Monthly Archives: March 2008

Rant of the Day: Jezebel’s “Dear Ben” Letter

Posted on March 19, 2008 by Felix

Sophisticated financial analysis it isn’t; heartfelt, however, it is. Moe Tkacik went on the rampage yesterday afternoon, speaking for the unmoneyed everywhere when she told Ben Bernanke to, well, I’ll let her say it: Fuck the Street. Please, Ben Bernanke, … Continue reading →

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Liquidity Returns

Posted on March 19, 2008 by Felix

Alea doesn’t like it, but I actually find this reassuring: The Federal Reserve is draining U.S. banking reserves temporarily via overnight reverse repurchase agreements, the Federal Reserve of New York said on Wednesday… Such a move typically puts upward pressure … Continue reading →

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Whither the Discount Window Stigma?

Posted on March 19, 2008 by Felix

The WSJ headline today implies great dilemmas on Wall Street. "Firms Wrestle With Loans’ Stigma", it says, explaining: Wall Street firms were reluctant to borrow from the program Monday out of concern it could be seen as a sign of … Continue reading →

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Fannie and Freddie Get a Little Room to Breathe

Posted on March 19, 2008 by Felix

OFHEO, the regulator in charge of Fannie Mae and Freddie Mac, has designed to loosen a key capital requirement which has been restraining the mortgage giants: To support growth and further restore market liquidity, OFHEO announced that it would begin … Continue reading →

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Bear Stearns’s Share Price: It’s Not Speculators

Posted on March 19, 2008 by Felix

That confounding Bear Stearns share price! Unsurprisingly, my explanation yesterday for why BSC was trading well above the offer price doesn’t seem to have persuaded everybody (or, frankly, anybody, really). It was mentioned by DealBook, but the "first best explanation" … Continue reading →

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Extra Credit, Wednesday Edition

Posted on March 19, 2008 by Felix

Charting The Banking Crisis – A Boomerang Demo: Two wonderful charts. Amid Brokers’ Woes, Investor Accounts Are Mostly Protected Not a bailout: James Hamilton gets it right. More Dissents at the Bernanke Fed: On the usefulness of public hawks. Can … Continue reading →

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Battle of the Housing Bears

Posted on March 18, 2008 by Felix

Barry Ritholtz doesn’t like Alex Tabarrok’s "happy talk". Is he talking about this? If the financial markets can predict where and when house prices will stabilize, then credit conditions can quickly return to normal, the economy can expand and house … Continue reading →

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The New Committee to Save the World: Success!

Posted on March 18, 2008 by Felix

Today’s 75bp rate cut came as no surprise to anybody: if anything, markets were expecting something even bigger. And when markets started trading on Monday morning, the Fed’s interventions and policy changes on Sunday were well known. Which means that … Continue reading →

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How Risky are the Fed’s Actions?

Posted on March 18, 2008 by Felix

Jeff Cane today cites with approval Edmund Andrews: On Sunday, Fed officials raised the stakes by offering investment banks a new loan program without any explicit size limit. These moves, along with a $30 billion credit line to help JPMorgan … Continue reading →

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Bernanke Shows a Tiny Bit of Restraint

Posted on March 18, 2008 by Felix

After a busy weekend, Ben Bernanke is clearly tired of giving the markets absolutely everything they want. Instead, he’s just giving them nearly everything they want. Today’s 75bp cut is actually a 100bp cut in the discount rate, at least … Continue reading →

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Explaining the Bear Stearns Share Price

Posted on March 18, 2008 by Felix

If you head over here, David Neubert has a slightly cryptic explanation of why Bear Stearns shares are trading in the $7 range. After IMing with him, I think I’m clear on what he’s saying, so let me try to … Continue reading →

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Open Questions About the JP Morgan-Bear Stearns Deal

Posted on March 18, 2008 by Felix

Karen Donovan has a good story up about the complex deal to buy Bear Stearns, and all the high-powered legal advice which went into it. For all that legal firepower, however, the agreement seems pretty precarious: "Everything about this deal … Continue reading →

