The recent record highs in stock market were presupposed on the notion that the credit crisis of the summer was now history and that growth would resume its former course. Investors chose to regard large writeoffs at UBS, Citigroup, Merrill, and Deutsche Bank as signs that they were all putting the problems behind them. That […]
Read more...Forgive me for critiquing two Wall Street Journal articles in one evening, but the worst offender (this one) caught my eye second. It’s frustrating because this page one story, “U.S. Investors Face An Age of Murky Pricing,” attempts to explain the role of transparency, or more accurately, the lack thereof, in the recent credit market […]
Read more...Northern Rock has, for the most part, slipped from the attention of most Americans, and that’s a mistake, because the bank’s failure and resoluton is a useful object lesson. Admittedly, England has a different bank regulatory regime than the US. The biggest difference, until recently, was that retail deposits were only partially guaranteed and it […]
Read more...The Journal has redeemed itself a bit with a page one story, “The United States of Subprime.,” in which it seeks to understand what type of people would up as subprime borrowers. A caveat: I’m always leery of judging the quality of analytical work if I haven’t looked at the underlying methodology. One issue confounding […]
Read more...Joseph Stiglitz, in a comment in the Guardian (hat tip Mark Thoma), tells us he would rather have been wrong about the housing bubble. And he anticipates that, since direct and indirect spending related to housing accounted for two-thirds to three-quarters of US economic expansion since the end of the tech boom, the unwinding of […]
Read more...Ah, the thankless task of endeavoring to uphold sensible principles when events conspire against you. Mervyn King, the governor of the Bank of England, had to eat quite of a bit of crow in the Northern Rock bailout, when a mere two days after a submission to Parliament in which he criticized other central bankers […]
Read more...George Magnus, the UBS economist who popularized the term “Minsky moment,” has a thoughtful comment, “The credit crisis: why it is still too early to relax,” in today’s Financial Times. The article expresses doubts about the beliefs that undergird the current optimism in the financial markets, namely that the credit crisis is pretty much over, […]
Read more...A very good post by Menzie Chin at Ecnobrowser explores the meaning of an expression often used by regulators, traders, and the media, the strength (or weakness) of a currency. Chin tells us (and I hope I am not oversimplifying a lucid explanation) that it really signifies two things. The first meaning is the value […]
Read more...A clever post by Elizabeth Warren at Credit Slips keys off, of all things, a discussion by mystery writer Lisa Scottoline about her experiences with American Express and reward programs generally. Scottoline gives a colorful recap of her inattentiveness about paying on time and its predictable impact on her credit record (“My FICO score was […]
Read more...It’s revealing that Robert Kuttner’s hard hitting, cogent testimony before the House Committee on Financial Services (hat tip Culture of Life News) has gotten very little attention in the media and the blogsphere. Perhaps it’s because Kuttner, an economist and former investigator for the Senate Banking Committee, argues persuasively that the strong ideological bias against […]
Read more...I am kicking myself that I didn’t come up with the proposal made by Brandeis professor Stephen Cecchetti in today’s Financial Times. His opinion piece, “A better way to organise securities markets,” is the single best idea for securities reform I have seen in a very long time. It is simple, elegant, and addresses many […]
Read more...By way of background, an Extreme Measure is a recommendation to take a radical and, upon examination, unworkable approach to a pressing problem. We’ve only been on this beat recently, but so far, the Extreme Measures we’ve seen have had to do with the US housing crisis or the credit contraction. The first was from […]
Read more...Bloomberg reports today that commercial paper outstandings rose for the first time in eight weeks. However, the increase was a very modest $4.5 billion (by contrast, the decline in the first two weeks of the fall was roughly $90 billion per week, and the third week’s decline was just shy of $60 billion). Upcoming weeks […]
Read more...Despite the evidence of some recovery in the credit markets, such as the sale of some formerly-hung LBO debt (at admittedly lower prices) and the return of buyers to the structured credit market, the patient is far from healthy. An article “Is the storm over? Credit market conditions look changeable,” by Gillian Tett in the […]
Read more...Martin Wolf, the Financial Times’ economics editor, may have called the demise of securitization prematurely in his article, “Securitisation: life after death.” This is an odd piece for the normally thoughtful and pragmatic Wolf. On the one hand, he gives a succinct and colorful of assessment of the credit crisis, depicting it as yet another […]
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