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 […]
Read more...No, we don’t mean the end of the world, but the end of this credit cycle. An aside: forgive us if you found some of our posts last week sketchier than usual. We’re at a location with very erratic broadband, which makes it hard to get anything Internet-related done efficiently. We’ve run a few comments […]
Read more...Here’s some lighter fare, but in keeping with post above, from Minyanville via Barry Ritzhold’s The Big Picture: Once upon a time there was a family of three bears, a mama bear, a papa bear and a baby bear. This family of bears lived in a quiet cottage in the woods. One day, waiting for […]
Read more...The Housing Bubble Blog put the question more neutrally in its post headline, “When Did Lending Standards Start Charging So Much?,” but the responses all point in one direction: Readers suggested a topic on when loan standards changed. “Here’s my question for the gang – when did lending standards start changing so much? I was […]
Read more...We’ve commented from time to time on loose credit conditions (see our “Rising Tide of Liquidity“, plus Part 2 and Part 3 on the same topic) and indifference to risk (“Where Has the (Perception of) Risk Gone?“). The tide may be turning. Today, the New York Times had a lengthy, well researched article, “Tremors at […]
Read more...Somehow we missed this Financial Times story when it came out on January 19, but it is still germane. Titled “The unease bubbling in today’s brave new financial world,” it’s Gillian Tett’s follow up to a story she wrote on the raging growth of structured finance (covered in our January 16 post, “The Rising Tide […]
Read more...A good couple of posts from The Big Picture (see the first and second) on the increase in margin debt. The data comes from a Wall Street Journal piece: Such debt is accumulated by investors who trade “on margin” with funds borrowed from their brokers. As tracked by the New York Stock Exchange, margin debt […]
Read more...The Financial Times has had three stories on loose credit conditions in three press days: one on Friday the 12th, two on Monday the 15th, all worried in tone. Apologies for getting this to you on a delayed basis, but the FT website was not cooperating from Friday evening through Monday (colleagues had the same […]
Read more...Usury is becoming a hot topic. We posted on it a few days ago; it is also featured in a January 13 New York Times Op-Ed piece, “Banks Gone Wild” by Joe Lee and Thomas Parrish, which was then picked up in the blogsphere by Mark Thoma’s Economist’s View. From the Times: I owe about […]
Read more...Good post this morning on the debate over what the inverted yield curve means for economic prospects by Barry Ritholtz at The Big Picture | Yield Curve: Its different this time. The trigger was that Arthur Laffer has been arguing that the negative yield curve does not point to an impending recession, while a story […]
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