Monthly Archives: September 2008

Bloomberg Thumbs its Nose at FDIC

Posted on September 28, 2008 by Felix

On Thursday, I criticized a Bloomberg story by David Evans which seemed to be unnecessarily alarmist about the FDIC’s finances. Later that day, Jeff Bercovici ran a letter from the FDIC to Bloomberg, complaining that the story "does a serious … Continue reading →

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Remuneration Datapoint of the Day

Posted on September 27, 2008 by Felix

From Gretchen Morgenson’s article on AIG Financial Products, the 377-person unit which brought down a 116,000-employee behemoth: Over all, A.I.G. Financial Products paid its employees $3.56 billion during the last seven years.

Posted in derivatives, insurance, pay | 1 Comment

McCain’s Economics

Posted on September 26, 2008 by Felix

Don’t ask me who won the debate in terms of persuading formerly undecided voters to fix an allegiance. The number of undecided voters who understand the difference between financial and fiscal is minuscule, and the number of those who think … Continue reading →

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Extra Credit, Friday Edition

Posted on September 26, 2008 by Felix

Why the GOP Plan Won’t Work: A very lucid explanation. JP Morgan Chase raises $10bn after Washington Mutual buyout: With an oversubscribed plain-vanilla equity offering. Simple, quiet, fast, effective. Fallen Tycoon to Auction Prized Works: Dick Fuld and his wife … Continue reading →

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Does the TED Spread Really Matter?

Posted on September 26, 2008 by Felix

I’m hardly the only person paying close attention to the TED spread right now. Here’s a few blog entries about it from today alone: 1 2 3 4 5 6 7 8 9 — there was even a joking fight … Continue reading →

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Does Bankruptcy Save Jobs?

Posted on September 26, 2008 by Felix

Remember all those pictures of dejected Lehman bankers walking out of their offices with cardboard boxes full of personal possessions? Well, it seems they might have acted rather prematurely. In fact, there seems to be a good chance that there … Continue reading →

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The $2 Trillion in Uninsured Bank Deposits

Posted on September 26, 2008 by Felix

Many thanks to Don Fishback, who alerted me to the fact that (with a lot of work) one can actually find reasonably up-to-date statistics on total uninsured deposits at the FDIC’s website. He did just that back in July, using … Continue reading →

Posted in Portfolio | 2 Comments

The Parallel Universe of Leadership Events

Posted on September 26, 2008 by Felix

(Cross-posted from Market Movers) The World Business Forum is a two-day event; I only made the second afternoon. But even that was enough to almost make my head explode. I knew in theory that there’s an almost insatiable appetite for … Continue reading →

Posted in Econoblog | 1 Comment

Worrying About Large-Deposit Bank Runs

Posted on September 26, 2008 by Felix

Dealbook gives us something new to worry about: In Washington Mutual’s case, customers withdrew $16.7 billion in cash from the thrift in the last nine days, according to the Office of Thrift Supervision. The majority of those that withdrew cash … Continue reading →

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Flow Chart of the Day

Posted on September 26, 2008 by Felix

Zubin’s flow chart of the Palin Economy: As Zubin says, Not only will the bailout help us with the overall economy, but we’ll also improve health care, jobs, trade, the budget, AND the tax system. And one other thing, too: … Continue reading →

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The Calm Before the Storm?

Posted on September 26, 2008 by Felix

It’s definitely not just stocks: the credit markets have failed to deteriorate today as everybody expected them to, on the day after the largest banking collapse in US history. Libor’s down a little, TED’s down a lot, and generally there’s … Continue reading →

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Stocks: Unruffled

Posted on September 26, 2008 by Felix

This is what napalm in the morning smells like, this is the sound of a primal scream: Dow down 38 points, or 0.35%; S&P 500 down 13 points, or 1.1%; Bank of America up $1.16 a share, or 3.4%. If … Continue reading →

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Bailout Talks Lose Sight of Cost Question

