In-depth analysis on Credit Writedowns Pro.

Links: 2009-05-01

  • Australian real estate values rise

    House and flat prices in Australia increased in value by 1.6% in the first three months of the year, according to RP Data-Rismark, helped by a scarcity of supply, lower interest rates and incentives to first-home buyers. The slight recovery in Australia “has been driven by the 40% fall in home loan rates to 5.7%, which are now at their lowest levels since July 1968,” said Christopher Joye, managing director of Rismark International.

  • Bronte Capital: What was it like to be a Stanford salesman?

    We live in a society where the appearance of money – and the possibility of having some – gets people to leave either their conscience or their judgement at the door (or in this case the departing aircraft hanger). And that is why I found these photos grimly amusing.

  • The Washington Monthly – He’s been known to go off script

    Vice President Joe Biden says he’s advising his own family to avoid “confined places” — to stay off commercial airlines and even subways — because of the new swine flu. Biden said Thursday if one person sneezes on a confined aircraft, “it goes all the way through the aircraft.” Going beyond official advice from the federal government, Biden said of his family’s personal precautions: “That’s me.”

  • More on Arlen Specter from Ed Rendell – Swampland – TIME.com

    n 2002, Rendell, the only leading candidate on either side who was pro-choice, had sent voter registration cards in the mail to moderate Republicans–along with a promise that if they switched registration to vote for him in the Democratic primary, he would send them another card after the election, so they could switch back. Statewide, Rendell says, he managed to convince 65,000 Republicans to become Democrats for at least a day. But in the end, Rendell said, Specter decided that kind of maneuver wouldn’t work for him.

  • Statement From Non-Tarp Lenders of Chrysler – Deal Journal – WSJ

    Nevertheless, to facilitate Chrysler’s rehabilitation, we offered to take a 40% haircut even though some groups lower down in the legal priority chain in Chrysler debt were being given recoveries of up to 50% or more and being allowed to take out billions of dollars. In contrast, over at General Motors, senior secured lenders are being left unimpaired with 100% recoveries, while even GM’s unsecured bondholders are receiving a far better recovery than we are as Chrysler’s first lien secured lenders.

  • Flu pandemic could wipe 7pc off UK economy, warns Bank – Telegraph
  • FT Alphaville – The politics of Paradigm

    In 2006 Hunter Biden, the youngest son of Delaware Senator Joe Biden, needed to find a new line of work. He began planning to purchase New York-based fund of funds Paradigm Capital Management, where Lotito, according to an affidavit later filed by James Biden, said he had been an adviser.

  • FT Alphaville » Untangling floor 17, 650 5th Avenue

    For nearly twenty years, Paradigm, a fund of funds the Bidens’ purchased in 2006, has had its offices on the 17th floor. In 2007, Paradigm sub-let some of its office to a new tenant. And on Monday this week, the SEC charged Ponta Negra Group – the Bidens’ tenant – with orchestrating a multi-million dollar investment fraud.

  • Felix Salmon » When bloggers uncover Ponzis

    The Alphaville posts are quite hard to follow, partly because the FT lawyers have stripped them of links, and partly because this whole thing is just very opaque and complex.

  • Role of credit default swaps debated in GM’s bankruptcy risk | Freep.com | Detroit Free Press

    About $2.7 billion of the $28 billion in existing GM bonds are backed by such swaps, a form of insurance that investors buy to protect against defaults or other adverse “credit events.” In GM’s case, these swaps would presumably entitle large institutional bondholders to be paid in full in the event of a GM default.

  • UK Bubble: Make money in commercial real estate

    It sounds so easy. But you have to be expert. Doctors and dentists in the CRE market is a recipe for losses. This is a time capsule in imprudent risk in CRE activity spotted by our friends at UK bubble

  • FDIC May Let Investors Buy Toxic Assets Without Treasury Stake – Bloomberg.com

    The Federal Deposit Insurance Corp. may offer investors financing to buy distressed U.S. bank assets without requiring them to share an equity stake with the Treasury, people familiar with the matter said. Treasury capital probably won’t be applied to the FDIC’s pilot program to buy as much as $1 billion of so-called legacy loans that is planned for June, the people said on condition of anonymity because no final decision has been made. The proposal reflects officials’ efforts to make the program more attractive to hedge funds and other investors fearing government attempts to impose limits on their pay. Regulators are hoping the initiative will bolster lenders’ capital levels after stress tests to gauge their health are completed next week.

  • Swedish bank rescue expert doubts U.S. efforts will work – USATODAY.com

    U.S. officials should confront the financial industry’s political power and seize temporary ownership of troubled banks, Borg says. Otherwise, error-prone bankers will be bailed out at taxpayer expense. “We can’t let them get away with the fact that they’ve been reckless,” Borg told a group of economists while attending the recent International Monetary Fund and World Bank meetings here.

  • Felix Salmon » Chrysler’s future

    workers’ interests are aligned with the owners’ interests, just because the workers are the owners. Given how everything up to now has failed, this structure is at the very least worth a try.

  • More Cities Seeing at Least 15% Unemployment – Real Time Economics – WSJ

    The following is a chart of all metro areas, sortable by area, state, March jobless rate and the change from 2008.

  • FT Alphaville » Guest post by Mohamed El-Erian: The bumpy journey to a ‘new normal’

    The risk is that this change turns out to be a premature relaxation of a critical policy effort, thereby increasing the possibility of a prolonged period of anaemic growth, employment losses, and deflation. After all, history suggests not only that the right balance is very difficult to strike; it also suggests that it is easier to correct later on for doing too much as opposed to doing too little.

  • Capitalism Still Has Legs That Are Long and Sexy: Caroline Baum – Bloomberg.com

    Baum has some quotes from Sam Peltzman that regulation, not deregulation, is to blame. Hogwash. Limted regulation and vigilant oversight are always necessary in a fractional reserve system. It is the Ponzi-like nature of fractional reserve banking that makes the system inherently unstable and in need of regulation. On the other hand, the comments about the failure of government and the Fed ring true.

About 

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.