All Content

Are Citi and BofA gaming the Geithner Plan already?

Here we are just days out from the announcement by Treasury Secretary Tim Geithner that the Obama Administration will be buying up so-called toxic assets as originally planned by Henry Paulson during the Bush Administration. The initial reaction has been one of euphoria as most asset markets responded positively to the news.

Now that the dust has settled somewhat, another reaction is taking place behind the scenes and it looks an awful lot like banks — specifically Citigroup and Bank of America — are gaming the system. Note my highlighting.

Read more ›

Auto Loan ABS market best of the bunch

This comes via Angus Robertson of Research Recap: The performance of auto loan securities has been mixed, but Standard & Poor’s Credit Research points out that overall ratings on the ABS have been remarkably stable in spite of the recession. In a new report on the sector, S & P says that delinquencies and write-downs among certain auto loan ABS, […]

Read more ›

What are the consequences of the huge U.S. deficit?

This post is a contribution from Rob Parteneau of MacroStrategy Edge about fiscal expansion, printing money, avoiding debt deflation, and U.S. treasuries. He has some great insights on deflationary spirals, the paradox of thrift and the desire of foreign investors to dump dollars. He also argues that the “Blame Asia Meme” is misguided as the ultimate source of credit growth in the United States is domestic. The crux of his statements is that the only way to avoid a deflationary spiral when household savings is increasing is through fiscal expansion, which is one reason I support fiscal stimulus. But, there are consequences.

Read more ›

Links: 2009-03-26

Here are the main links. A ton more can be found in the news feed (also available via RSS). Enjoy. Has the Gaming of the Public-Private Partnership Begun? – Yves Smith Daddy, tell me, what exactly is a derivative? – James Carville, FT.com Was aus dem Geschäftsbericht der Deutschen Bank über Kreditderivate zu erfahren ist – Blick Log The Same […]

Read more ›

Video: Barack Obama finally gets angry

OK, well this is just an actor in a comedy skit from Saturday Night Live getting angry.  But, it is pretty funny.

Read more ›

Fix the real economy first: lessons from James Montier

James Montier has a very good piece out via John Mauldin ([email protected]) on the need for real economy stimulus over financial sector stimulus. The quote I find most memorable goes to the heart of our debate about the financial system: Investors seem to be rather excited about banks posting profits at the moment. Frankly, if a bank didn’t post a […]

Read more ›

Moody’s anticipates huge increase in leveraged loan defaults

This comes via Angus Robertson at Research Recap. Just as the RMBS post yesterday confirmed, moe writedowns are coming in other credit classes: In a trend likely to accelerate in 2009, the default rate on bank loans to speculative-grade corporations rose sharply in 2008 and recovery rates on leveraged loans dropped over the same period, according to a new study […]

Read more ›

Links: 2009-03-25

Here are the main links. A ton more can be found in the news feed (also available via RSS). Enjoy. Dear A.I.G., I Quit – Paul Kedrosky The devalued Prime Minister of a devalued Government – Alice Cook This video is good. U.S. wrong to blame China for trade imbalance: Stephen Roach – Xinhua Buffett’s Goldman Sachs Warrants Regain Value […]

Read more ›

Krugman: Geithner Plan “won’t work”

I have the same misgivings about the Public Private Partnership Investment Program that Paul Krugman does. However, I still think it could work in conjunction with all of the other stimulus being applied (at least in inducing a cyclical rebound, which seems to be the goal). Krugman does not. Watch the video to see his reasoning.

Read more ›

Is the economic contraction peaking?

I believe we may be seeing the bottom here. Marc Chandler of Brown Brothers Harriman does as well. Here is what he has to say: Our baseline expectation is that the pace of contraction of the US economy probably peaked in the horrific fourth quarter of last year, which still appears subject to downward revisions. We expect a deep contraction […]

Read more ›

Roubini: Nationalization “fully on the table” in Geithner’s Plan

This is yet another semi-positive post about the Geithner plan. To reiterate, I think the plan is inadequate because it assumes illiquidity instead of insolvency and is a huge gift to the financial sector. But, that does not mean it will definitely not work in conjunction with other moves by Obama. In fact, to the degree the Obama Administration has […]

Read more ›

2003

Yesterday, I posted an item on Naked Capitalism about the bankruptcy of Yamaichi Securities in 1996 as testament to lingering weakness in a country’s financial sector if sick financial institutions are not dealt with swiftly. In essence, the entire Japanese banking sector remained weak for years despite multiple cyclical upturns after the Bubble Economy burst. So, let’s fast forward to […]

Read more ›