fed cuts or no, it looks like we will see more upward pressure on […]
Read more...While it’s risky to opine about a plan described only in sketchy rumors, what we have seen so far about the possible bailout plan for structured investment vehicles, the entities responsible for the unresolved problems in the money markets, doesn’t give us a great deal of confidence that this program will come into being (see […]
Read more...“SOS to the SEC,” from the New York Post: Did Federal Reserve Chairman Ben Bernanke give away any secrets to Treasury Secretary Hank Paulson when the two had an hour-long lunch on Aug. 16? And did Paulson share what he and Bernanke discussed with anyone in the hours immediately after that lunch?Those are two key […]
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