A good comment in the Financial Times by Wolfang Munchau on the merits of the various remedies available to address the credit crunch. He argues that for monetary policy to be effective would require deep interest rate cuts (200-300 basis points), risking inflation and still leaving quite a few stressed borrowers no better off. He […]
Read more...An article by Clive Crook at the Financial Times which focuses on the inconsistencies (one might say hypocrisies) and failings in the subprime rescue plan announced last week. Because this program will provide only limited relief, he foresees that more rescue efforts, with costs to taxpayers, will follow. From the Financial Times: “This is a […]
Read more...As possible financial trouble spots go, this is far from the biggest. UK property funds are a £10 billion industry. But after the Northern Rock debacle, the last thing the UK needs is another panic where investors pull withdraw their balance from vehicles that can’t take large scale redemptions. The problem with UK property trusts […]
Read more...The quality of debate in America has become so debased that for the most part we have become desensitized to the use of ad hominem attacks. In logic and rhetoric, an ad hominem argument, which attempts to discredit the person mounting the criticism, is considered invalid, since the substance of the charge has not been […]
Read more...Dear readers, I had wanted to go through the geeky American CoreLogic Mortgage Resets study, which gives mind-numbing detail on what type of mortgages reset when to come up with a more refined guesstimate of how many borrowers might be eligible for the formerly-Paulson, now Administration subprime program. The Administration claims its program could help […]
Read more...Duh. Note how, nevertheless, S&P bends over backwards to look supportive…. From Bloomberg: U.S. Treasury Secretary Henry Paulson’s plan to freeze some subprime mortgage rates in an effort to stop a wave of foreclosures may lead to ratings cuts on some mortgage bonds, Standard & Poor’s said. “Simply freezing interest rates on some U.S. first-lien […]
Read more...As some cynics speculated, the subprime freeze proposal, scheduled to be unveiled early this afternoon, got a considerable push from worries about legislation sponsored by Barney Frank which would have allowed judges in bankruptcy some ability to change mortgage terms in bankruptcy. Note that these proposed rules merely put consumers on the same footing as […]
Read more...Events have overtaken the SIV rescue plan brokered by the Treasury Department and sponsored by Citigroup, Bank of America, and JP Morgan. The concept, first announced as a way to unfreeze the commercial paper market, is now being depicted as providing only modest benefits, namely, giving bank sponsors more time to sell the vehicles’ assets, […]
Read more...Yesterday we fulminated at the failure of the Treasury Department to include mortgage counselors, one of the constituencies in the original Hope Now Alliance, in the efforts to craft a plan a to salvage subprime borrowers facing resets. This was a major oversight since the counsellors will play an essential role in gathering information from […]
Read more...As much as I would like to leave the matter of Hank Paulson and his dubious subprime rescue plan alone, the latest developments demand comment, first my own, followed by a roundup of other views. One tidbit later on to induce you to read the entire and admittedly long post: successful implementation of the program […]
Read more...A Bloomberg exclusive story reports that the efforts to clean up the relationship between equity analysts and corporate clients appear have failed to produce more candid ratings. While there is no sign of the overt corruption of the dot-com era, sell ratings are even scarcer than before, despite considerable and obvious signs of stress in […]
Read more...Wolfgang Munchau of the Financial Times provides an excellent and from what I can tell, overlooked argument against central banks’ eagerness to cut interest rates to shore up wobbly financial markets. His point is simple, and I am annoyed that I didn’t think of it. The reason that monetary authorities are so quick to lower […]
Read more...Many commentators on the bailout of E*Trade by hedge fund Citadel focused on either the terms of the deal (costly to E*Trade) or the fact that Citadel, like some other risk-minded investors, are starting to pick and choose among distressed mortgage assets, a sign they believe that the bottom is nigh. But a Reuters story, […]
Read more...Yesterday, we posted some thoughts about the subprime rescue plan under development among the Treasury, some leading servicers, other regulators, and some investors (most notably Freddie and Fannie). A few additional items: We had commented that the plan would be limited to only borrowers who were current on payments. That appears to be incorrect, or […]
Read more...The Wall Street Journal’s page one story, “Rate Plan Has Skeptics, Fans,” offers little new information about the substance of the program (not surprising) but gives mainly positive reviews. In case readers somehow haven’t figured it out, I believe this program to be a Bad Idea in any form, although some variants could be worse […]
Read more...