Author Archives: Felix

Blogonomics: When Blogs and Links are Second-Class

Econoblogs are now mainstream enough that even the Richmond Fed is publishing articles about them — even if this one is the kind of article which doesn’t exist in HTML format; explains that blog is "short for web log" and … Continue reading

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More on Detroit Housing

When I said yesterday that the median house price in Detroit was less than $10,000, Matt, in the comments, quite reasonably doubted the stat: That just does not pass any kind of smell test. $8,500 for a house or a … Continue reading

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Great Moments in Punditry, Even-A-Stopped-Clock Edition

Which prescient commentator wrote this, all the way back in January? The Fed is still behind the curve. There is a real solvency fear out there right now — a fear to lend at all, even at apparently advantageous rates. … Continue reading

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Why Banks Can Lend at Less Than 5%

Sprizouse asks, in the comments: If the banks all got capital injections at 5% why do we expect LIBOR to fall? The banks have to make 5.01% on the money, just to make a profit. Why isn’t this troubling for … Continue reading

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Hexed

Posting’s going to be light today: the volatility in the markets seems to have had, shall we say, some physical contagion. Either that or Charlie Gasparino put a hex on me. But of course I have to give you your … Continue reading

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Extra Credit, Wednesday Edition

Bailouts At a Glance: US vs UK. Candide, or Optimism: Why Paulson’s no hero. Next Victim of Turmoil: Your Salary Now Might Be a Good Time to Take the Social Security Trust Fund Balance Out of Treasuries and Move It … Continue reading

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The Unreassurable Markets

Megan Barnett has a good question: how come investment banks’ CDS spreads are widening, even in the face of an all-but-explicit government guarantee that they won’t be allowed to fail? The easy answer is that the markets are panicking. Boy … Continue reading

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Detroit Housing Datapoint of the Day

Greta Guest reports: The median price on a house or condo sold in Detroit last month plummeted 57%, to $9,250, from $21,250 a year ago, according to figures released Monday by Realcomp, a multiple listing service based in Farmington Hills. … Continue reading

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Ben Bernanke, Revisionist

This, from Ben Bernanke, is disingenuous: The difficulties at Lehman and AIG raised different issues. Like the GSEs, both companies were large, complex, and deeply embedded in our financial system. In both cases, the Treasury and the Federal Reserve sought … Continue reading

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The Exercise of Raw Power

Arnold Kling on Hank Paulson: This American Mussolini has captivated Washington by demonstrating the exercise of raw power. Which if you ask me is ridiculous. Paulson’s ears are much higher up on his head than Mussolini’s.

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The Unintended Consequences of Deposit Insurance

Alan Blinder and Glenn Hubbard make a good point today: Memo to Washington: Take a deep breath and ask, "What is the problem that unlimited deposit insurance is meant to solve?" It is not people lining up to take their … Continue reading

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Annals of Regulatory Arbitrage, German Structured Products Division

What is it about German banks selling credit derivatives to their retail customers? Back in 2000 I wrote about a scandal involving Dresdner bank and many others, who used credit derivatives to transform Ecuadorean PDI bonds (dollar denominated, coupon 3.5%, … Continue reading

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A Dark Morning

A hardy perennial in sci-fi movies is the scene where people start firing ever-larger weapons at some alien object, only to see it wobble a little instead of getting obliterated as expected. I’m beginning to see the TED spread (432bp … Continue reading

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Extra Credit, Tuesday Edition

Taleb vs economists: "What we economists have to learn from Taleb has nothing to do with the nature of risk – we’ve all known that – but about others’ rationality." Related: I told you so: bankers are brainless. Bulls, Bears, … Continue reading

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Investor Notes: BRICs and Credit Default Swaps

A couple of notes from the lunch I went to this afternoon put on by Natixis Asset Management: •Ron Holt of Hansberger Global Investors passed along a provocative datapoint: that the total market capitalization of all Russia’s oil companies is … Continue reading

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Will the Banks Lend?

The NYT’s lead headline this afternoon is unambiguous: "Treasury Chief Says Banks Must Deploy New Capital". But in 2,300 words of reporting, reaching as far as a run on the Hungarian currency, this is the only mention of any requirement … Continue reading

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Treasury’s Standardized Terms

The details of Treasury’s recapitalization plan are out, and it’s more or less what I expected, but with a lower coupon. In fact it looks very much like Warren Buffett’s investment in Goldman Sachs, or MUFG’s investment in Morgan Stanley, … Continue reading

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The Very Slow Thaw

The speed and size of yesterday’s stock-market rally — which is being continued today — should absolutely not be taken as any indication that the credit crunch is over. It represents hope that the crunch will be over — and … Continue reading

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Extra Credit, Monday Edition

Honoring Paul Krugman: Ed Glaeser insists his PhD students memorize Krugman’s 1991 model. Barack Obama and Joe Biden: A Rescue Plan for the Middle Class: Lots of detail here. “Unlimited” Dollar Liquidity: "Nothing like ‘unlimited’ dollar liquidity to send Libor … Continue reading

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The Mathematics of Paul Krugman

Paul Krugman on Paul Krugman: My first love was history; I studied little math, picking up what I needed as I went along… Always try to express your ideas in the simplest possible model… I have used the "minimum necessary … Continue reading

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The Weakness of the Treasury’s New Bailout Plan

The scorpion, it seems, is staying as true as he can to his nature. And although I’m the first to admit that this is no time to worry overmuch about moral hazard concerns, the slowly-emerging shape of Treasury’s plan to … Continue reading

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Are More Big Falls Ahead?

Justin Fox is worried about today’s rally, and whether it portends future falls: We can learn very little about the future direction of the market from which direction stocks moved in today. But we can learn a lot about the … Continue reading

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Credit Crunch Picture of the Day

I’m a fan of Jim Surowiecki’s financial column in the New Yorker, but this week the real kudos goes to his regular illustrator, Christoph Niemann. In a classic case of a picture telling a thousand words, Niemann nails the credit … Continue reading

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Looking for Credit Data Online

If the TED spread is not the best indicator to look at to judge the health of the credit markets, what should we be looking at? Nick asked me this morning about S&P’s newly-launched Commercial Paper index, which might be … Continue reading

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CNBC’s Gasparino Problem

Charlie Gasparino has outdone himself today. He reasonably blames much of the current financial crisis on "a lack of leadership from Washington" — but somehow manages to convince himself that it’s Obama’s leadership which is lacking, rather than Paulson’s or … Continue reading

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