Ooof, I am in possession of a hefty and detailed presentation on MBIA and Ambac by an investor that is short the stock of the two holding companies. I believe it is kosher to summarize its findings, particularly since it is all derived from public information. And you probably didn’t want to something that long […]
Read more...Barney Frank, chairman of the House Financial Services Committee, has the reputation of having a sharp mind (and occasionally sharp tongue) and it shows in this Financial Times comment piece. The article makes a two pronged attack against the rightward economic drift of the last 30 years, noting that deregulation has not been the panacea […]
Read more...Yesterday, the Wall Street Journal reported that Merrill and Citigroup were looking for more funding to compensate for pending writedowns. The Journal said Merrill was seeking $3-$4 billion, Ciit $10 billion, and the losses the firms could take on mortgage-related debt could be as high as $25 billion. That number already appears to be out […]
Read more...Forgive comparatively terse comments tonight. The Wall Street Journal reports that Citi and Merrill could have additional losses of up to $25 billion between them and are scrambling to secure foreign funding commitments of $3-$4 billion at Merrill and up to $10 billion at Citi While the article doesn’t say so clearly, the goal is […]
Read more...The New York Times has an approving story, and the Financial Times a more neutral one, on the fact that New York state superintendent of insurance Eric Dinallo called Berkshire Hathaway’s insurance chief, Ajit Jain, and urged him to enter the municipal bond guarantee business. The license was issued in record time, a bit more […]
Read more...The origins of the phrase “Let them eat cake” are uncertain, but it is generally attributed to Marie Antoinette, and at the time, her proposal wasn’t as loopy as it sounds now. The French peasantry was hungry due to high bread prices resulting from a flour shortage. The queen urged the poor instead to eat […]
Read more...jck at Alea pointed to this deceptively important Reuters story, “Ability to track risk has shrunk ‘forever’ -Moody’s,” which says that financial innovation has created information asymmetries that make it impossible for participants to understand their exposures fully. That position may cynically be seen as a defense of the rating agencies’ poor performance, but the […]
Read more...For those who may be too young to have been around in his heyday, Henry Kaufman, aka Dr. Doom, was one of the preeminent economists during the early to mid 1980s, when his firm, Salomon Brothers, ruled the bond markets. Kaufman had a particularly well honed ability to read interest rate trends, no mean skill […]
Read more...As the US government has sponsored various plans to forestall the recognition of real estate related losses, ranging from the failed SIV bailout program to New Hope Alliance subprime rate freeze program to proposals to raise Freddie Mac and Fannie Mae’s mortgage ceilings, it has begged comparison to Japan in the post-bubble years. Even though […]
Read more...Since I often take the Wall Street Journal to task on its reporting, I wanted to be sure to point out when they do a good job on topics of interest, per today’s page one story, “Lender Lobbying Blitz Abetted Mortgage Mess.” The article describes the lobbying efforts of subprime lender Ameriquest and three industry […]
Read more...Two readers pointed us to very good post by John Hussman that goes through the Fed’s open market desk operations in detail, and then looks at similar work done on the European Central Bank’s activities (including its widely reported $500 billion liquidity injection). He concludes that in fact liquidity, meaning bank reserves plus money in […]
Read more...For the record, Menzie Chinn is thoughtful and measured, and had a much less inflammatory heading to his post on the need to prevent “looting” in any regulatory reform that comes out of the subprime train wreck. Chinn uses the term looting in a very specific fashion, using George Akerlof and Paul Roemer’s analysis of […]
Read more...The headline above appears in a Financial Times story today. Note that if any such sentiments are voiced in the press in the US, they are discreetly tucked away in the body of the story. Why do we treat people in the officialdom with kid gloves? Paulson put himself front and center on this SIV […]
Read more...We are more that a bit skeptical of whether the New Hope Alliance Plan (the name alone instills doubt) to help a subset of subprime borrowers by freezing their initial interest rate is more about creating photo ops than helping meaningful numbers of overextended borrowers. Why are we so dubious? The last smoke and mirrors […]
Read more...The SV rescue plan touted by the Treasury Deparment and sponsored by Citigroup, JP Morgan, and Bank of America, has finally, officially, had a stake put through its heart today. It dies unmourned and unloved. It wasn’t hard to see that this concept was unlikely to get off the drawing board. But with the Treasury’s […]
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