Oh, we are in for a wild ride today. Oddly, the reaction in Pacific rim stock markets seems comparatively subdued (the Nikkei is down only 134 points, but the Hang Seng has fallen over 2%), but the credit markets are stumbling badly. Central banks are rushing to the rescue, but their efforts aren’t having much […]
Read more...Mirabile dictu, one of the Fed governors is expressing reservations about the stalled bailout proposal. Richard Fisher’s concern is that it would push Federal debt precariously high. From Bloomberg: Dallas Federal Reserve Bank President Richard Fisher said the proposed $700 billion rescue of financial institutions backed by Fed Chairman Ben S. Bernanke would plunge the […]
Read more...Anyone nicknamed Dr. Doom is likely to be a man after my own heart, and Marc Faber is no exception. The Swiss investor has a good record of market calls (for instance, he was a staunch commodities bull till late in the spring, when he reversed his view) and perhaps as important, has a broader […]
Read more...From Bloomberg (hat tip reader Lewis B. Sckolnick); Responding to questions from lawmakers, Bernanke said that should the rescue succeed and spur an economic recovery, that may lead the Fed to raise interest rates sooner than it otherwise would. For the plan itself, “I don’t expect any effect on inflation,” Bernanke said. The first trading […]
Read more...The bank funding market continues to be under stress. To some degree, this was anticipated, as various market participants saw signs that the year-end liquidity squeeze, and the months preceding it, would be worse than last year, which was bad enough to lead to the creation of the first special liquidity vehicle, the Term Auction […]
Read more...It is becoming clear that Bernanke simply does not get it. Just as he once thought subprime was contained, and has continued to misread the nature and trajectory of the credit crisis, so too he has said that there is a way out of it that involves little or no cost in terms of growth. […]
Read more...The latest “Let’s do something, anything” move to rescue the financial system is yet another example of expediency trumping sound long-term measures. The motivation for making Goldman and Morgan Stanley banks seems obvious: the powers that be seem determined to prevent either firm from going under. Being banks gives the firms access to a expanded […]
Read more...The credit markets had a seizure on Wednesday. To recap the mind-numbing events: Three month T-bills finished at a two basis point yield, and may even have traded at negative yields. Signs of ZIRP. Gold rose $68 and is still going up in Asia. The dollar fell against the yen, a sign of continued carry […]
Read more...The Chicago Tribune, in a truly remarkable story with an anodyne title, “Economist recounts talk with Fed chairman” (hat tip reader Dwight who pointed to Michael Panzner) contains this stunner: “Ben, you are playing a very unique role in world economic history,” {economist David[ Hale recalled telling Bernanke, an expert in the Great Depression. “You […]
Read more...the Treasury is applying some elbow grease too. From Bloomberg: The U.S. Treasury said it will sell bills to allow the Federal Reserve to expand its balance sheet, a day after the government agreed to take over American International Group Inc. “The Treasury Department announced today the initiation of a temporary Supplementary Financing Program at […]
Read more...Dunno about you, but I need some levity right now. Enjoy!
Read more...The outlines of a deal to prevent the world’s biggest insurer from filing for bankruptcy may be emerging. In concept, the outline of provisions is about as good as the government could likely extract, absent taking control, which runs the risk of loss of talent (and having considerably lost by various “helpers” as Warren Buffet […]
Read more...I guess someone at the Fed figured that letting the financial system blow up on its watch was not such a hot idea. But as far as the Fed’s purview is concerned, lending to AIG is just about as far afield as lending to General Motors. What is surprising (at least based on this report) […]
Read more...Twp readers, Steve and Julian e-mailed us about the Bloomberg story below, that the Fed repaid JP Morgan for an advance made to Lehman after its bankruptcy filing: Lehman Brothers Holdings Inc., the securities firm that filed the biggest bankruptcy in history yesterday, was advanced $138 billion this week by JPMorgan Chase & Co. to […]
Read more...Due to the lateness of the hour, I will be a bit more terse than I perhaps should be. We discussed yesterday that one of the emergency measures implemented by the Fed was the suspension of the rules prohibiting banks from using deposits to fund their investment banking subsidiaries. Reader dh helpfully pointed to background […]
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