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Krugman Shouts “Fire” in a Crowded Theater

Posted on March 18, 2008 by Felix

Paul Krugman has really picked up his game on the blogging front over the past couple of weeks, and I like the fact that he feels comfortable throwing ideas out there. But this morning, in a post headlined "Shouting “fire” … Continue reading →

Posted in banking | 1 Comment

Lehman: Looking Strong on the Repo Front

Posted on March 18, 2008 by Felix

If you thought a price-to-book league table was arcane, wait till you see what Heidi Moore has come up with: an excess-liquidity-and-other-unencumbered-collateral-to-total-repos league table! I’m impressed. As Heidi explains, the proximate cause of Bear’s collapse was the fact that its … Continue reading →

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The Price-to-Book League Table, Revisited

Posted on March 18, 2008 by Felix

In today’s earnings report, Lehman Brothers reported that its book value rose one cent to $39.45 per share. The stock is doing great this morning, up $6 or so to $37.80, which puts Lehman on a price-to-book ratio of 0.96. … Continue reading →

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How Important is JP Morgan’s Option to buy Bear Stock?

Posted on March 18, 2008 by Felix

There’s one detail of the WSJ’s weekend narrative which is worth its own blog entry: the way in which the deal to buy Bear Stearns was structured. The lawyers seem to have tried very hard to make the deal airtight, … Continue reading →

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The Scramble to Save Bear

Posted on March 18, 2008 by Felix

The WSJ has been talking to Bear Stearns directors, JP Morgan executives, Fed officials, and others, and has a wonderful narrative of exactly what happened this weekend, complete with a fantastic lead quote. The overarching impression is of both banks … Continue reading →

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Lehman Will Survive

Posted on March 18, 2008 by Felix

This should be enough to keep Lehman going. The upspin: in the months of December, January, and February, in the face of credit-market chaos, Lehman Brothers still managed to make a substantial profit of half a billion dollars, more or … Continue reading →

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Extra Credit, Tuesday Edition

Posted on March 17, 2008 by Felix

A Subprime Conversation The Economy of Fear: Cassidy is bearish. Economics Blogs Search Bear Stearns tremors – now affecting candle-sticks

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Why The Low Capital Gains Tax? (Redux)

Posted on March 17, 2008 by Felix

Portfolio’s editors, in the April issue of the magazine, tackle the issue of which Bush tax cuts should be left to expire in 2010, and which should be extended. I like the idea of a flat 15% inheritance tax rate … Continue reading →

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The Price-to-Book Lag Table

Posted on March 17, 2008 by Felix

Last Thursday, I printed a price-to-book league table; I thought it would be interesting to see how it has changed, two full trading days later. But as I click around the internet from WSJ.com to Reuters to Yahoo, they all … Continue reading →

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Ben Stein Watch: March 9, 2008

Posted on March 17, 2008 by Felix

I apologize for completely missing Ben Stein’s NYT column on March 9, telling John McCain to balance the budget by raising taxes on the rich. So, for the sake of completeness, here’s a link to it. You might be surprised … Continue reading →

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The Perils of Forecasting

Posted on March 17, 2008 by Felix

Jim Cramer is the new Michael Fish.

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Blogonomics: Should Seeking Alpha Pay its Contributors?

Posted on March 17, 2008 by Felix

Time for a breather from the credit crunch, I think. Instead, let’s head over to Bill Rempel’s No DooDahs blog, where he rails against Seeking Alpha’s business model, and says that Seeking Alpha gets 66 times as much value from … Continue reading →

Posted in blogonomics | 1 Comment

Good News on the Credit Front

Posted on March 17, 2008 by Felix

Accrued Interest has some numbers on banks’ credit spreads, and the news seems to be bad, but manageable. Crucially, they’ve tightened in from the open, and are now only a little bit wider than they closed on Friday. Elsewhere in … Continue reading →

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