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 […]
Read more...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 […]
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