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 […]
Read more...A solid, well argued case against further central bank accommodation by Charles Wyplosz, professor of economics at the Graduate Institute of International Studies in Geneva, in the Financial Times. The centerpiece of his argument is that by providing ample liquidity and low interest rates, monetary authorities are delaying the very steps necessary for banks to […]
Read more...The ECB’s offer to lend to all takers who could post collateral for two weeks at 4.21% or higher led to an unprecedented $500 billion worth of advances. The New York Times and the Financial Times offer some insights as to what this portends. First, from the New York Times, which focused on the comments […]
Read more...The odd thing about former hedge fund manager Ralph’s Cioffi’s departure from Bear Stearns isn’t that it has happened, but that it is taking place now. The decision to keep him on as an advisor was inexplicable, unless there was some convoluted legal reasoning, for example, that keeping him in the Bear tent would lead […]
Read more...Despite the widely-held view that the SIV bailout plan engineered by the Treasury Department and sponsored by Citigroup, JP Morgan, and Banks of America will be largely irrelevant, the program keeps moving forward. We have the latest press release, um, update, courtesy Bloomberg: The “SuperSIV” fund, set up to provide cash to structured investment vehicles […]
Read more...On Monday, the European Central Bank announced an even more aggressive version of a liquidity facility it had used last August in its efforts to lower interbank lending rates that are stubbornly higher than policy rates. This move is an admission that the coordinated efforts of five central banks last week, including the Fed and […]
Read more...John Dizard of the Financial Times has learned that Goldman is trying to find a counterparty for a bearish position on banking industry risk. Is this a house bet, a hedge, an attractive product, or is the firm merely trying to find a taker for a punt a client wants to make? Regardless, the actions […]
Read more...If this story proves to be valid, Bear has a major mess on its hands. Business Week reports that the SEC and the US attorney’s office in Brooklyn are looking into whether Bear permitted insiders to withdraw their capital in February and March from the two Bear hedge funds that failed later in the year. […]
Read more...Wolfgang Munchau provides a sober comment at the Financial Times. He agrees with our view (shared by other) that the central bank actions of last week to try to stimulate more interbank lending (which will show up as a fall in the spread between Libor and risk-free rates) are likely to be ineffective and that […]
Read more...Steve Cecchetti, Professor of Global Finance at Brandeis, has a nice post at Vox EU, “The Art of Crisis Management: Auctions and Swaps.” The title’s misleading; Cecchetti describes it as a FAQ on the central bank actions of last week to try to close the unusually high and troubling spread between interbank rates like Libor […]
Read more...Willem Buiter ought to annoy me, and yet he doesn’t. While it is no doubt unconscious, he seems overly intent on impressing his readers with his intelligence, which is considerable; he wears his erudition on his sleeve. Yet he manages not to come off as an intellectual snob. While I’m not about to do an […]
Read more...The Wall Street Journal has officially sounded taps for the SIV bailout plan that once garnered front-page business news coverage: This week’s decision by Citigroup Inc. to bail out seven investment entities and bring $49 billion in assets onto its balance sheet effectively killed one of the centerpieces of the Bush administration’s approach. The balance […]
Read more...The actions announced by five central banks two days ago continue to leave the money markets unpersuaded. From Bloomberg: The biggest concerted effort by central banks in six years to restore confidence in global money markets is showing little sign of success. The rates banks charge each other for three-month loans held at seven-year highs […]
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