Full disclosure: I am no fan of the Wall Street Journal’s editorials: in fact, I’ve commented on the liberties they often take with facts. But when they are on a pet peeve, they can become so overwrought that the level of agitation alone is amusing. And just because they are often wrong doesn’t mean they […]
Read more...Apologies for the high concentration of monoline items tonight, but that’s where the meatiest material is right now. I received a surprising e-mail from an investor on a rumor he heard from a well-placed source. He was a bit incredulous as to what he was told, and I am skeptical too. Nevertheless, I thought it […]
Read more...As reported by Bloomberg, Bill Ackman of Pershing Square weighted in with his own breakup proposal today. Details there were sketchy, but a reader sent me a pdf of Ackman’s PowerPoint presentation. One slide points out something we have been saying: Berkshire Hathaway’s proposal would require a payment over and above the premiums paid by […]
Read more...Martin Wolf of the Financial Times turns over today’s comment to uberbear Nouriel Roubini, who looks more and more prescient with every passing day. Wolf summarizes two recent Roubini offerings, one on the twelves steps of a financial meltdown, the second on why the powers that be are unlikely to pull themselves out of it. […]
Read more...Ever since Eliot Spitzer threatened the troubled monoline insurers that he’d break them up, everyone has acted as if that’s a viable option. But this talk of a split reminds me of movies about Hollywood, where someone buttonholes a producer with his pet idea: “See, it’s like Flashdance, except you reverse it: the girl is […]
Read more...It’s popular to beat up on the drug industry these days, but it is a deserving target. The prices drug companies charge in the US are outlandish; most of their so-called research is on “new drug applications.” But over 80% of those are other uses of existing drugs. For instance, Wellbutrin, an anti-depressant, is also […]
Read more...With conventional wisdom holding that private sector solutions are better than public stewardship, to have the government winding up owning a financial institution looks bad. It revives the memories of the regulatory failures that led the bank to be bailed out in the first place. Oddly, though, Northern Rock could have been allowed to collapse […]
Read more...Be careful what you wish for. New York insurance superintendent Eric Dinallo seems to be getting what he wants. FGIC, the number four bond insurer, was downgraded six grades by Moody’s on Thursday, from Aaa to A3, which meant it has lost its AAA rating from all agencies, and Moody’s warned it could be downgraded […]
Read more...One of the not-sufficiently-acknowledged-in-the-MSM reasons for the current credit crisis is the sharp contraction of securitization, particularly of mortgages. Banks are balking at honoring LBO commitments because they can’t on-sell them as collateralized loan obligations, at least in the current environment. CDO new issues have pretty much halted, with only three deals this year (some […]
Read more...The endgame for the monolines is upon us. As reported in the Wall Street Journal and the Financial Times, New York governor Eliot Spitzer, in testimony before the House Financial Services committee, said that bond insurers needed to conclude deals to raise capital in five business days. Otherwise, they would be split into a municipal […]
Read more...Eliot Spitzer, former New York State attorney general, now governor, savages the Bush Administration in a Washington Post op-ed today (hat tip Mark Thoma). He discusses the measures taken by Federal banking regulators, namely the Office of the Comptroller of the Currency, to stymie state efforts to curb predatory lending. While the article is largely […]
Read more...Bloomberg gives some updates du jour on the bond insurer front. As rumored, New York insurance superintendent Eric Dinallo is considering breaking up the monolines into the muni operations versus everything else: Bond insurers may be split into two pieces to bolster credit ratings and protect municipalities and bondholders, New York’s top insurance regulator plans […]
Read more...We’ve often observed that the reason to keep the banking industry (and Wall Street, now that some firms are too big to fail) on a short leash is that it plays with the public’s money: gains go to employees and shareholders but losses are socialized. We now see a bald-faced example of that problem in […]
Read more...One of the big news items yesterday was the turmoil in the auction-rate securities market, a $330 billion corner of the muni market, which is a direct casualty of the distress with the bond insurers. The specter of Bristol Myers taking a $275 million charge on an $811 million, announced at the end of January, […]
Read more...The Financial Times has an interesting piece today by Chris Giles and Gillian Tett, “Lessons of the credit crunch.” The world’s top central bankers have learned that their traditional policy tools haven’t worked as well as they would have liked. So how to judge the job they have done? The FT story fails to address […]
Read more...