Monthly Archives: November 2008

Treasury Enters its Lame Duck Phase

A welcome sign of independent intelligent life at the NYT business section comes this morning, with Edmund Andrews’ piece on Frannie’s latest loan-mod plan. Both the WSJ and the FT played the story just as Treasury and FHFA wanted them … Continue reading

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Extra Credit, Monday Edition

World Bank to Lend $100 Billion to Poor Nations Over 3 Years: Including $35 billion to middle-income countries by the middle of next year. Finally, the World Bank can start making money from lending again! Tosca Monthly Shareholder Report, October … Continue reading

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Who Would Bail Out Switzerland’s Banks?

Richard Baldwin of VoxEU gives us a sneak preview of a new article by Jon Danielsson: In this crisis, the strength of a bank’s balance sheet is of little consequence. What matters is the explicit or implicit guarantee provided by … Continue reading

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Contrarian Investing

Baruch has a corker of a post over at Ultimi Barbarorum on hedge funds, and why it is that they’ve unravelled so spectacularly this year despite largely escaping the bursting of the dot-com bubble unscathed. Go read the whole thing, … Continue reading

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The Underwhelming Frannie Loan-Mod Plan

The Frannie loan-mod plan has arrived, and it’s not particularly exciting. Among the more obvious problems: It applies only to mortgages owned by Frannie, which means, by definition, that it doesn’t include subprime mortgages. FHFA is trying to apply moral … Continue reading

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Sheldon Adelson’s Surprising Capital Raise

Never count Sheldon Adelson out. I don’t know how many other people could manage to raise $1.62 billion in a public stock offering after their company’s shares had fallen 94%. Yes, it helps that Adelson’s putting in another $1 billion … Continue reading

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Why Buying Default Protection Isn’t Naked Shorting

Commenter "cds_till_i_die" asks: Can you explain to me the conceptual differences(if there are any) between buying CDS protection on a bond you don’t own and naked short selling…I think I get it but some clarification would be useful. Happy to … Continue reading

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Mortgage Repayment Datapoint of the Day

As we await Frannie’s latest mortgage-mod plan, David Streitfeld has news of the dire mortgage situation in Mountain House, California — a new town where all the houses were bought since 2003 and as a result 90% are now underwater. … Continue reading

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ProPublica’s Goldman Sachs Hatchet Job

ProPublica is a non-profit investigative-journalism shop founded by Paul Steiger, the former managing editor of The Wall Street Journal. So you’d expect that when it moves into the world of finance, during a credit crisis which has thrown up its … Continue reading

Posted in banking, journalism | 8 Comments

Even Harvard’s Feeling the Pinch

Harvard president Drew Faust is worried about the university’s endowment: As a result of strong returns and the generosity of our alumni and friends, endowment income has come to fund more than a third of the University’s annual operating budget. … Continue reading

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Extra Credit, Monday Edition

The End: Michael Lewis on the death of Wall Street. The Hedge Fund Collapse: Jesse Eisinger on the death of the hedge funds. R.I.P. Franklin Bank: Lew Ranieri faces up to the death of his most recent creation.

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New Yorker Blind Item Watch

Nick Paumgarten attended an election-night party with various hedgies: One hedge-fund trader, a Democrat, said that he’d recently reread (several times) John Kenneth Galbraith’s classic history “The Great Crash, 1929.” He quoted two passages from memory: “The singular feature of … Continue reading

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Where are the TIPS Strips?

Let’s say you’re a risk-averse investor with a nest egg you want to save for retirement. You’re not greedy; you’d rather take absolute safety over an extra point or two in annual returns. You could just keep your money in … Continue reading

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Goldman Sachs: Back in the Crosshairs

What is going on over at Goldman Sachs, whose shares are down 10% or so today at $70 apiece? John Carney says that the market fears Goldman might be lining up yet another secondary equity offering — after raising $10 … Continue reading

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Why the Detroit Bailout Should Include Bankruptcy

With Deutsche Bank saying that GM is worthless, and some kind of government bailout of Detroit now a certainty, the battle lines are being drawn: is bankruptcy an option? Justin Hyde says it isn’t, and he might well be right, … Continue reading

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The FT.com Redesign

The FT.com redesign isn’t live yet, but you can get a preview here. It has a lot more white (or, rather, pink) space than before, and places a huge onus on the front-page editors to get the story mix exactly … Continue reading

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Against Summers

Brad DeLong is pushing Larry Summers as Treasury Secretary. His argument, in a nutshell, is that "we want really smart people" running things, that Larry Summers is a really smart person, and that if you have the intelligence, self-confidence, and … Continue reading

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Have the Democrats moved to the left?

Brad DeLong: One way in which 2009 is different from 1993 is that the Democratic Party is far to the left of where it was back then–let alone back in 1977. Is the Democratic party the only major left-wing party … Continue reading

Posted in Not economics | 1 Comment

Couldn’t the New AIG Bailout Have Waited Until January?

Last night I asked why AIG was getting a second bailout. I think the answer came this morning: AIG lost $24.5 billion in the third quarter. Under the terms of the first bailout, AIG could effectively borrow that $24.5 billion … Continue reading

Posted in bailouts, insurance | 1 Comment

Extra Credit, Sunday Edition

NBER’s Hall Sees `Conclusive’ Evidence of Recession: "’The evidence is more than compelling,’ Robert Hall, the Stanford University economist who leads the National Bureau of Economic Research’s business cycle dating committee, said in an interview. ‘It’s conclusive, in my personal … Continue reading

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AIG Bailout 2: Why?

The WSJ has details of AIG Bailout II: Under the terms being finalized on Sunday night, the government would replace its original $85 billion loan with a two-year duration with a $60 billion loan with a five-year duration. Interest on … Continue reading

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Two Investment Bank Post-Mortems

Jennifer Hughes deserves some kind of medal for her magnificent article on Lehman Europe’s insolvency in this weekend’s FT. Hughes’s piece clears up a large number of questions about UK law, the $8 billion taken from Lehman Europe by Lehman … Continue reading

Posted in banking, journalism | 5 Comments

The Wealth Effects of House Price Declines

Dean Baker reckons that wealth effects alone would be sufficient to cause a massive recession, even absent any kind of financial crisis: Homeowners have lost more than $5 trillion in housing wealth. There is a very well established wealth effect … Continue reading

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Ben Stein Watch: November 8, 2008

Just how much does Ben Stein love his "mighty Cadillac STS-V"? So much, it seems, that he considers its survival a matter of national security. Srsly: The national security considerations make saving General Motors, Ford and Chrysler a life-or-death matter. … Continue reading

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CDS: An IM Exchange

Many thanks to Robert Waldmann, who allowed himself to be roped into an IM conversation with me about the CDS market, after he left a couple of skeptical comments on the subject here and at Kevin Drum’s. Here, then, is … Continue reading

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