Monthly Archives: October 2008

The Very Slow Thaw

Posted on October 14, 2008 by Felix

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

Posted on October 14, 2008 by Felix

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

Posted on October 13, 2008 by Felix

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

Posted on October 13, 2008 by Felix

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?

Posted on October 13, 2008 by Felix

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

Posted on October 13, 2008 by Felix

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

Posted on October 13, 2008 by Felix

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

Posted on October 13, 2008 by Felix

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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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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