The question of systemic risk, that is, the possibility of a generalized failure of the financial system, such as a stock market crash, is something that regulators think about a great deal and quite deliberately discuss a good bit less, since fear becomes a driving element in any market panic. The reason for the heightened […]
Read more...Bernanke normally adopts a measured tone and, as befits someone whose words can move markets, takes great care not to dwell too heavily on bad news. So it was suprising to see him issue a fairly pointed statement on risks to the banking system. His remarks on the perils of private equity loans, when taken […]
Read more...The headline above isn’t news per se, but someone reputable, in this case, Matt Fellowes and Mia Mabanta, have done the sleuth work of putting together the data to dimension the problem. The report says that the bottom quintile is “awash” with credit and now is one of the fastest growing segments. Ee found this […]
Read more...Fed Chairman Ben Bernanke has made an effort to be more transparent than his prececessor Alan Greenspan, but even Bernanke can be improved by translation. From Calculated Risk: Remarks by Fed Chairman Ben Bernanke: The Subprime Mortgage Market The recent sharp increases in subprime mortgage loan delinquencies and in the number of homes entering foreclosure […]
Read more...If a terrorist were to blow up Moodys, S&P, and Fitch, it would have a devastating impact on the financial markets. Rating agencies play a indispensable role in the debt arena. Many investors are required to consider bond ratings in their investment decision making process. Insurance companies, for example, are required to hold either all […]
Read more...I have a quibble with Nouriel Roubini’s headline, “Housing Recession Deepens and Subprime Credit Crunch Spills Over to Other Mortgages,” but agree with the substance of his post. The difference of opinion is in the idea that the subprime credit crunch is “spilling over.” Lenders have gotten much more stringent with weak borrowers, and somewhat […]
Read more...It’s quite remarkable how indifferent to bad economic data keeps coming in and the markets keep shrugging it off. And what is of particular concern, if you are the worrying sort, isn’t the peppy equity markets (that’s for the optimistic types anyhow), but the near-total indifference to risk in the credit markets. Aside from a […]
Read more...It was obvious that lenders were going to become more stringent, in a classic knee-jerk fashion, and now it is happening. From Calculated Risk:From O.C. Register: LendingTree lays off 20% of 2,200 workers LendingTree … laid off 20 percent of its 2,200 workers nationwide today, the company said. Rebecca Anderson, a spokeswoman for the company […]
Read more...Ooh, now things are getting interesting. The subprime meltdown is moving into the usual “pin the liability on someone” phase, which is proving to be complicated, given that many of the logical suspects, meaning the original lenders, have declared bankruptcy (and in the case of mortgage broker New Century, the IRS has first dibs, since […]
Read more...That’s the bottom line of a smart and scary bit of analysis by Michael Shedlock of “Mish’s Global Trend Analysis.” And it confirms, even more dramatically than we imagined, the large and growing gap between the Fed’s reputation and its real power. The Fed is a close cousin to the Wizard of Oz. It hides […]
Read more...Media interest in the subprime problem has died down. Subprimes are now in that same zombie category of ongoing problems that are unpleasant and unresolved, like Katrina victims and Iraq turning military service into involuntary servitude. In poking around, we found an intriguing item that likely won’t get the attention it warrants. Readers may recall […]
Read more...Kudos for an excellent post, “Inflation Targeting is Flawed,” by Michael Shedlock at Mish’s Global Economic Trend Analysis. Like many other observers, we’ve criticized the Fed’s failure to consider, or even acknowledge, asset price inflation in its monetary policy decisions. Instead, the Fed and other central bankers focus on traditional price inflation, and stick their […]
Read more...Oddly, this story, which runs in today’s Financial Times, does not seem to have been reported in the Wall Street Journal or the New York Times (and perhaps not on Bloomberg either, but I am less certain since its search tools for the great unwashed aren’t foolproof). The findings, at least for the Fed, are […]
Read more...Jeremy Grantham of GMO Investments (the G in GMO stands for Gratham), a very well regarded and long standing investment manager (the firm runs over $140 billion, much of it in equities). He is skilled in the black art of modelling and at the peak of the dot com bubble, correctly called how far the […]
Read more...Due to Paul Volcker’s having broken the back of inflation in the early 1980s, and Alan Greenspan performing what appears to be adequately on the substance of his job and masterfully at the showmanship, the Fed’s reputation is at an all time high. And that in and of itself is a danger sign. The Fed’s […]
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