Marguerite Yourcenar’s Memoirs of Hadrian contains a stunning line: “I begin to discern the profile of my death.” The news of this evening has given me the perhaps mistaken impression that the end game of this credit crunch is similarly coming into view. Before, it seemed an open question as to what measures would be […]
Read more...Greenspan has at points proven to be the bane of Bernanike’s existence. Now it appears Paulson is getting a dose of the same. A reader pointed us to this article in Emerging Markets, which features an exclusive interview with the former Fed chairman Alan Greenspan. The Maestro warned that the SIV rescue program, the so-called […]
Read more...The Wall Street Journal and the New York Times report that Citigroup obtained funding through the end of the year for $80 billion of SIVs (for background, please see here and here). This development is newsworthy, since Citigroup had indicated it faced a crunch in November as commercial paper funding SIVs mature, yet the widely […]
Read more...In the Financial Times, Avinash Persaud, an emeritus professor at Gresham College and a director of Global Association of Risk Professionals. offers some sensible recommendations for regulating rating agencies, first, standardizing their ratings definitions and second, changing the rating agencies’ incentives (although this idea is not spelled out in sufficient detail). What is perhaps most […]
Read more...Courtesy Calculated Risk, here is a MarkIt chart showing the latest tumble in the ABX (the chart in question is of the HE-BBB-07-2, a proxy for recent vintage BBB- subprimes): This plunge is troublingly parallel the past falls in February and July. Here is a quote from a Wall Street Journal article in July, the […]
Read more...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...