According to the New York Times, Congress is suddenly keen to get a homeowner bailout program in place, and made a rare bipartisan show of a joint news conference, with the hope of tabling the bill as soon as noon Wednesday. Key elements: At a minimum, the bipartisan package was expected to include up to […]
Read more...I came across this terrific post by Tom Engelhardt via Michael Panzner. Englehardt takes a cold, hard look at the Bush Adminsitration’s performance and practices, and argues you don’t need to be an economist to predict that whatever limited efforts they make to address the credit crisis are sure to fail. After all, everything they’ve […]
Read more...A reader sent this note by AIG’s Bernard Connolly, which is surprisingly blunt for a sell-side analyst: In saying today that the housing price correction must be allowed to proceed, Paulson is in effect calling for a massively weaker dollar – athough he probably does not realise it. Of course it is true, as Paulson […]
Read more...The comments in the Financial Times by Yoshimi Watanabe, Japan’s financial services minister, are extraordinary. He ventured to give the US advice on its credit crunch based on Japan’s experience during its post-bubble-years banking crisis. And it’s not pretty. Why are these remarks so unusual? Consider: Most countries don’t give other countries advice on how […]
Read more...People never learn, as John Dizard reminds us via “Forget the past and you make the same mistakes again” in the Financial Times. Quite a few policy makers have talked up plans to use Fannie Mae and Freddie Mac as central agents in salvaging the US housing market, typically by refinancing stressed borrowers. The markets […]
Read more...Mohamed El-Erian, former head of Harvard Management Company, now co-head of the biggest bond investment firm, Pimco, has been a reliable source of insight into the operations of financial markets and the implications of policy measures. Well, at least until today. In a comment in the Financial Times that shows him to be wearing an […]
Read more...Krugman, in his New York Times op-ed today, “Betting the Bank,” reminds us that the Fed is much like the Wizard of Oz: the perception of its power vastly exceeds reality. In normal times, the limited tools central bankers have at their disposal can be used to great effect, but extreme conditions reveal their impotence. […]
Read more...Gillian Tett ponders the conundrum that, given the dearth of logical suspects to replenish US bank equity if credit markets continue to deteriorate, the Federal government will have to step into the breach. But bailouts are profoundly unpopular even in the best of times, and an election year is a particularly ill-fated juncture for this […]
Read more...Joseph Stiglitz gives the high point of the findings of his new book, The Three Trillion Dollar War, in a comment today in the Guardian. I wish Stiglitz has gone on at more length about the horrific corruption and featherbedding in the Iraq contracting process. All the traditional rules were thrown out the window. This […]
Read more...Never expect a group with members ideologically opposed to regulation to come up with a wide ranging reform program, no matter how badly one is needed. An individual can have a Nixon-goes-to-China moment, but not a committee. Later today, no doubt with great fanfare, Hank Paulson will announce the plans devised by the President’s Working […]
Read more...No, Barney Frank, head of the House Financial Services Committee, did not say in so many words that he wanted to end the municipal bond insurance business. But that’s the implication of the ultimatum. He told the rating agencies and the insurers that they have a month to make the standards applied to the ratings […]
Read more...An article in Business Week, and a related discussion on the blog Credit Slips, highlight a new and nasty trend: banks are refusing to give overstretched borrowers who negotiate repayment plans through credit counselors the interest rate breaks they once did. In the old days, banks would reduce interest rates on balances due, sometimes to […]
Read more...The Financial Times reports today that New York governor Eliot Spitzer, hardly a well-liked figure on Wall Street, did serious arm-twisting to get banks to support Ambac’s fundraising: Eliot Spitzer, governor of New York, played a critical behind-the-scenes role in the rescue of Ambac, frequently calling senior bankers to press for a deal to be […]
Read more...I nearly fell off my chair. Ben Stein’s column this week, “What McCain Could Do About Taxes,” is sensible and vastly more tightly written and argued than his previous work. No free association or gratuitous name-dropping, no leaps of logic, no wishful thinking. More shocking, not only does he take issue with the Republican party […]
Read more...For Project Syndicate, Brad DeLong writes that the Friedman era may be over and gives some initial thought to what a new system (he doesn’t attach a name to it) might look like (hat tip Mark Thoma). I’m always amazed by the deference with which American economists, even those of a liberal persuasion, treat Friedman’s […]
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