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Mark-to-market is dead

This comes via Marc Chandler of Brown Brothers Harriman and is an even-handed review of what just happened: As widely expected FASB modified fair value accounting rules. The key seems to be for assets for which there is not a market. The last traded price does not have to be used. Rather other methods, like discounted cash flows can be […]

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The Cult of Zero Imbalances

The Cult of Zero Imbalances

Marshall Auerback here with a few thoughts about this economic cycle, external imbalances, fiscal stimulus, and current account deficits. This is not the Great Depression. We are going to have “muddle through” here precisely because we lack the courage to deficit spend on the magnitude we did in World War II. We are spending too much time fretting about “external […]

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Links: 2009-04-02

Before I provide the links I want to add some clarifying points about previous articles. Regarding the story about Larry Summers, Summers did not dismiss the employee in question. So, the post title is rather misleading. My apologies. Rather, Summers condoned an environment in which large bets on derivatives were permitted. Harvard has since not done well on those bets. […]

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Did Larry Summers fire derivatives whistleblower at Harvard

I am sure you realize by now that I believe Larry Summers is soft on derivatives, soft on regulation and soft on banking executives.  He exemplifies the self-regulatory zeal of the previous boom.  Given his indifference to responsible regulatory oversight of derivatives and other markets, the following account, now public does seem to fit a pattern. A former quantitative analyst […]

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Eastern European economic growth to crater in 2009

This comes via Angus Robertson over at Research Recap: Fitch Ratings forecasts that Emerging Europe (EE) will suffer its steepest fall in real GDP since the collapse of the Communist planned economic system in the early 1990s, reflecting the severity of the trade and financial shocks that have hit the region. However, the aggregate forecasts conceal a wide range in […]

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U.S. banks’ derivatives exposure explodes to $200 trillion

U.S. banks’ derivatives exposure explodes to $200 trillion

The OCC’s Quarterly Report on Bank Trading and Derivatives Activities
for the Fourth Quarter 2008 is out. And derivatives exposure is way up. U.S. commercial banks now have a massive $200 trillion in derivatives exposure, which is 14x U.S. GDP.

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More credit card writedowns are coming

Of course you know I think credit cards are going to produce a tsunami of writedowns, right? Things are looking more and more like that tsunami is right around the corner: Credit card writedowns soared to record levels in February, representing an all-time high in the 20-year history of the Moody’s Credit Card Index, as job losses mounted, the rating […]

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ISM: U.S. manufacturing contracting slower

ISM: U.S. manufacturing contracting slower

The March 2009 Manufacturing ISM Report on Business is out.  The widely-followed figure of 36.3 for the purchasing manager’s index (PMI) shows a manufacturing sector contracting quickly, albeit at a slower pace.  Last month, the PMI was 35.8 and it was 35.6 in January.  So this marks the second consecutive month of gain in the figure. Nevertheless, with 50 as […]

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Obama sacks Geithner and Summers, calls for change

This post was an April Fool’s joke. We all know this is not going to happen anytime soon.

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Links: 2009-04-01

Lessons from Japan’s failed fiscal stimulus – Vox Eu Obama’s Ersatz Capitalism – Joseph Stiglitz, NY Times hat tip Mark Thoma The Future of Investing: Evolution or Revolution? – Bill Gross NBER: Household and NFP Differences Are Cyclical – Barry Ritholtz Sacked workers occupy car factory – BBC News Emerging-Market Stocks Extend Best Monthly Rally in 16 Years – Bloomberg.com […]

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G-20: China is clearly looking for a new world order

I don’t want to beat a dead horse here, but the Chinese have been making a lot of muscular moves diplomatically. While shifts in balance of power often take decades, it is increasingly apparent that China is making a strategic move in that direction right now. We have been chronicling these moves here in a series of posts at Credit […]

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Will Goldman’s Jim O’Neill change his bullish outlook?

Will Goldman’s Jim O’Neill change his bullish outlook?

Back in February I posted an article called “The bullish argument for the global economy” highlighting Goldman Sachs’ Chief Economist Jim O’Neill’s bullish view for the economy. O’Neill believed in February that a economic rebound was certainly possible due to fiscal and monetary stimulus. Paul Kasriel has made similar arguments.

While I do agree that fiscal and monetary stimulus have been great and may induce a cyclical rebound, I wanted to point out that he mentioned the Philly Fed Survey and the ISM surveys as potential leading indicators of recovery.

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