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 […]
Read more...Credit Slips tells us that bankruptcy filings are increasing, but the new bankruptcy law has succeeded in keeping them below the 2005 level (the law became effective late October 2005). They dispute the idea that this represents progress. From Credit Slips: According to the folks at Automated Access to Court Electronic Records (AACER), preliminary figures […]
Read more...Bill Gross. chief investment officer of bond investment giant Pimco, uses his monthly newsletter to tackle the question of whether the Fed and the Treasury really understand what they are up against. Although he reaches no definitive conconclusion, he suggests they have a bank-centric, and therefore badly outmoded, view of the world. We’ve raised this […]
Read more...Tim Duy, economics professor at the University of Oregon, posts from time to time on Mark Thoma’s blog, Economist’s View, and Fed watching is one of his favorite topics. His latest, “The Fed’s Next Move,” is particularly thorough and cogent. He goes through the case for further rate cuts and finds the consensus view, that […]
Read more...Tanta at Calculated Risk, in one of her usual colorful explanations, tells us the real pitfall of stated income loans, and it’s not one you might expect. She works through an example of an entrepreneur who doesn’t report all his income (as an aside, she’s not keen to reward that behavior and works through the […]
Read more...The Wall Street Journal has broken the story that UBS will announce that it is writing down its fixed income book as much as 4 billion Swiss Francs, or roughly $3.4 billion, which will result in losses of 600 to 700 million SFr for its third quarter. Although this write-off is greater than those taken […]
Read more...The prolonged disconnect between the debt and equity markets is bizarre. Historically, credit market corrections precede equity downturns; once in a while, as in 1997-1998, they send a false positive, so equity investors feel justified in not taking every blip in the credit markets to heart. (And we aren’t the only ones to think along […]
Read more...A couple of stories confirm that, despite the peppy response of the equity markets and the return to more-or-less upbeat reporting in the financial media, the Fed’s 50 basis point cut has not restored normalcy to the sector most in need of aid, namely, the money markets. Central bankers have limited and for the most […]
Read more...Bloomberg Magazine, in “Unsafe Havens,” reports that money market funds run by Bank of America Corp., Credit Suisse Group, Fidelity Investments and Morgan Stanley owned over $6 billion of CDOs with subprime debt in June. The reason this is a serious issue is that money market funds have a $1 NAV, meaning “net asset value” […]
Read more...A few days ago, we said we were willing to eat a bit of crow. Even though we had acknowledged some time ago that Bear might not survive the subprime mess as an independent firm, we also thought that no one with any sense would take a strategic position (taking a speculative bet is an […]
Read more...As rating agencies came into renewed focus this week as a result of Senate Banking Committee hearings on their role in the structured credit mess, one suggestion appears to have been gotten little play in the financial media. Yesterday, the Financial Times reported that Eric Mindich, CEO of Eton Park Capital and newly appointed head […]
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