While one data point does not constitute a trend, a first page article in today’s New York Times, “Creators of Credit Crisis Revel in Las Vegas,” may signal a shift in popular sentiment. Normally, “how the mighty are fallen” stories are exercises in shadenfreude. But this one, on the annual convention of the American Securitization […]
Read more...As many reader likely know, the Markit CMBX indices are commercial real estate mortgage-backed securities default indexes, However, unlike the more familiar subprime indexes, the ABX, which is based on bond prices (so down is bad), the CMBX is based on spreads. When spreads go up, bond prices go down, so for the CMBX, up […]
Read more...Fitch was warning of lax lending practices in commercial real estate in the US starting in April of last year. The typical pattern, of going from unduly generous terms to stringent ones, with nary a stop in between, is occurring now, and with a vengeance. By happenstance, I had dinner with a colleague whose family […]
Read more...We had been wondering when subprime-related securities litigation would get going in earnest. New York attorney general, Andrew Cuomo, along with Connecticut attorney general Richard Blumenthal, has been investigating whether underwriters failed to disclose relevant information to investors in subprime deals. The latest development, according to the Wall Street Journal, is that Cuomo has issued […]
Read more...$14 billion? I thought I’d be inured to big negative numbers coming from investment banks by now, but I caught my breath when I read the headline of the Bloomberg story reporting that UBS is taking a further $14 billion in writedowns, resulting in a $11.4 billion loss for the fourth quarter. Remember, when UBS […]
Read more...Sometimes a picture is worth a thousand words….does that mean two are worth two thousand? From the Businomiics Blog; the underlying data comes from the Census Bureau. While local markets don’t always conform with national patterns, this is another confirmation that a housing recovery is not just around the corner.
Read more...In today’s New York Times, Yale economist and author of Irrational Exuberance Robert Shiller says, in effect, that the problems in the financial system are large enough to call for large scale, possibly even radical remedies. Shiller admits to not having a notion of what those measures should be. He does call for some changes […]
Read more...The Financial Times reports that commercial real estate sales in the US have fallen dramatically, due to uncertainty about financing, vacancy, and defaults. It isn’t yet clear what the price impact will be once sales pick up again, although experts believe that the decline will be less than that of the housing market. From the […]
Read more...Mortgage servicing, a business about which most people were once blissfully ignorant, is increasingly getting less-than-good press. The latest sighting comes from Katie Porter at Credit Slips, who tells of pending litigation against Fidelity National, a big, behind-the-scenes player in the servicing game. Effectively, Fidelity was taking extra compensation that was unseen by bankruptcy judges […]
Read more...A very good article by David Leonhardt in today’s New York Times raises a question that would have been regarded with considerable skepticism as recently as, say, even August, when the perturbations in the debt markets seemed to be the largely the result of the subprime meltdown. That question is whether the Great Moderation, the […]
Read more...Michael Lewis, of Liar’s Poker fame, gives an elegant explanation of why Goldman got its subprime position right when everyone else on the Street was disastrously wrong. And I mean elegant in the mathematical sense: it fits known facts and has few moving parts. As Lewis tells it, Goldman did not use the largely impotent […]
Read more...While the amount at issue isn’t large by global finance standards, the fact that one of the UK’s biggest property funds had to stop withdrawals is not a good sign about the damage that falls in real estate prices are inflicting on investors’ psychology and balance sheets. The Guardian and the Financial Times reported on […]
Read more...While the market iss spooked today by Merrill’s $16.7 billion writedown announdement (Dow down 189 as of this writing), which had been anticipated to a considerable degree in the media, grim news on other fronts certainly doesn’t help either. An aside: the story on Merrill says that the Wall Street writedowns related to subprime were […]
Read more...The UK housing market (and indeed the UK economy) seem to be proceeding on the sorry path that we are on. However, forecasts are far from dire, pointing to a softening rather than a sharp fall. But gee, didn’t we see that movie here? Update: Reader vlade chided me for perhaps creating the impression that […]
Read more...Bloomberg has come across some correspondence with the SEC that sheds light on Goldman’s much commented upon “net short” subprime position. Note, despite the fulminations of certain members of the media, it is not at all clear that being short creates any liability whatsoever, regardless of whether customers may feel “had” or not. On secondary […]
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