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 […]
Read more...Even though the Fannie and Freddie near crisis, which produced a few days of panic in the credit markets, now seems to have abated, money market investors are still on edge. The Financial Times warns that various risk measures remain at elevated levels: Libor, the measure of inter-bank interest rates that is a key barometer […]
Read more...It no doubt seems absurd to question the idea that deleveraging in underway. We’ve had three heroic central bank interventions, starting in August 2007, to reverse seize-ups in the money markets. The asset backed commercial paper market has been almost in run-off mode. Leveraged buyout loans have been scarce to non-existent. Banks have cut home […]
Read more...You simply cannot make this stuff up. Reader Steve pointed us to a HousingWire post, which says that mortgage servicers may too come knocking on the Fed’s window for financial support, thanks to the housing bill just passed by Congress. Now we’ve been told by mortgage counsellors involved in the Hope Now Alliance that servicers […]
Read more...Former regional Fed president William Poole argues forcefully in a New York Times op-ed today that Fannie Mae and Freddie Mac are not only unnecessary but also distort the financial markets and should be wound down. This program would also be consistent with a strategy of minimizing risk and cost to taxpayers. Probably due to […]
Read more...Tonight brings some useful commentary on the prospects and possible remedies for the banking industry. Roger Ehrenberg offers a good overview, highlighting an area that hasn’t gotten the attention it deserves, namely, proposals to change the Bank Holding Company Act to attract more investors. Reader Steve sent an e-mail that relates to some of the […]
Read more...Boy, what is the FDIC going to do come the fall? A summer Friday night is the perfect time to take over a bank, but the same action even on a Friday night in September will be noticed by a larger number of people. From a practical standpoint, this is really one bank failure, since […]
Read more...The possible downgrade of Fannie’s and Freddie’s subordinated debt involves only a small amount of the GSEs’ total debt, but the symbolism is more important than the dollar amounts. It validates some of the critics’ worries about Fannie and Freddie but also signals the possibility that not only shareowners could be wiped out, but even […]
Read more...When commentators as diverse as Willem Buiter, Marc Faber, and Joseph Stiglitz (to name a few) agree on something, whatever their shared opinion is probably merits consideration. In this case, it’s a cause near and dear to most readers’ hearts, namely, that the rescue efforts orchestrated by the officialdom are poorly designed. They treat taxpayers […]
Read more...Bond maven Bill Gross has raised his estimate of losses from the credit crunch to $1 trillion. One has to note that his firm is a large holder of Freddie and Fannie debt and he issued this pronouncement the day after the GSE rescue bill passed the House and looks certain to become law. Note […]
Read more...One of the perverse side effects of the size and scale of the leading investment and universal banks is that it seems they are largely immune to the traditionally-crippling effects of a serious lawsuit or regulatory failing. Salomon Brothers, a Wall Street powerhouse in the 1980s was seriously wounded in its Treasury bond scandal and […]
Read more...And subprime was contained…… I am curious: what expertise does the CBO have in developing an independent view of the two GSE’s exposures? The CBO was no doubt dependent on the GSEs and/or the Treasury for key elements of the analysis. Moreover, if you connect the dots suggested in the Bloomberg story, the analysis was […]
Read more...The US has managed to get itself in a no-win situation on many fronts. Try the usual trick of fiscal stimulus to combat a downturn, and our friendly foreign funding sources are likely to take a dimmer view of Treasuries. Higher interest rates (in a worst case scenario, a dollar crisis) could easily counter any […]
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