Category Archives: bonds and loans

Another Blow to Rating Agency Credibility

Posted on September 6, 2007 by Felix

Yves Smith of Naked Capitalism submits: A Bloomberg story today tells us that CreditSights found that AAA ratings for a new type of credit derivative may be as likely to default as junk. In a report titled “Distressed CPDOs: We’re … Continue reading →

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Commercial Real Estate Prices May Drop 15% in Next Year

Posted on September 5, 2007 by Felix

Yves Smith at Naked Capitalism submits: Experts warn that the boom in commercial real estate prices, fueled by cheap credit, is going sharply into reverse. Fitch had noted as early as April, and again in July that commercial real estate … Continue reading →

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Brad DeLong Argues That Central Banks Should Cut Interest Rates

Posted on September 5, 2007 by Felix

Yves Smith at Naked Capitalism submits: It’s always dangerous for mere mortals to take issue with Serious Economists, but let’s start with Professor of Economics at U.C Berkeley Brad DeLong’s thesis (hat tip Mark Thoma): The fact that there is … Continue reading →

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The Barriers to Bottom Fishing

Posted on September 4, 2007 by Felix

Yves Smith at Naked Capitalism submits: John Dizard, in today’s Financial Times, tells us why, despite the fact that a lot of fixed income paper is on offer at very cheap prices, no one seems to be stepping to the … Continue reading →

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Will Asking Mortgage Servicers to Modify Mortgages Have Much Impact?

Posted on September 4, 2007 by Felix

Yves Smith at Naked Capitalism submits: Bloomberg tells us that the Fed and the Treasury made a joint statement today asking mortgage servicers to take a more proactive stance, identify borrowers in danger of gong into default, and offer loan … Continue reading →

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Cash-Out Refis: The Missing Actor in the Subprime Drama

Posted on September 4, 2007 by Felix

Yves Smith at Naked Capitalism submits: Ah, fall is upon us, and with it comes the spectacle of renewed discussion of what to do about the snowballing subprime/housing mess. Members of Congress will compete for air time to Bemoan the … Continue reading →

Posted in banking, bonds and loans, housing, Media | 6 Comments

Treasury Trading Down as Black Box Traders Withdraw

Posted on September 4, 2007 by Felix

Yves Smith at Naked Capitalism submits: Users of computer-driven strategies of all sorts have been taking it on the chin. Bloomberg tells us that the latest casualties are Treasury bond traders using quantitatively driven strategies hit by a sudden increase … Continue reading →

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Bundesbank President Weber vs. White House on Housing Crisis

Posted on September 3, 2007 by Felix

Yves Smith at Naked Capitalism submits: Apologies for the heavy reliance on the Financial Times today, but the pickings elsewhere are meager indeed. The FT has an interesting juxtaposition of stores on its website tonight. The lead story, from the … Continue reading →

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Fed Governor Mishkin Urges Swift Action to Combat Housing Price Decline

Posted on September 1, 2007 by Felix

Yves Smith at Naked Capitalism submits: In a paper presented at the Fed’s Jackson Hole conference, Federal Reserve governor Frederic Mishkin urged central bankers to respond quickly and aggressively to large falls in housing prices, arguing that it was less … Continue reading →

Posted in banking, bonds and loans, fiscal and monetary policy, housing | 1 Comment

Bush’s Mainly Cosmetic Homeowner Rescue Proposals

Posted on August 31, 2007 by Felix

Yves Smith at Naked Capitalism submits: The Wall Street Journal, in “Bush Moves to Aid Homeowners,” reports that today the President will set forth a program to help stressed borrowers at risk of losing their homes. Main elements: Allowing the … Continue reading →

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AAA to CCC and Other Rating Agency Horror Stories

Posted on August 31, 2007 by Felix

Yves Smith at Naked Capitalism submits: The news from rating agency land goes from bad to worse. This Bloomberg article does much to explain why investors are avoiding subprime like the plague. AAA paper revealed to be CCC. Repeated incidents … Continue reading →

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Commercial Paper Market Still in Distress

Posted on August 30, 2007 by Felix

Yves Smith at Naked Capitalism submits: Bloomberg tells us that the commercial paper market is shrinking rapidly. This is a more serious issue than might appear. Commercial paper is an important, if not the most important, source of short-term funding … Continue reading →

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New Business Opportunity: SMS Loan Sharking

Posted on August 29, 2007 by Felix

Yves Smith at Naked Capitalism submits: Lucy Kellaway, a Financial Times columnist who writes about corporate fads, once said no new business technique is too ridiculous to be put into practice. The Springwise newsletter (“New business ideas for entrepreneurial minds”), … Continue reading →

Posted in banking, bonds and loans, personal finance, regulation | 1 Comment

Corporate Deleveraging May Be Overstated

Posted on August 28, 2007 by Felix

Yves Smith at Naked Capitalism reports: BreakingViews (free subscription required) reports that the degree of deleveraging of corporate balance sheets may be exaggerated. Yet another reason to look at stocks with a wary eye. Readers may know that the level … Continue reading →

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Default Rates Set to Rise?

