Is it any surprise that Wall Street went a bit off the deep end with the (admittedly barmy, but that’s a separate issue) Blanche Lincoln proposal to spin off derivatives desks? Derivatives, which are now deeply integrated in how dealer banks devise customer transactions and how they manage their own risks, are a large proportion […]
Read more...An article by Gillian Tett in the Financial Times, “Trading volumes retreat with investor trust,” contends that the notably low trading activity of late is a sign of deeper changes in financial markets: The most pernicious issue hanging over the system right now is a loss of confidence – not merely in the idea that the […]
Read more...This post first appeared on July 11, 2007 Readers of this blog know that I have been concerned about the state of the credit markets for some time. We’ve had (until the last month or so), rampant liquidity feeding asset bubbles in virtually every asset class except the dollar and the yen, tight risk spreads […]
Read more...Even in this TARP and Fed supported, “heads I win, tails you lose” of the banking industry, the “you live by the sword, you die by the sword” element has not been entirely removed. Witness the schadenfreude-gratifying distress at JP Morgan’s commodities unit, headed by Blythe Masters (a supersaleswoman who has already gotten a fair […]
Read more...According to Pimco’s global strategic adviser Richard Clarida and CEO Mohamed El-Erian, the new normal is not normal, and that has profound implications for investors. Some of the conclusions may sound a tad self-serving, in that Pimco is a bond shop, and fat tails implies more risk (or more accurately, higher odds of more extreme […]
Read more...Complementing today’s piece on the Chinese property bubble, a cross-post from VoxEU, with some graphical depictions of how wild the bubble has become. The NYT article referenced in the piece is here – RS. By Yongheng Deng, Professor of Real Estate and Finance at the National University of Singapore, Joseph Gyourko, Professor of Real Estate, […]
Read more...This post first appeared on May 1, 2007 Due to Paul Volcker’s having broken the back of inflation in the early 1980s, and Alan Greenspan performing what appears to be adequately on the substance of his job and masterfully at the showmanship, the Fed’s reputation is at an all time high. And that in and […]
Read more...Felix guessed how this Structured Finance issue pipeline would get sorted out, for the moment. Three not necessarily inconsistent takes on causes and effects: A neat way to embarrass the government. The rating agency logjam and the GM deal announced yesterday are closely related: if there’s one thing GM will think it still needs for […]
Read more...Richard covering for Yves here, in case that maritime internet connection, which seems OK for terse emails, is not so great for navigating 100 eurowebsites, to whizz through as much detail as possible. Just seven failures, making Chris Whalen’s EU stress tests: who knows, who cares? the main takeaway, I suppose. Not enough blood to […]
Read more...This post first appeared on March 27, 2007 This is a great post by Tanta at Calculated Risk on the classic types of mortgage frauds and how they morphed into new forms due to a unique confluence of buyer naivete and broker/originator greed (oh, and sometimes buyer greed too). She clearly discusses recent versus traditional […]
Read more...Just a reminder of one little corner of the toxic debt fiasco that has plenty of bite still left in it. The Irish banks got in a big mess with duff RE loans. The government swapped discounted bad loans for government-issued bonds. A new agency, NAMA, monitors the duff loan portfolio. There are half a […]
Read more...This post first appeared on March 26, 2007 The post below is from a reader, DS. He focuses on the fact that the Fed has basically admitted that its powers are limited due to the extent of financial activity that takes place outside its purview (the Fed supervises federally-chartered banks; securities firms, which are regulated […]
Read more...A surprise for the ratings agencies, the bond market, and me, too – this has to be a late change in the Financial Reform bill, and it’s a corker. From the WSJ: The nation’s three dominant credit-ratings providers have made an urgent new request of their clients: Please don’t use our credit ratings. The odd […]
Read more...Joint post by Richard Smith and Tom Adams, a securities lawyer The fabulous Fab has entered his solo response to the SEC’s complaint. It provides an interesting glimpse into what are certainly complex legal strategies by Tourre, Goldman and the SEC. The list of his stated defenses are at the bottom. First, the response may […]
Read more...Back to this thing to try to work out what it’s driving at. Yves wrote: I have serious trouble with its bottom line: We document that the shadow banking system became severely strained during the financial crisis because, like traditional banks, shadow banks conduct credit, maturity, and liquidity transformation, but unlike traditional financial intermediaries, they […]
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