Sometimes I feel like I am beating a dead horse, or in this case, an about-to-be-stillborn one. The leak over the weekend revealed that the sponsors of SIV salvage operation, the so-called Master Liquidity Enhancement Conduit, had come up with a deal structure. That’s an important hurdle, but it still puts the concept a long […]
Read more...The equity markets seem to have finally realized that conditions are ugly in the credit markets, due to get uglier, and the mess will pull down the real economy. And the bad news continues. The dollar index fell to a new low. Wachovia said the value of its subprime securities, largely “super senior” tranches of […]
Read more...The question posed in the headline isn’t exactly the one Gillian Tett and Paul Davies address in a long and worthwhile analysis at the Financial Times, “What’s the damage? Why banks are only starting to uncover their subprime losses.” But that’s because, as the piece make clear, we are only at the end of the […]
Read more...I will confess to being cynical about the reporting in the Wall Street Journal. As we have noted repeatedly in the past, it generally goes overboard to stress the positive its market-related reporting. That says the reporters too often lack the time or savvy to go beyond their sources’ spin. Now Thursday was undeniably a […]
Read more...Famed investor Jim Rogers has been down on the investment banking industry for some time, and thinks there is even more reason to be negative, as a Bloomberg story reports. However, I think George Soros would take exception to the characterization of Rogers as “co-founder” of Quantum. Rogers most assuredly worked for Soros. Note that […]
Read more...Despite the widely-held view that the Fed will lower the Federal funds rate another 25 basis points this Halloween, some continue to argue against further reductions. We’ve taken that position here before, and will recap some of the reasons. The 50 basis point cut in September was a pre-emptive strike, based not on evidence of […]
Read more...The New York Times, in “Reports Suggest Broader Losses from Mortgages,” does a workmanlike job of providing an update on the losses likely to result from the housing slump. Nevertheless, the piece feels woefully incomplete. It’s not the authors’ fault, but the bad news is coming in faster the experts can update their estimates. Today, […]
Read more...Bloomberg reports that famed investor/fund manager Jim Rogers is moving entirely out of US $. He depicts the US as in the process of losing its reserve currency status (a theme familiar to readers) with dire consequences for the currency’s performance. From Bloomberg: Jim Rogers, chairman of Beeland Interests Inc., said he is shifting all […]
Read more...We’re a bit late to a very good comment in today’s Financial Times, “Interest rate cuts will not solve the crisis,” by Wolfgang Munchau. Munchau argues that despite inflation targeting, the potential to move into an inflationary cycle is greater than many analysts recognize, and that even a small increase in inflation at this juncture […]
Read more...A reader question got me to work through a back of the envelope calculation of what the SIV rescue plan, the so-called Master Enhanced Liquidity Conduit, would buy for its chief beneficiary, Citigroup. What I came up with gives cause for pause. It’s one thing to know in a general way that a proposal is […]
Read more...An excellent post by Angel Ubide, an economist for Tudor Investments as well as for the Center for European Policy Studies, at Vox EU (you need to click through to Telos to read the full text). He starts with a simple premise, that this crisis can’t be about liquidity because aggressive injections of liquidity haven’t […]
Read more...The recent record highs in stock market were presupposed on the notion that the credit crisis of the summer was now history and that growth would resume its former course. Investors chose to regard large writeoffs at UBS, Citigroup, Merrill, and Deutsche Bank as signs that they were all putting the problems behind them. That […]
Read more...The Financial Times’ Lex column today, in reflecting on the coming anniversary of the 1987 crash, dashes cold water on those who continue to be optimistic about corporate earnings. Independent of the outlook for housing, it seems quite remarkable that analysts can come up with forecasts of meaningful aggregate increases in earnings over the next […]
Read more...Michael Panzner of Financial Armageddon is the source of this very interesting chart, which he depicted as possible speculative convergence. If his observation is correct, his label is way too polite.
Read more...Ah, the thankless task of endeavoring to uphold sensible principles when events conspire against you. Mervyn King, the governor of the Bank of England, had to eat quite of a bit of crow in the Northern Rock bailout, when a mere two days after a submission to Parliament in which he criticized other central bankers […]
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