I’m told that alcoholics and addicts have to hit bottom before they are able to renounce their self destructive ways. Ironically, their personal collapse makes them more capable of change than scientists, who, according to Thomas Kuhn in his landmark, The Structure of Scientific Revolutions, were so incapable of abandoning core beliefs that it would […]
Read more...A very interesting pair of articles tonight comment on a statement today by ECB governing board member and President of the Dutch Central Bank Nout Wellink to the effect that banks were overly dependent on the ECB’s liquidity facilities and needed to start fending more for themselves. Ed Harrison at Credit Writedowns translated an article […]
Read more...Warning: Josh Rosner is controversial in some circles. He co-authored a simply terrific paper with Joe Mason, “Where Did the Risk Go? How Misapplied Bond Ratings Cause Mortgage Backed Securities and Collateralized Debt Obligation Market Disruptions.” If you haven’t read it, do so now. If you don’t have the time, we summarized it here. However, […]
Read more...Another day of nervousness and not-exactly-positive developments on the Fannie and Freddie front. What is remarkable about the situation now is that at least some of the trouble elements were entirely predictable, which suggests that a bit of aforethought might have led to a better plan and less bad outcomes (I’m not such as optimist […]
Read more...A post at VoxEU, “Bank capital and write-downs: Zeno’s paradox and the subprime crisis” by Marco Onado does a nice job of recapping at a high but nevertheless useful level of abstraction, how regulators cast a blind eye to the mess banks managed to create for themselves. It also has some useful information on the […]
Read more...Stories by Bloomberg and Reuters on a talk by Kenneth Rogoff, former chief economist for the IMF and currently a Harvard professor, fail to mention perhaps his most relevant credential as far as opining on the US credit crunch is concerned. He and Carmen Reinhart of the University of Maryland have done an extensive study […]
Read more...James Carville, Clinton strategist, said, I used to think if there was reincarnation, I wanted to come back as the President or the Pope or a .400 baseball hitter, but now I want to come back as the bond market. You can intimidate everybody. If a politico like Carville recognized the fixed income market as […]
Read more...While even moral hazard hawks generally agree that some sort of government intervention would be needed in the event of financial trouble at Fannie and Freddie, the most compelling reason was that the US, chronically dependent on foreign funding, would be ill advised to treat its money sources badly. Of the GSEs’ $5.2 trillion in […]
Read more...Reader Saboor was kind enough to send me an August 1 report by Stephen Roach, former chief economist of Morgan Stanley, now chairman of its Asian operations. It’s noteworthy in two respects. First, although Roach remains a long-term dollar bear, he made a well timed call that it was oversold, due for a rally, and […]
Read more...Since roughly February, a solid minority of commentarors, including this blogger, have questioned the thesis that the rapid increase in oil prices was solely the function of supply and demand. It was disconcerting to see what reactions this stance elicited. There was often an unwillingness to read what was written, and instead turn the post […]
Read more...One of the preferred ways for regulators to deal with failed or wobbly financial institutions is to get a stronger firm to take the problem off their hands. But as Jon Birger of Fortune reports in a profile of bank analyst Meredith Whitney (hat tip doc holiday), new accounting rules may get in the way: […]
Read more...In less than a month, NYMEX crude oil futures have dropped about 15% in value. Other commodities ranging from precious metals to agriculture have had significant drops as well. Even for the traditionally volatile commodity markets, this is somewhat unusual and has led many people to scratch their heads to figure out what’s happening. Is […]
Read more...Not only are we getting bailouts, we are now getting Chinese puzzle box bailouts, with new tricks nestled inside other vehicles. Maybe we should quit pretending and just give the American Bankers Association and the National Association of Realtors blank checks from the Treasury Department. We might as well be straightforward about what is happening. […]
Read more...Readers may know I am a big fan of Kenneth Rogoff and Carmen Reinhart, his frequent research partner and co-author. One of my reasons is that he is much more empirically-oriented than most Serious Economists. One recent bit of Reinhart/Rogoff research that has gotten some attention (but in my mind, still not enough) is their […]
Read more...From the Times Online: Sir James Crosby, former chief executive of HBOS, who is carrying out a review for the Treasury, said that the “shortage of mortgage finance will persist throughout 2008, 2009 and 2010, and I suspect that current forecasts for new mortgage lending during this period will prove optimistic.” As expected, Sir James […]
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