Posted on August 28, 2007 by Felix

Yves Smith of Naked Capitalism submits: The Financial Times’ Lex column today (subscription required) takes issue with those who take comfort in the oft-quoted statistic that default rates are at a 25 year low. The article shows a long-term, unrelenting … Continue reading →

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Do We Need to Bail Out Homeowners? (Nouriel Roubini Edition)

Posted on August 28, 2007 by Felix

Yves Smith of Naked Capitalism submits: Has Roubini gone to the Dark Side? Nouriel Roubini, normally the voice of prudence, makes a marked shift in his latest post, “Fiscal versus Monetary Solutions to the Subprime Crisis. ” He sympathizes with … Continue reading →

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Larry Summers’ Unanswered Questions

Posted on August 27, 2007 by Felix

Yves Smith at Naked Capitalism submits: Today, in a comment at the Financial Times, “This is where Freddie and Fannie step in” (subscription required), Harvard’s Larry Summers argued that the subprime crisis highlights three questions. Most commentators focused on the … Continue reading →

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Extreme Measures II: Gillian Tett at the Financial Times

Posted on August 27, 2007 by Felix

Yves Smith at Naked Capitalism submits: Recently, we’ve noticed a new theme among economics writers: Extreme Measures. Commentators have looked toward the end of the road we are on and fear it leads to a precipice. Hence the calls for … Continue reading →

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Extreme Measures I: Bill Gross at Pimco

Posted on August 26, 2007 by Felix

Yves Smith of Naked Capitalism submits: We’ve noticed a new theme among economics writers: Extreme Measures. Commentators have suddenly looked into the abyss, either of the depth of the US subprime/housing problem or the progressing credit crunch that has already … Continue reading →

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Fed Acts More Directly to Shore Up Battered Asset-Backed Commercial Paper Market

Posted on August 24, 2007 by Felix

Yves Smith at Naked Capitalism submits: To recap the turmoil in the money markets: the problem stems from a near-complete repudiation of asset-backed commercial paper, which constitutes roughly half of commercial paper outstandings. The reason for the concern is most … Continue reading →

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Thinking the Unthinkable: Regulating the Brave New World of Finance

Posted on August 24, 2007 by Felix

Yves Smith at Naked Capitalism submits: Earlier this week, I sought to frame the prevailing views of what the supervising adults, namely central bankers, should do about the turmoil in the financial markets. They break down into four groups (names … Continue reading →

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Central Bank Efforts to Stabilize Money Markets May Not Be Working

Posted on August 23, 2007 by Felix

Yves Smith of Naked Capitalism submits: An update from Bloomberg tells us that commercial paper outstandings fell 4.2% in a week, which suggests the efforts of central bankers to restore confidence in that market, and particularly in asset backed commercial … Continue reading →

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Has Smoke and Mirrors Worked?

Posted on August 21, 2007 by Felix

Yves Smith at Naked Capitalism submits: In an inspired bit of stagecraft, Senate Banking Committee Chairman Christopher Dodd reported today on a meeting with Fed chairman Ben Bernanke and Treasury secretary Henry Paulson that the Fed stood ready to use … Continue reading →

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The Four Views of What the Fed Should Do

Posted on August 21, 2007 by Felix

Yves Smith of Naked Capitalism submits: A gut-wrenching two weeks in the credit markets have been capped by unprecedented moves by central bankers. The ECB’s offer of an unlimited infusion to member banks the week before last was followed last … Continue reading →

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Municipalities May Suffer Subprime Fallout

Posted on August 20, 2007 by Felix

Yves Smith of Naked Capitalism submits: Gillian Tett, in “Credit compass fails to work,” in the Financial Times (subscription required), uses the woes suffered by monoline insurers such as MBIA and Ambac to illustrate that in our current credit crunch, … Continue reading →

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