The mainstream media, giving reports from Barney Frank and Nancy Pelosi, who said last week there was a bailout deal imminent, are giving similar chipper reports of progress with appropriate caveats. From the New York Times, “Consensus on Rescue Plan Is Said to Be Near“: After a tumultuous week, including a contentious meeting at the […]
Read more...Gretchen Morgenson in the New York Times reports that Goldman and no other Wall Street firm was involved in the AIG rescue talks and an AIG failure would have created a hole as big as $20 billion in Goldman’s balance sheet. This is special dealing, pure and simple. Even if AIG needed to be salvaged […]
Read more...The quote above comes from Robert Bennett (Senate, R-Utah) and while no doubt narrowly true (presumably it’s Wachovia), implying that the bank will go under due to the failure to implement the Paulson plan is just plain dishonest. The bank has been wobbly for a very long time and t isn’t at all clear that […]
Read more...The IMF just released a study that analyzed 124 banking crises, and I wish everyone in Congress (well, at least their staffers), the Treasury, and the Fed read the paper. It provides insight into what worked and didn’t work in past banking crises, and gives an idea of what we might expect from various policy […]
Read more...Some readers would have a go at me whenever I’d post articles by the Telegraph’s Ambrose Evans-Pritchard. Although he has a tendency to hyperventilate and sometimes oversimplifies, he regularly points to data and research that I haven’t seen covered elsewhere. More important, his major calls this year have been correct. He predicted the oil price […]
Read more...From Forbes (hat tip reader The Social Pathologist): In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy. “It’s not based on any particular data point,” a Treasury spokeswoman told Forbes.com Tuesday. “We just wanted to choose a really large number.”
Read more...Hope you like the smell of napalm in the morning. Otherwise, this will not be your sort of day. I have to turn in, but the early morning sightings, as expected, are not at all pretty. What is particularly troubling is that central bank interventions may have become unproductive. Banks have quit lending to each […]
Read more...The unravelling that started with the Freddie and Fannie conservatorship has exacted a toll not just on dollar-denominated paper but on financial assets around the world. As they have fallen, so too has the standing of the US, which zealously promoted liberalized capital markets and saw US firms establish dominant positions when those rules were […]
Read more...Boy, by the time this is all done, what won’t JP Morgan own (well, besides Countrywide)? FDIC is winding up WaMu. The bank had been struggling to find a resolution for some time, and an FDIC takeover would have strained the agency’s resources. But one has to why JP Morgan took this on at such […]
Read more...From the Washington Post: House Financial Services Committee Chairman Barney Frank (D-Mass.) said the bailout deal reached by key lawmakers calls for dividing the $700 billion pricetag into three parts: Paulson would receive $250 billion immediately and another $100 billion upon White House certification of its necessity. The final $350 billion could be dispersed without […]
Read more...While we have focused on the fact that the Treasury bailout plan, which with some tweaks, is moving towards approval. is a covert and inefficient recapitalization of the banking system, other observers see another goal for the plan. The contend that its main purpose is to circumvent mark-to-market accounting. The belief is that mark to […]
Read more...While there have been various reports during the day that a version 2.0 of the Treasury bailout bill was moving towards passage, the agreement in principle now appears to be official. From the Wall Street Journal: A bipartisan group of House and Senate lawmakers left a two-hour-plus meeting in the U.S. Capitol on Thursday saying […]
Read more...Vikas Bajaj of the New York Times is an able reporter and I have often enjoyed his work. I was therefore taken aback when I read his article, “Plan’s Basic Mystery: What’s All This Stuff Worth?” since it misleads readers as to the intent and thrust of the so-called Troubled Asset Relief Program. This is […]
Read more...As we said when the idea of this bill was first mooted, bye bye US AAA rating, bye bye dollar. Not overnight, but the die is cast. We have also said that the eagerness to pass this measure is based on the faulty premise that this package will actually do something to solve the problem. […]
Read more...The International Swaps and Derivatives Association reported that the notional amount of credit default swaps outstanding fell from $62 trillion to a bit under $55 trillion as dealers worked to eliminate offsetting trades. This is a step forward, although it is hard to assess how significant it is. While the reduction in systemic risk is […]
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