That’s the title of an article in today’s Financial Times, describing how concerns about the implosion of the subprime mortgage market has led to concerns about the broader mortgage market. As the piece sets forth, this isn’t simple speculative precaution; it turns out delinquencies are running higher than expected in mortgages that are rated just […]
Read more...It is singularly odd (one might even say out of line) for a former Fed chairman to intrude on the turf of the current Fed chief. So why is Greenspan making predictions about the US economy, ones that seem to be at odds (at least in tone) with Bernanke’s? You may recall that the week […]
Read more...As readers doubtless know, the efficient market hypothesis states that prices of publicly traded securities incorporate all available information. We’ve also commented on the wide spread evidence that (except for the subprime sector) investors have a pretty cheery outlook these days. The US stock market has had a nice run so far this year, with […]
Read more...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...Ah, a man after our own heart (we too have written about Pollyanna markets and complacency about risk). In a nicely understated piece at Seeking Alpha, “Short-Lived Economic Pessimism: Pollyanna is Back – With a Vengeance,” Michael Panzer writes about how various regulators have been perternaturally cheerful this week.The piece is very much worth reading […]
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...Earlier this month, Blackstone Group acquired Equity Office Properties Trust for $39 billion, the largest leveraged buyout in history. When a guy as smart and as plugged in as Sam Zell decides to cash out of his biggest asset, it’s worth considering that he might know something that the rest of us don’t know. But […]
Read more...This post from Seeking Alpha makes a persuasive case based on the commodity price outlook that inflation will get worse and the Fed may have to increase rates. When you contrast this with some of our earlier posts, such as ones on the distress in the housing market, the meltdown in the subprime sector, and […]
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 stockmarket today posted another new high, yet the drip, drip, drip of less than cheery economic and political news continues (or have market participants forgotten that governments are bigger than they are?). But the markets focus on whatever good news there is, and the spectacle of Bernanke reassuring Congress also soothed, perhaps anesthetized, investors. […]
Read more...An informative article in the current Economist on the dangers and economic distortion created by the carry trade, a topic we’ve discussed. On a massive scale, investors, typically hedge funds, are borrowing in yen, a currency with very low borrowing costs, and investing in currencies where the interest rates are high, like the New Zealand […]
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...An informative and troubling post from Barry Ritzholtz at The Big Picture that picks up on themes we’ve discussed earlier, namely excessive liquidity, a widespread cavalier attitude towards risk, historically low levels of volatility despite a less-than-rosy geopolitical setting: Surprisingly strong words out of Merrill: “Merrill Lynch has warned of a global credit crunch as […]
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