Yet another subject of worry is whether the global financial crisis will fracture the EU fatally. While the ECB coordinated rescue of Fortis was a positive sign, Ireland’s move to guarantee all bank deposits was a blow, since it is drawing funds from EU institutions to Irish ones. French president Sarkozy had proposed a 300 […]
Read more...Columbia professor and Nobel prize winner Edmund Phelps writes in a Wall Street Journal op-ed, “We Need to Recapitalize the Banks,” an article appears not to have garnered the attention it warrants in the blogosphere. Phelps comments approvingly on Sweden’s approach to handling its financial crisis, which had as its cornerstone reducing the size of […]
Read more...Reader FairEconomist left a short comment on an earlier post which we hoisted along with some other material, on why the bailout bill could make the illiquidity in money markets worse. He left a longer comment j that sets forth the issues, as he sees them, in more detail. I hope readers do not mind […]
Read more...Imitation is the sincerest form of flattery. The bailout bill discussions in the US have apparently emboldened politicians on the other side of the pond to suggest massive rescue efforts. As we have said, one of our colleagues who has high level regulatory contacts in the US and Europe has been telling us for quite […]
Read more...Boy, I wish I had thought of this, and why no one else save some smart readers have focused on the mechanics of the Paulson plan operations is beyond me. This bill is moving ahead like the Titanic…..with high odds of similar outcomes. Hoisted from comments, we turn the mike over to reader Don: The […]
Read more...Bloomberg did not report this story in enough detail to be certain, but as it reads, the EU will be imposing rules on member banks that will require them to hold more capital now. That’s a good thing, right? Banks need more capital, after all. Not exactly, When banks are imperiled, the first priority is […]
Read more...One of my hugely plugged in buddies has been warning that European banks are even more wobbly than US ones, and the ECB will wind up, like the Fed, cutting rates to as close to zero as it dares. Some of his grim view is based on the fact that EU banks on average are […]
Read more...I’m actually quite surprised. The stock market in a panic. I wonder whether Paulson and Bernanke have a Plan B. Jamie Galbraith outlined a good interim idea (needs tweaking but has merit) in the Washington Post last week. Hope someone paid attention. From Bloomberg: U.S. stocks plunged and the Standard & Poor’s 500 Index tumbled […]
Read more...We had grumbled last week that the Treasury had left its money market guarnatee program in the never-never land of “we’ll get back to you with details. The program is now in effect on a short-term basis. One hang up with any program of this sort is that the powers that be do not want […]
Read more...Note that unlike the FDIC’s resolution of WaMu, senior and secured debtors are preserved, but the FDIC may wind up absorbing some losses on a pool of Wachovia loans. But the agency also will take upside stake in Citi. From the Financial Times: Citigroup on Monday said it would acquire the banking operations of Wachovia, […]
Read more...An excellent comment in the Financial Times by Wolfgang Munchau discusses how the gold standard for handling banking crises, the Swedish model, would take even more discipline to implement in the US and how we are dong the reverse of what is needed.It is a levelheaded analysis which stands in stunning contrast with a bit […]
Read more...Did we say really? Even by the normal standards of Roubini’s tendency to hyperventilate state his case forcefully, the good professor rises to levels of choler heretofore unseen. Roubini focuses on many of the issues we have discussed in our earlier posts (most notably this one) but he teases out some of the issues in […]
Read more...Various readers wrote us, and it was confirmed by a detailed report on the call at DealBreaker, that the Treasury Department held a conference call this evening for analysts on the bailout bill. A memo was evidently sent to SIFMA members; others may have been contacted by other means. But the report I got from […]
Read more...See here, sports fans. At least it isn’t three pages long any more. I haven’t gotten past noting that it is a “discussion draft”. Hope to have more substantive comments in due order. The Troubled Assets are initially limited to commercial and residential mortgages and instruments based on them. The Treasury has to go to […]
Read more...Apparently there has been a pretty weird announcement. Progress is being made to sound like resolution. Since the House Republicans weren’t part of the photo op, it isn’t at all clear whether this is real. First sighting from Clusterstock, will add updates as they come in: Update (12:35 a.m.): Nancy Pelosi speaks first. She says […]
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