Author Archives: Felix

What Just Happened?

Posted on October 9, 2008 by Felix

I’ve long said that end-of-day market reports are silly, since the only thing reporters can normally say with any confidence is "the market moved and we don’t know why". But what we’re seeing right now isn’t moves so much as … Continue reading →

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When Shipping Costs Plunge

Posted on October 9, 2008 by Felix

The Baltic Dry Index, which measures international shipping costs, was fixed today at 2,503, down 9% on the day and down 79% from its May high of 11,793. It’s a volatile index, and these levels are hardly unprecedented: the index … Continue reading →

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Should the Fed Target Libor?

Posted on October 9, 2008 by Felix

Many thanks to Colin Barr, who saw my question about how we can bring down Libor and pointed me to a recent essay by Edwin Truman with a very specific proposal about doing just that. Truman takes the very direct … Continue reading →

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The Last Days of Morgan Stanley

Posted on October 9, 2008 by Felix

If Morgan Stanley was in distress back in mid-September, it’s much worse today, trading as low as $12.50 a share: that’s just 40% of its stated book value. For all the denials coming out of the bank, clearly the market … Continue reading →

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Bank Soundness Datapoint of the Day

Posted on October 9, 2008 by Felix

This has got to sting, in New York and London: Canada has the world’s soundest banking system, closely followed by Sweden, Luxembourg and Australia, a survey by the World Economic Forum has found as financial crisis and bank failures shake … Continue reading →

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How Can We Bring Down Libor?

Posted on October 9, 2008 by Felix

When banks get nationalized, they become much safer, right? So what on earth is overnight Libor doing at 5.09%, and three-month Libor at 4.75%? The TED spread is a new record high, 413bp, making all its previous scary spikes look … Continue reading →

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Did Derivatives Cause the Crisis?

Posted on October 9, 2008 by Felix

While I’m reading the front page of the NYT, it’s worth noting the latest installment in its crisis series: 3,000 words from Peter Goodman on how Alan Greenspan’s lax oversight of the derivatives market got us all into this mess … Continue reading →

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US Bank Nationalizations: One Step Closer

Posted on October 9, 2008 by Felix

Yesterday, Justin Fox detected a possibly important shift in emphasis from Hank Paulson. Did anybody else notice that when Hank Paulson was describing in his press conference today what the Emergency Economic Stabilization Act enables Treasury to do, the first … Continue reading →

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Extra Credit, Thursday Morning Edition

Posted on October 9, 2008 by Felix

Emerging Europe seen key crisis flashpoint: or is it Bank Crisis Is Bypassing Central and East Europe? They report, you decide. CME Group and Citadel to Launch the First Integrated Credit Default Swaps Trading Platform and Central Counterparty Facility, Linked … Continue reading →

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Lies, Damn Lies, and Intellectual Property Statistics

Posted on October 8, 2008 by Felix

Welcome, Julian Sanchez, to the Alice-in-Wonderland world of trying to track down widely-cited statistics to their original source! I tried and failed with counterfeiting statistics; Julian has now tried and failed with estimates of lost jobs and money due to … Continue reading →

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Beware Small ETFs

Posted on October 8, 2008 by Felix

When I said this morning that "we’re only at the very beginning of the global sovereign (as opposed to financial) crisis" and that "there will be more government debt scares before this is all over", I was evidently thinking along … Continue reading →

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Homeownership: The Ideal Which Refuses to Die

Posted on October 8, 2008 by Felix

Of all the Big Ideas which have been thoroughly discredited over the course of this crisis, arguably the biggest is the concept that homeownership is always and everywhere a Good Thing. As we’ve seen over the past couple of years, … Continue reading →

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Iceland’s Best-Laid Plan Falls Apart

Posted on October 8, 2008 by Felix

Here’s how fluid things are: last week, Iceland nationalized Glitnir, the country’s third-largest bank. Today, it unnationalized Glitnir, putting it into receivership instead: clearly the bank’s liabilities were too large for the Icelandic government to take on. Yesterday, Iceland pegged … Continue reading →

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The Sovereign Default Race Heats Up

Posted on October 8, 2008 by Felix

You thought Iceland was in dire straits? Maybe Pakistan will beat it to the first-to-default finish line! Pakistan’s economic crisis deepened on Monday after the rupee sank to an all-time low and Standard & Poor’s, the global rating agency, downgraded … Continue reading →

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Can the TARP Work?

Posted on October 8, 2008 by Felix

I’ve got a piece at the main Portfolio.com site today called "Rolling Out the TARP", going into a bit of detail about whether and how this whole reverse-auction thing might work in practice. It’s based largely on a paper by … Continue reading →

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TED Breaks 400bp

Posted on October 8, 2008 by Felix

So much for unprecedented global coordinated rate cuts, not to mention a UK bank bailout which could reach a mind-boggling 500 billion pounds. TED’s at 403bp, European stocks are sharply lower across the board, and the US stock market, after … Continue reading →

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Extra Credit, Tuesday Edition

Posted on October 8, 2008 by Felix

How to handle the crisis in your 401K: Good advice from Megan. If you have long-term investments (and all stock-market investments should be long-term investments) then mark them to market no more than once a year. Never Enough Lessons on … Continue reading →

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How CDOs Are Like Stocks

Posted on October 7, 2008 by Felix

I had lunch today with Moe Tkacik; I was talking about how I’ve always been much more comfortable in the world of bonds, which can be valued quite easily, rather than stocks, which are essentially impossible to value with any … Continue reading →

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Great Moments in Punditry, Kudlow Edition

Posted on October 7, 2008 by Felix

Larry Kudlow, July 2007: If you ask folks on Wall Street what their biggest worry is, most will say it’s another 9-11. They rank another attack far ahead of passing sub-prime mortgage problems or wiggles in consumer spending… I have … Continue reading →

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Mortgage Repayment Datapoint of the Day

Posted on October 7, 2008 by Felix

The real-world consequences of an elevated Libor: The average subprime borrower facing an adjustable payment for the first time next month would face a monthly payment increase of about 18 percent based on Libor rates as of Sept. 30, rather … Continue reading →

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The Burst Commodity Bubble

Posted on October 7, 2008 by Felix

Do you remember the food and commodity bubble? Sure you do. It wasn’t that long ago. The rise of India and China was inexorable, and the supply of food in general and meat in particular was never going to keep … Continue reading →

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The Iceland-Dow Connection

Posted on October 7, 2008 by Felix

Josh has been watching the Icelandic krona: This morning, the ISK reached a nadir of 350 ISK to the EUR, and I was placing phone calls to travel agencies trying to book the cheapest holiday of my life. Then, suddenly … Continue reading →

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Cap-and-Trade in the US

Posted on October 7, 2008 by Felix

Did you know that September 29 saw the largest carbon auction the world has ever seen? OK, it was pretty small on an absolute level — it raised just $39 million, and the price per ton of carbon emitted was … Continue reading →

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Ask Not What Your Country Can Do For You, Spanish Banknote Edition

Posted on October 7, 2008 by Felix

During WWII, plucky Londoners tore down their beautiful Victorian cast-iron railings, sending them off to be recycled into guns and tanks. Today, Spaniards are being asked to do something similar: Spanish officials were yesterday reported to be looking for ways … Continue reading →

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Roubini was Right

Posted on October 7, 2008 by Felix

I asked Nouriel Roubini this morning whether there was any way of getting institutions to start lending to each other, rather than the Fed being the only game in town. I got this in response: savor it, it’s probably the … Continue reading →

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