Category Archives: Credit markets

The Shutdown Talks Are in Chaos

A lot of readers, when we’ve discussed the budget/shutdown/debt ceiling negotiations, have done the equivalent of declaring it all to be kabuki, that the fix is in.

While I have no doubt that any resolution of this impasse is certain to make matters worse for what is left of the endangered species known as the American middle class, what is going on in DC is not a pretty scripted stagefight.

Talks Over Debt Showdown Finally Underway, but Acrimony, Republican Divisions Impede Dealmaking

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In the hostage negotiations otherwise known as the budget deal, the movement on Thursday, that of the Republicans meeting with Obama and offering the idea of a limited extension of the debt ceiling with some thin conditions attached, is indeed progress. But don’t confuse progress with much progress.

As Budget Stalemate Hostilities Escalate, Obama Starts to Brandish Default Threat

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The confrontation underway in Washington DC isn’t as deadly as the Cuban Missile crisis. But in many ways, a misstep could be would produce collateral damage is hard to estimate but would unquestionably be large. So given the stakes, it’s remarkable to see Obama prove his manhood by telling those Republicans he is not intimidated by the possibility of default.

Yanis Varoufakis: Johnny (Paulson) Got His Gun and is Aiming at Bigger Subsidies for His Greek Bank Investments

Yves here. A couple of days ago, we linked to a Financial Times story that featured hedge fund investor John Paulson talking up his investments in the two large Greek banks, Alpha Bank and Piraeus Bank. As a savvy investor buddy once remarked, “When some is talking up something they own, be on the watch that they are actually selling.” In this case, as Varoufakis describes, what Paulson is actually pushing for is for the Troika to change the pricing of warrants on his Greek bank investments because they aren’t providing the big payoff he wanted. So he is indeed “selling” in that he wants his payday now but needs to get official bodies to give him even more subsidies to get there.

Democrats and Republicans Pedal to the Metal in Debt Ceiling/Shutdown Game of Chicken

You know it’s bad when Grover Norquist is playing elder statesman.

How the Foreclosure Crisis Made the Rich Even Richer

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It’s a welcome departure to see Adam Davidson’s weekly column in the New York Times, which usually puts a happy face on how the 1% are winning the class war in America, have a guest writer look at the other side of the story.

Joe Firestone: Stop “the Great Betrayal” – Kabuki Update

It now looks like the big media and leaders in both parties are no longer focusing on the Government Shutdown crisis, but are now moving on to the notion that the shutdown is melding with the upcoming probable breaching of the debt limit to create a combined mother of all fiscal crises. Don’t be fooled.

How the Eurozone Might End

Yves here. This post by Yanis Varoufakis gives a plausible scenario as to how the Eurozone could unravel. Most commentators believe the country that is most likely to rupture it is Italy. Italy has a primary budget surplus and also has a high saving rate, with the result that even under the gold-standard-like Eurozone, it still funds most of its debt issuance internally. Notice how quickly the Eurozone could fracture once one country exits.

David Dayen: Justice’s Deceit on the JPMorgan Settlement, and Why Ed DeMarco Should Get Some Apologies

The moral bankruptcy of the Justice Department’s fake crusade against JPMorgan Chase was always fairly obvious, considering that the Attorney General is holding private meetings with Jamie Dimon, the chief potential suspect in a criminal case (hey, at least those talks were “constructive”). Just yesterday, Dimon walked into the White House to meet with the President, afforded the respect of an elder statesman. The idea that he’s under “attack” is absurd.

But this has now burst into the open with Justice’s desire to stick the FDIC with half the bill:

Monetary Policy Implementation: Some Facts and a Monetary Myth.

Nathan here. Tonight I’m moderating an event on monetary policy implementation at my University, the University of Ottawa. We will have three speakers, Donna Howard, Eric Tymoigne and Marc Lavoie. The event will begin about 5:30 and will probably finish- at the latest- by 7:30. Donna Howard is a former head of financial markets at […]

Why the US Mortgage Market Will Remain Heavily Dependent on Government Support (Updated)

In Senate Banking Committee testimony today, Georgetown law professor Adam Levitin explains why the private label (non-government guaranteed) mortgage market is a textbook case of what Nobel prize winning economist George Akerloff called a “market for lemons”.

Yanis Varoufakis: What Merkel’s Third Term Means for Europe

Yves here. Varoufakis gives a high-level overview of the political and economic constraints on Merkel in dealing with the festering Eurocrisis. While many of the political issues have received decent coverage in the English language press, the nature and severity of Germany’s economic challenges have gotten scant notice.

The Fat Lady Has Yet to Sing for Dimon and JP Morgan

I thought I was late to write about JP Morgan’s $920 million multi-regulator settlement last week on the London Whale, but breathless news of a possible $11 billion settlement of mortgage-related liabilities has pushed the bank and its chief back under the hot lights.