Author Archives: Felix

Morgan Stanley: Not Out of the Woods

Posted on October 13, 2008 by Felix

Amidst all the enthusiasm about the Dow rising 5% in its opening minutes, it’s worth noting that Morgan Stanley stock is up a disappointing 60%. I’m serious. At $15 a share, Morgan Stanley is still trading at only half its … Continue reading →

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Krugman, Nobelist

Posted on October 13, 2008 by Felix

The discussion of Paul Krugman’s Nobel Prize in economics is, I’m sure, going to get very political very fast. So it’s worth emphasizing that his work on currency crises and on economic geography — the former not even cited by … Continue reading →

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The First Glimmers of Optimism

Posted on October 13, 2008 by Felix

Your daily TED update: 457bp. Just to put things in perspective, a little, on a day when European and — surely — US stock markets are going to rise a lot. But I do think that the optimism (or retreat … Continue reading →

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Extra Credit, Sunday Edition

Posted on October 13, 2008 by Felix

Are the fiscal pockets deep enough to save the banks? Asks Willem Buiter. Lehman: One Big Derivatives Mess Pakistan, The Land That Financial Bad News Forgot: Part II: The flat-lining of the Karachi stock exchange. Private sector loans, not Fannie … Continue reading →

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Lehman CDS Datapoint of the Day

Posted on October 12, 2008 by Felix

The DTCC is a reliable source, and it says the Lehman CDS settlement flows on October 21 are going to be small: In November 2006, The Depository Trust and Clearing Corporation (DTCC) established its automated Trade Information Warehouse as the … Continue reading →

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Anecdotal Crisis Datapoint of the Day

Posted on October 12, 2008 by Felix

James Fallows: Just in the last few days, I’ve heard separately from three friends who run objectively "viable" businesses that they are on the verge of closing permanently, or laying off much of their staff, because they can’t get short-term … Continue reading →

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Europe to the Rescue?

Posted on October 12, 2008 by Felix

While all eyes were on Washington this weekend, who would have thought that the real breakthrough would happen in Paris? European financial and political leaders agreed late Sunday to a plan that would inject billions of euros into their banks … Continue reading →

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The End of the BRIC Trade

Posted on October 12, 2008 by Felix

In a crisis, as we all know by now, all correlations go to 1. But it’s still interesting to see how similarly the BRICs have behaved. Floyd Norris has their respective declines: Brazil, down 55% Russia, down 65% China, down … Continue reading →

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The Amazing Ballooning RBS Bailout

Posted on October 12, 2008 by Felix

Robert Peston/BBC, Saturday afternoon: I would expect Royal Bank to raise the capital it needs over the weekend. On paper its balance sheet looks okay. But its board has concluded it needs a further cushion of capital, perhaps as much … Continue reading →

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Ben Stein Watch: October 12, 2008

Posted on October 12, 2008 by Felix

Ben Stein, October 2007: If you are a smart long-term investor, do not pay any attention to short-term developments. They are often reported by people whose motivation may be to scare you (screaming about the subprime “crisis”)… In the very … Continue reading →

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Hank Paulson, Drowning Scorpion

Posted on October 12, 2008 by Felix

Why has Gordon Brown found it so much easier to bite the nationalization bullet than Hank Paulson? Simple: it’s a question of old-fashioned ideology. Here’s John Quiggin: It’s fascinating to wonder how Gordon Brown and Alistair Darling must feel about … Continue reading →

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The Bar Fight on the Titanic

Posted on October 12, 2008 by Felix

Steve Waldman asked on Saturday: Why did Ben Bernanke, widely respected among economists as both a scholar and gentleman, support a rescue plan that very few of his colleagues considered "first-best" or even "second-best"? While there was no firm consensus … Continue reading →

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HBOS, RBS to be Nationalized

Posted on October 11, 2008 by Felix

Gordon Brown shows how it should be done: THE government will launch the biggest rescue of Britain’s high-street banks tomorrow when the UK’s four biggest institutions ask for a ߣ35 billion financial lifeline… The British bank rescue could leave the … Continue reading →

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Extra Credit, Friday Edition

Posted on October 10, 2008 by Felix

Cramer Should Be Suspended: "His market call on the Today Show this week for investors to completely liquidate out of the stock market is the most irrational market commentary I have ever heard." Why Gordon Brown Demurs over Deposit Guarantees: … Continue reading →

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Paulson’s Failure

Posted on October 10, 2008 by Felix

Why am I not reassured by Hank Paulson’s latest press conference? "We’re going to do it as soon as we can do it and do it properly and do it effectively and right," Paulson said. "Trust me, we are not … Continue reading →

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Quitting the Hedge Fund Game

Posted on October 10, 2008 by Felix

This I can understand: For some, the volatile market has been too much. Such is the case for Mark Sellers, who runs a small energy fund Sellers Capital. After posting eye-popping returns of 65 percent in the first half of … Continue reading →

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The Coalition of the Ailing

Posted on October 10, 2008 by Felix

I know that yesterday’s blog entry on Morgan Stanley is doing the rounds, not least because I got a phone call from within Morgan Stanley telling me so. (They weren’t very happy about it, needless to say.) But I also … Continue reading →

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Recapitalization and the Implicit Treasury Guarantee

Posted on October 10, 2008 by Felix

Tyler Cowen has a very good question: Treasury equity is not the same as debt to the Fed, but are they so different? In some ways the Fed’s I-can’t-just-stop-rolling-it-over-when-I-want contribution is a bit like preferred equity. I think main key … Continue reading →

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Lehman CDS: Low Price, Low Volume

Posted on October 10, 2008 by Felix

So, how did that Lehman CDS auction go? On the face of it, not well: the initial recovery price is just 9.75 cents on the dollar. But if you were expecting 86 cents of losses based on a 14-cent recovery, … Continue reading →

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Credit Markets Get Even Scarier

Posted on October 10, 2008 by Felix

John Jansen is scaring me today. Remember the new CDX investment-grade index, IG 11, which just launched? They took the crap out of IG 10 (Fannie Mae, Freddie Mac, WaMu), and put in solid corporates like Xerox and UPS. And … Continue reading →

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Information Overload Datapoint of the Day

Posted on October 10, 2008 by Felix

The Dow swung 780 points between its low point and high point just in the first hour of trading this morning. This is a crazy market, and it’s overloading the information systems: here’s a screencap I took just now, from … Continue reading →

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Lehman CDS: It Won’t Be Over Today

Posted on October 10, 2008 by Felix

Vipal Monga today mentions something I was unaware of: the Lehman CDS auction today is not the end of the story when it comes to settling those trades. All it does is set the price: settlement doesn’t happen until October … Continue reading →

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The Guarantee Plan

Posted on October 10, 2008 by Felix

The bad news is that Hank Paulson seems to have run out of ideas. The good news is that, with no bright ideas of his own, he’s turning to the bright ideas of Gordon Brown: first direct equity injections into … Continue reading →

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Extra Credit, Thursday Edition

Posted on October 9, 2008 by Felix

Rescuing our jobs and savings: What G7/8 leaders can do to solve the global credit crisis: An all-star cast of authors with very timely advice. Probably never before in a financial crisis has so much first-rate advice been available so … Continue reading →

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The Unwinding of the Moral Hazard Trade

Posted on October 9, 2008 by Felix

This is the Age of the Bailout. And everybody knows how bailouts work: the government steps in and makes whole any holders of fixed income instruments, be they bonds or deposits or even subordinated debt. That’s what happened with Bear … Continue reading →

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