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Two largest wholesale credit unions seized

From the Wall Street Journal: In the latest dramatic move by federal authorities to prop up the nation’s banking system, regulators late Friday seized control of the two largest wholesale credit unions in the U.S. after finding that their losses on mortgage-related securities were even larger than previously thought. U.S. Central Corporate Federal Credit Union and Western Corporate Federal Credit […]

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Is Obama considering nationalisation?

You may have seen Ed’s post “Gillian Tett: Washington is talking to Swedes about banking crisis solutions” a week back about how the U.S. government was getting ready to talk to Swedish officials regarding the banking crisis. This is a very important development and I have a lot more to provide below on the issue as it pertains to today’s events and Japan’s crisis early this decade.

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Drug suspects show Ben Bernanke how to drop helicopter money

You probably saw this one already, but a pair of suspected narcotics traffickers threw gads of money from their car window while being pursued by the Drug Enforcement Agency (DEA) in a car chase in San Diego. Basically, it was free money for any other drivers willing to risk death picking up the money on the highway. Many people, including […]

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Links: 2009-03-20

Here are the main links. Others can be found in the news feed (also available via RSS). Enjoy. No Return to Normal – James K. Galbraith A Sign of the Times: A.I.G. Sues Countrywide – Deal Book Mexico Treasury Seeks Measure Favoring Citigroup – Deal Book “A statement from the Mexican Treasury Department said it will ask lawmakers to change […]

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Steve Coll talks Pakistan with Charlie Rose

If you have noticed, Pakistan is in a real state of crisis right now. Given the fact that this country is both unstable and possesses nuclear weapons courtesy of A. Q. Khan, it stands to reason that everyone should be interested. The fact that it has a border with Afghanistan only makes things that much more urgent.

In this video on Charlie Rose, Steve Coll of the “New Yorker” discusses Pakistan with Joe Klein, Hasain Haqqani, Director of the Center for International Relations and Professor at Boston University, and Imtiaz Ali.

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Congressional response to AIG is mindless

As understandable as the Congressional response to the AIG bonuses was, the reality is that this does create a number of disturbing precedents. We have a stupid Congress mindlessly lashing out to compensate for its own complicity in political corruption (Congress has long been a major recipient of Wall Street largesse, including AIG) It all goes back to Tom Ferguson’s […]

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Mexico: Central bank to cut today

This analysis comes via Brown Brothers Harriman (I have bolded a few lines): Mexico’s central bank is widely expected to cut its overnight rate by 25 bp today. That would bring it to 7.25%. Last month it delivered a 25 bp rate cut too. The market had expected a 50 bp cut and punished the peso in disappointment. However, the […]

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Has the increase in U.S. jobless claims peaked?

Has the increase in U.S. jobless claims peaked?

Yesterday, the U.S. Department of Labor released its Unemployment Insurance Weekly Claims Report. I see the data as mostly good. The headline seasonally-adjusted numbers were 646,000 initial claims and 5.47 million continuing claims, both of which are extremely high – 5.47 million is a record. However, the real story is in the unadjusted numbers end of seasonal factors. And, this is becoming a better story every week.

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It’s the writedowns, stupid

Today, I want to make the case for seeing writedowns as central to this global downturn. To do so, we need to rewind and compare what is going on today with what we have experienced in the past. Drawing on this comparison, I can demonstrate that traditional policy tools are likely to be ineffective today. Moreover, the present course of action will also prove inadequate. Other more aggressive means must be applied in order to ensure a more stable banking system and a path to recovery. Likely remedies will include a reorganization of large swathes of the U.S. banking system.

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AIG: worst damage yet to come

Marshall Auerback here. I have a few thoughts about AIG and what it means politically and for American banks.

The episode may have already made it much harder to get any support in Congress for bailing out more banks in the future. The Obama administration, and some outside experts, believe the economy will only get worse if big banks start to fail. Which means the worst damage that AIG’s adventures in high finance have caused might be yet to come.

We had a broadly similar type of situation in 1994, and as Lawrence Summers was one of the key actors, it is worth considering the episode in details, as recounted in “The New Republic

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Links: 2009-03-19

The dishonest “Blame Dodd” scheme from Treasury officials – Salon The AIG 2008 Employee Retention Plan – Tyler Durden President Barack Obama: Perhaps he can’t fix it. . . – Telegraph Slaughtering sacred cows: it’s the turn of the unsecured creditors now – Willem Buiter Protectionism On The Rise Despite Pledges to the Contrary – Research Recap Betting on Geithner’s […]

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The Norwegian krone: the new safe haven currency

This comes via the Financial Times. The Swiss National Bank’s decision to intervene to weaken the franc has left currency investors with one less haven from the financial crisis. Its move comes at a time when there are also questions surrounding the future haven status of two other leading currencies: the dollar and the yen. While the dollar has enjoyed […]

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