Posted on September 26, 2008 by Felix

Andy Kessler reckons that if the government buys up bad loans at 35 cents on the dollar and eventually receives 50 cents for them, it could make well over $1 trillion on this bailout. I’m not sure how that works: … Continue reading →

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How to Get the House Republicans On Board

Posted on September 26, 2008 by Felix

Is this elegant, or simply disingenuous? There are disagreements over aspects of the rescue plan, but there is no disagreement that something substantial must be done. The legislative process is sometimes not very pretty, but we are going to get … Continue reading →

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CDS Datapoint of the Day

Posted on September 26, 2008 by Felix

From Paul Davies: One broker quoted McDonald’s CDS at about 26.5 basis points, compared with 30bp for the US, on Friday morning. Yes, the cost of protecting US Treasury bonds against default has now reached 30bp — higher than McDonald’s. … Continue reading →

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What Was Paulson Begging For?

Posted on September 26, 2008 by Felix

It’s the defining moment of Thursday’s breakdown in negotiations: In the Roosevelt Room after the session, the Treasury secretary, Henry M. Paulson Jr., literally bent down on one knee as he pleaded with Nancy Pelosi, the House Speaker, not to … Continue reading →

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When it Rains, it Pours

Posted on September 26, 2008 by Felix

This is really, really bad. In a nutshell: the bailout package, which everybody thought was a done deal, has been undone by some combination of Republican recalcitrance and the heat of the presidential campaign. At the same time, WaMu’s gone … Continue reading →

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Extra Credit, Thursday Edition

Posted on September 25, 2008 by Felix

J.P. Morgan to Buy Bulk Of WaMu Operations: "The deal isn’t expected to result in any hit to the bank-insurance fund, which would be a huge relief given that some analysts worried that a failure of the thrift could cost … Continue reading →

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The Pressure to Hedge in the Credit Markets

Posted on September 25, 2008 by Felix

Lex has a theory about the way in which the CDS market can drive a vicious cycle in credit: The pressure to hedge has led the most liquid contracts to overshoot, in effect pricing in absurd default risks and recovery … Continue reading →

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When Single-A Corporates Default

Posted on September 25, 2008 by Felix

S&P is defending the single-A rating that Lehman had when it went bust. "In our view, Lehman LEHNG.PK had a strong franchise across its core investment banking, trading, and investment management business," analyst Scott Sprinzen said in a statement… "We … Continue reading →

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The Parallel Universe of Leadership Events

Posted on September 25, 2008 by Felix

The World Business Forum is a two-day event; I only made the second afternoon. But even that was enough to almost make my head explode. I knew in theory that there’s an almost insatiable appetite for motivational speakers and leadership … Continue reading →

Posted in leadership | 1 Comment

Don’t Worry About the FDIC

Posted on September 25, 2008 by Felix

Chris Whalen is quoted in a Bloomberg story today about the FDIC. But he’s no fan of the story, or any other story which implies that there’s any chance at all the FDIC could run out of money. He emails: … Continue reading →

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Philanthropy vs Profit

Posted on September 25, 2008 by Felix

Muhammad Yunus gave a good speech to the World Business Forum yesterday, and he came down hard on anybody who would make facile comparisons between subprime lending and microfinance. The difference, he said, is the profit motive. In fact, he … Continue reading →

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The Bailout Arrives

Posted on September 25, 2008 by Felix

McCain returning to Washington to work on the bailout? Unhelpful — and, in fact, he’s still in New York, at the Clinton Global Initiative, he hasn’t even gotten started on his legislative work yet. But McCain announcing that he was … Continue reading →

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Chart of the Day: Sectoral Contribution to Debt

Posted on September 25, 2008 by Felix

Now that Robert Higgs and David Cay Johnston have both brought up personal and business lending as an indicator that credit isn’t frozen after all, I’m feeling a meme coming on. And this chart, from Martin Wolf in the FT, … Continue reading →

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