Wolfgang Munchau provides a sober comment at the Financial Times. He agrees with our view (shared by other) that the central bank actions of last week to try to stimulate more interbank lending (which will show up as a fall in the spread between Libor and risk-free rates) are likely to be ineffective and that […]
Read more...Ouch. The fall in residential real estate prices was more dramatic in London than in the rest of the UK, but no matter how you look at it, the market has gone down a notch, and this move has all the appearances of being the beginning of a trend. Although it is a completely unrelated […]
Read more...The Wall Street Journal has officially sounded taps for the SIV bailout plan that once garnered front-page business news coverage: This week’s decision by Citigroup Inc. to bail out seven investment entities and bring $49 billion in assets onto its balance sheet effectively killed one of the centerpieces of the Bush administration’s approach. The balance […]
Read more...A reader reports that despite losing just over $2 billion in the third quarter on revenues of $9.6 billion and projecting fourth quarter results “not effectively better” , Freddie Mac nevertheless thought it fit to host a lavish celebration. As our reader described it: To celebrate, they threw a decadent holiday party at the Ritz […]
Read more...I’ll be the first to confess that I am not current on who the logical suspects are in the loan syndication business these days, but I don’t think Japanese banks are the first parties one would call on. The SIV bailout plan (officially called the Master Liquidity Enhancement Conduit, or MLEC) was initially going to […]
Read more...Courtesy Doug Noland at Prudent Bear, these charts illustrate a fundamental problem: debt creation well in excess of economic growth: Now in fairness, rapid growth in debt isn’t necessarily a bad thing, provided it is funding productive investments. But much of the rise in US indebtedness is the result of overinvestment in housing, borrowing to […]
Read more...We’ve noted on this blog repeatedly that the Wall Street Journal does an erratic job of covering the credit markets, sometimes reporting stories as late as a full month after they have appeared either at Bloomberg or the Financial Times. And we’ve also repeatedly caught the Wall Street Journal putting a positive spin on news […]
Read more...Both Bloomberg and MarketWatch feature stories on the possibility of further mortgage-debt triggered writeoffs at UBS. Readers may recall that the markets took cheer when UBS announced its third quarter chargeoffs, believing the bank and its peers were putting their troubles behind them. However, the bank now has lower MarketWatch cited a Swiss newspaper that […]
Read more...An article by Clive Crook at the Financial Times which focuses on the inconsistencies (one might say hypocrisies) and failings in the subprime rescue plan announced last week. Because this program will provide only limited relief, he foresees that more rescue efforts, with costs to taxpayers, will follow. From the Financial Times: “This is a […]
Read more...As possible financial trouble spots go, this is far from the biggest. UK property funds are a £10 billion industry. But after the Northern Rock debacle, the last thing the UK needs is another panic where investors pull withdraw their balance from vehicles that can’t take large scale redemptions. The problem with UK property trusts […]
Read more...We wrote earlier this week that the subprime relief deal orchestrated by the Administration was an effort to forestall a bill sponsored by Democrats that would, among other things, give judges the ability to change some mortgage terms in consumer bankruptcies. Elizabeth Warren at Credit Slips confirms this view in her assessment of the subprime […]
Read more...Dear readers, I had wanted to go through the geeky American CoreLogic Mortgage Resets study, which gives mind-numbing detail on what type of mortgages reset when to come up with a more refined guesstimate of how many borrowers might be eligible for the formerly-Paulson, now Administration subprime program. The Administration claims its program could help […]
Read more...Minyanville has a post on three potential sources of systemic risk that have been largely overlooked by the media and in the markets. Numbers two and three on the list – downgrades to monoline insurers damaging municipal credit and counterparty risk in derivatives markets – have been covered in this blog. But the first, the impact […]
Read more...Duh. Note how, nevertheless, S&P bends over backwards to look supportive…. From Bloomberg: U.S. Treasury Secretary Henry Paulson’s plan to freeze some subprime mortgage rates in an effort to stop a wave of foreclosures may lead to ratings cuts on some mortgage bonds, Standard & Poor’s said. “Simply freezing interest rates on some U.S. first-lien […]
Read more...David Gaffen at the Wall Street Journal’s MarketBeat blog found some information showing why subprime borrowers lose their homes via foreclosure. The data is from a Countrywide presentation at the Bank of America investing conference, courtesy Peridot Capitalist: Causes of Foreclosure (July 2007) 58.3% Curtailment of income13.2% Illness/Medical8.4% Divorce6.1% Investment property/Unable to sell5.5% Low regard […]
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