Yesterday, we had a link and some commentary on a front-page New York Times article, “Crisis Looms in Mortgages,” by Gretchen Morgenson. Morgenson likes a take-no-prisoners style of writing, and she tends to be controversial due to her forceful articles about CEO pay. I will confess to having read past it (I am inured to […]
Read more...Gretchen Morgenson, in Sunday’s New York Times, has an excellent front page story, “Crisis Looms in Market for Mortgages.” Her forecast is the worst is yet to come. The story describes how delinquencies in the subprime market, already at 12.6%, are already high (we’ve pointed out before that borrowers are also starting to look shaky […]
Read more...An excellent piece today by John Authers in the Financial Times, “Look to US for clues on whether sky is about to fall.” It’s not that he covers new ground, but he does a very good job of characterizing the current state of affairs. However, the piece falls just short of something you could share […]
Read more...The Financial Times reported today, in a page one story, “Funds take firm grip on US Treasuries,” Big hedge funds have recently grabbed such a large share of trading in US Treasury bonds that their activity is eclipsing many of the investment banks which have traditionally dominated the market. This falls in the category, “I […]
Read more...Here it is, Sunday evening. The Asian markets are opening down. I don’t know about you, but I am already tired of the events of last week. They don’t appear to be ending anytime soon, despite the attempts at reassurance by various people in positions of authority. And no, I didn’t take a beating. It’s […]
Read more...Oh, how the mighty are fallen… Some of the biggest securities firms’ own debt instruments are now trading as if they were five grades below their current S&P and Moody’s ratings. It’s pretty common when the credit quality of a company is deteriorating that the markets will mark it down before the rating agencies can […]
Read more...Just a couple of posts ago, we complained about Bernanke talking up the stock market. While that may indeed have been what he was doing (and we don’t approve of that), he may also have been trying to slow action in the credit markets, and that is a legitimate use of his power of the […]
Read more...I trust readers don’t mind the high proportion of Financial Times stories today. You’ve probably figured out that the FT often runs stories that don’t get reported in the US. While the title of this post is a bit of a mouthful, the concept is pretty simple. As you know, the pricing of risky credit […]
Read more...That’s the title of an article in today’s Financial Times, describing how concerns about the implosion of the subprime mortgage market has led to concerns about the broader mortgage market. As the piece sets forth, this isn’t simple speculative precaution; it turns out delinquencies are running higher than expected in mortgages that are rated just […]
Read more...The Wall Street Journal today ran a story, “Mortgage Bond Pioneer Dislikes What He Sees,” featuring Lew Ranieri’s comments on the mortgage securities market. For those of you too young to remember, Ranieri effectively created the mortgage securities market at Salomon Brothers in the 1980s, as head of its mortgage-backed securities department. He and his […]
Read more...Somehow, “subprime contagion” doesn’t have the same ring as “Asian contagion” did in 1998, but we have the same sort of phenomenon at hand: that panic in one sector of the debt market could lead to a broader rout. Nouriel Roubini in his RGE Monitor quotes extensively from a Bloomberg story that indicates that the […]
Read more...A Wall Street Journal story, “Payday Lenders Strike a Defensive Pose,” discussed the growing Congressional interest in restricting payday lending, and the attempts by the industry to clean up its act around the margin. By any standard, payday lending is predatory lending. Typical terms are $15 for every $100 borrowed for two weeks. That’s 390% […]
Read more...Mirable dictu, a Wall Street Journal editorial, “How Expansions Die,” that, for the most part, has a solid foundation in reality. Although the WSJ’s news pages have been reporting on the meltdown in the subprime mortgage market (admittedly somewhat less intently than the Financial Times), both the news and editorial pages have treated it as […]
Read more...The well-regarded Nouriel Roubini of RGE Monitor thinks it might. He picks up on the themes we’ve discussed earlier, particularly the severity of the subprime mortgage market contraction (these are loans made to particularly weak borrowers, which therefor e command higher interest rates). Roubini comments on what he regards as an unusual feature of this […]
Read more...The Financial Times reported today on a spike up in the ABX index, a means to buy and sell default insurance on mortgage-backed bonds rated BBB- (the very bottom of investment grade bonds) are now trading at nearly 1000 basis points, up from 650 a week ago, a dramatic increase. The reason? More bad news […]
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