Monthly Archives: August 2007

Is This a Liquidity Crisis or an Insolvency Crisis?

Telling the difference is always more of an art than a science. And from my point of view, a lot of what Roubini considers to be insolvency is reallly “just” a liquidity problem.
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Posted in bonds and loans, economics | Comments Off on Is This a Liquidity Crisis or an Insolvency Crisis?

The Credit Crunch Reaches the Money Market

Investors in obscure asset-backed instruments knew, or should have known, that they were taking liquidity risk. But the interbank market and money-market funds are designed to be as liquid as possible.
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Posted in bonds and loans | Comments Off on The Credit Crunch Reaches the Money Market

Abolish Mortgage-Interest Tax Deduction, But Not Now

Matt Cooper is 100% right, today, when he says that we should
abolish
the mortgage-interest tax deduction
.
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Posted in fiscal and monetary policy, housing, Politics | Comments Off on Abolish Mortgage-Interest Tax Deduction, But Not Now

In Defense of Credit Indices, Part 2

CDS indices aren’t
perfect
. But they’re a darn sight better than the alternative, which is
nothing.
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BNP Paribas Funds: A Non-Story With Big Consequences

Why all the fuss about these BNP
Paribas funds
?
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Posted in bonds and loans | Comments Off on BNP Paribas Funds: A Non-Story With Big Consequences

Print Bears vs TV Bulls

Brian Wesbury says there are too
many bears
on the telly; Barry Ritholtz says there are
too
many bulls
.
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Posted in Media | Comments Off on Print Bears vs TV Bulls

When Is A Bailout Not A Bailout?

Dean Baker says
it’s bailout
– of hedge-fund managers, no less. Tim Worstall
says
it’s a bailout
, which raises all manner of moral-hazard issues. Joanna
Ossinger
says
it’s a bailout
. But it’s not.
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Posted in housing | Comments Off on When Is A Bailout Not A Bailout?

Looking for a Risk-Constant Mutual Fund

The financial markets have outgrown their retail investors. When will those investors be given the tools to catch up?
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Posted in personal finance | Comments Off on Looking for a Risk-Constant Mutual Fund

Bush and the Dollar

A weak dollar is neither a bad idea nor a good idea: it’s just a fact of life, imposed on the US by the international currency markets.
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Posted in foreign exchange | Comments Off on Bush and the Dollar

Analyzing Bear Stearns’s Credit Portfolio

I find the bearish case more persuasive than the bullish.
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Posted in banking | Comments Off on Analyzing Bear Stearns’s Credit Portfolio

Credit Market Datapoint of the Day

Serena Ng says that Bear Stearns paid
"a heavy price"
when it issued $2.25 billion of five-year bonds
at 245bp over Treasuries on Monday.
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Posted in banking, bonds and loans | Comments Off on Credit Market Datapoint of the Day

In Defense of Credit Indices

I was quite
rude
about the ABX.HE indices this morning, but, like all hedging mechanisms,
they do serve an important purpose.
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Posted in derivatives | Comments Off on In Defense of Credit Indices

Let Fannie and Freddie Buy Profitable Mortgages

Is it a good idea to lift restrictions on the kind of mortgages that Fannie Mae and Freddie Mac can buy? In a word, yes.
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Posted in housing | Comments Off on Let Fannie and Freddie Buy Profitable Mortgages

The ABX Indices: Making the Bad Seem Worse

The ABX.HE indices are a pretty weak indication of what mortgage-backed
bonds are actually worth.
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Posted in bonds and loans, derivatives | Comments Off on The ABX Indices: Making the Bad Seem Worse

How Politicians Can Help Fix the Mortgage Mess

Hillary Clinton has a plan to address
the subprime mortgage mess
, and, to my surprise, it’s actually eminently
sensible.
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Posted in housing, Politics | Comments Off on How Politicians Can Help Fix the Mortgage Mess

Why CEOs Don’t Resign

Let me try to answer Matt Cooper’s question:
How come Warren Spector has been fired from Bear Stearns, but
Jimmy Cayne is still there?
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Posted in defenestrations | Comments Off on Why CEOs Don’t Resign

IMF: Strauss-Kahn Joins the Side of the Angels

Dominique Strauss-Kahn apparently wants to reform
the process
which is used to choose the IMF’s managing director –
the very process which has just landed him in that job.
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Posted in IMF | Comments Off on IMF: Strauss-Kahn Joins the Side of the Angels

Andre Esteves, UBS’s Very Expensive New Debt Head

At the end of 2006, UBS bought Brazil’s Banco Pactual for $2.6 billion. The
managing partner of Pactual, Andre Esteves, owned 30% of Pactual,
and so, naturally, he stayed on salary at UBS.
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Free the NYT’s Archives!

Holly Sanders of the New York Post is reporting
that the NYT is finally going to abolish its idiotic TimesSelect service –
and about time too.
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Posted in Media | Comments Off on Free the NYT’s Archives!

Mea Minima Culpa

Starting on August 30th, before we invest in low-yield, illiquid securities with high default risk we promise to “think-twice”.
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Posted in remainders | Comments Off on Mea Minima Culpa

When Competition Increases Sales

You’re in a market and a competitor arrives. Should you be worried? Not always.
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Posted in economics | 2 Comments

WSJ Anoints Carlos Slim as World’s Richest Man

I was travelling over the weekend, and so I missed David Luchnow’s
profile
of Carlos Slim in the WSJ. Boy am I glad I found it now!
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Posted in wealth | Comments Off on WSJ Anoints Carlos Slim as World’s Richest Man

The Jumbo Mortgage Window Slams Shut

Are we in the middle of a fully-blown credit crunch, or is this merely an unpleasant and discontinuous repricing? The answer to that question lies in whether credit is available at any price.
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Posted in bonds and loans | Comments Off on The Jumbo Mortgage Window Slams Shut

Privatization and Subsidies Don’t Mix

James Surowiecki says, quite rightly, that the US student-loan
system is one
enormous boondoggle
for private lenders to students.
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Posted in privatization | Comments Off on Privatization and Subsidies Don’t Mix

Measuring Home Preferences

Would you rather have a 4,000-square-foot house in a neighborhood of 6,000-square-foot McMansions, or a 3,000-square-foot home in a zone of 2,000-square-foot bungalows?
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Posted in economics | Comments Off on Measuring Home Preferences