Nouriel Roubini and Marc Faber are well known bears, but that fact has not prevented them from being largely right of late. And since the events of the last few weeks have been particularly nerve-wracking, the US media has taken to focusing on the more soothing aspects of news developments, to the extent they can […]
Read more...A Bloomberg story, in what may be becoming conventional wisdom, charges Federal Reserve Chairman Ben Bernanke with making a novice’s error: By lowering the discount rate and issuing a statement conceding threats to the economy, Federal Open Market Committee members effectively ripped up the economic-outlook statement from their Aug. 7 meeting. Some economists describe the […]
Read more...It’s summer rerun time. By happenstance, I came across a May post, which referred to a Federal Reserve study that had found that risks of hedge funds pursuing highly correlated strategies appeared, by some measures, as high as before the LTCM crisis. We had thought the Fed might be making a mistake in dismissing its […]
Read more...Even though the Fed cut the discount rate to 5.75%, and more important, said it was concerned about risks to growth, asset backed commercial paper, which is the epicenter of the credit shock, is being placed at newly high yields: 5.99%, which is now above the discount rate. And remember, not only has the Fed […]
Read more...I was planning to go on long form about what the Fed should do, and now they have gone ahead and done it. That means I now have to write something very substantive. More on that later, but here is a roundup of some good posts: Cassandra depicts the credit crunch as a horror movie, […]
Read more...Given how extraordinary the Fed’s half point (not mere quarter point) discount rate cut of this morning was, and how the markets had been clamoring for it, you’d think we’d see more of a bounce in the Dow than the mere 160 ish points it is up as of this writing (that has come to […]
Read more...I am late to this good comment in the Financial Times, “Hold tight: a bumpy credit ride is only just beginning,” by Avinash Persaud. Between the bumpy markets of the day and arcane workings of Conde Nast’s blog entry system, I’ve been a bit distracted. Admittedly, one of the reasons I view Persaud’s piece favorably […]
Read more...Fragility seems to be the word on everyone’s lips today. As reported in the Financial Times, UBS market strategist William O’Donnell said that the commercial paper markets had dried up and, “Now the buyers are only interested in Treasury bills.” Overnight, Rams, an Australian home lender that, while not exposed to US subprime, had been […]
Read more...It seems to be a symptom of how stressed the markets are that no matter what the Fed does, it doesn’t seem to work. Jim Cramer and others have been clamoring for the Fed to cut rates to give a sop to the credit markets. Bloomberg tells us (and Felix Salmon was on to this […]
Read more...I am more than a bit late to this item, namely, an op-ed piece, “Our Risky New Financial Markets,” by Henry Kaufman in the Wall Street Journal on Wednesday. I’m puzzled at the lack of commentary on this article in the blogsphere. Kaufman, as chief economist of Salomon Brothers during its heyday in the 1980s […]
Read more...Martin Wolf, the Financial Times’ economics editor, tells us in “In a world of overconfidence, fear makes a welcome return,” that it’s high time that people in the financial markets lost some money, particularly Jim Cramer. Actually, Wolf is characteristically statesmanlike, but the crux of his argument is very much in keeping with Andy Xie’s: […]
Read more...Andy Xie, who until last year was Morgan Stanley’s chief Asia economist (he apparently made himself unpopular by being too candid about Singapore), gives a blunt critique of last week’s liquidity infusions by central bankers in “It’s time for central bankers to stop bailing out markets” in the Financial Times. Xie’s conclusion is that the […]
Read more...An excellent article by Willem Buiter (Professor of European Political Economy at the London School of Economics and formerly a member of the Monetary Policy Committee of the Bank of England and Chief Economist at the European Bank for Reconstruction and Development) and Anne Sibert (Professor and Head of the School of Economics, Mathematics and […]
Read more...The Financial Times indicated today that European banks were willing to provide commercial paper only on an overnight basis to a relatively lengthy list of names they regarded as under stress. That is a dramatic departure from normal market operations. Accordingly, the European Central Bank has found it necessary to infuse funds for a third […]
Read more...If the Financial Times’ Gillian Tett were hit by a bus, I’d be in a lot of trouble. With all due respect to her colleagues, she is the best source of financial news. Today, in “Structured investment vehicles’ role in crisis,” Tett probes what went wrong in the credit markets last week. As others have […]
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