Category Archives: Credit markets

Ilargi: The Taper And The China Credit Power Struggle Squeeze

Yves here. We described the funding mismatch with Chinese wealth management products during the first liquidity crunch earlier in the year, but given that most readers aren’t familiar with these structures, it’s good to have another summary as to how they work and more discussion of why they pose a risk to the Chinese economy. They are troublingly similar to structured investment vehicles, which were one of the detonators of the credit crisis in the US and UK.

Philip Pilkington: Interest Rates and Animal Spirits – A Response to JW Mason

Clarifying what believing in risk versus uncertainty means for how you view the role of interest rates.

Essays in Monetary Theory and Policy: On the Nature of Money (Continued)

Yves here. I thought this essay on money was useful in and of itself, and it also contains a useful primer on the views of major schools of thought in orthodox economics.

Wolf Richter: What Happens Next, Now That The 10-year Treasury Yield Hit The Psycho-Sound Barrier Of 3%

Yves here. As Wolf describes, in our brave new work of super-low interest rates, the 10 year Treasury breaching 3% was regarded with fear and loathing by the officialdom. Now with the Fed’s reassurances that the Fed funds rate will remain at just about zero for the foreseeable future, the stock market has popped the Champagne. But will the impact of the withdrawal of support for bond prices impact stocks sooner than the current rally would have you believe?

Banks Squealing Over Volcker Rule Exposing Their Dirty Laundry. Will Regulators Capitulate?

By George Bailey, who has worked in senior compliance roles at Big Firms You’ve Heard Of and is also a member of Occupy the SEC

The first few legs in the in the Volcker Rule repeal relay race are now under way.

Amar Bhidé on How Following Hayek Leads to Regulating Banks Like Utilities, Looking Askance at Liquidity and Securitization

I highly recommend this short interview by John Authers of the Financial Times with Amar Bhidé, a professor at Tufts, in which he argues that a proper reading of Friedrich Hayek would lead to considerable skepticism about whether most of the changes in finance over the last three decades actually represent progress.

Banks Start Volcker Rule Blame Game

Nothing like being able to use something in the headlines to hide your real behavior. And even better if you can get a banking stalwart columnist to run PR for you.

Michael Hudson: Trade Advantage Replaced by Rent Extraction

An interview with Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College, on the Renegade Economists radio/podcast

JP Morgan, Not Satisfied with Profitable WaMu Acquisition, Sues FDIC to Extract More

If you are Jamie Dimon, a good deal is apparently never good enough.

Wolf Richter: Fear And Trembling In Muni Land

Municipal bond investors, a conservative bunch who want to avoid rollercoaster rides and cliffhangers, are getting frazzled. And they’re bailing out of muni bond funds at record rate, while they still can without losing their shirts.

Ragnarok – Iceland and the ‘Doom of the Gods’

Iceland is widely portrayed as a post-bubble success story, but the reality is more conplex.

The Eurozone: If Only It Were the 1930s

Yves here. This post looks at the strictures of the Eurozone (debt to GDP and deficit limits) and not surprisingly concludes that the supposedly independent ECB is making matters worse that a more “political,” as in growth oriented one, would. But depicting central bank independence as detrimental is a novel and important argument.

Volcker Rule: The Devil’s in the Unimpressive Enforcement Details

If you managed to be late to the Volcker Rule party, you can learn a great deal of what you’d need to know via the revealing contrast between two reasonably detailed accounts, one at Huffington Post by Shahien Nasiripour, the other by Matt Levine at Bloomberg. If you didn’t know better, you’d wonder if they were talking about the same rule.

Big Banks About to Start Booking Second Mortgage Losses They Can No Longer Extend and Pretend Away

Reuters has a new article, Insight: A new wave of U.S. mortgage trouble threatens, which is simultaneously informative and frustrating. It is informative in that it provides some good detail but it is frustrating in that it depicts a long-standing problem aided and abetted by regulators as new.