All Content

The BoE’s inflation letter to Alistair Darling

The BoE’s inflation letter to Alistair Darling

Mervyn King correctly assessed inflation risks to be temporary and the downside to come from the real economy. It sounds like he is not hawkish. Chances of a rate cut are down now. I believe the BoE wants some inflation to help do the dirty work of reducing the huge debt loads amongst British consumers and bringing down real property […]

Read more ›

Regional banks: examples of risk from SoCal

Regional banks have not suffered the writedowns suffered by the major banks and investment banks due to their lack of derivatives exposure. But, loose lending standards are starting to bite. The LA Times has an excellent story out, which details how the community or regional banks will be affected by the housing slowdown. Notice, it is construction and commercial real […]

Read more ›

Jeremy Grantham: the bear growls

Jeremy Grantham, a hedge fund manager based in the Boston area, is one of the more respected money managers who has had a cautious view on equities during this past economic cycle. The Canadian daily Globe & Mail has a good interview with him. Text is below. Renowned value investor Jeremy Grantham knows an investment bubble when he sees one […]

Read more ›

SoCal home prices plumb new lows

The Mess That Greenspan Made has a blog entry with good visuals giving you a sense of how price appreciation, median prices and housing sales have changed over the past 4-5 years. I recommend it highly.

Read more ›
The Road to Revulsion

The Road to Revulsion

This newsletter from John Mauldin arrived in my inbox this morning. If you haven’t read his newsletters they are very good, including those from Guest commentators like this one from James Montier. I will add the text in full. It is quite long. In a future post, I’ll give you my thoughts on bubbles and how to prevent them. Expect […]

Read more ›
M&T sues Deutsche Bank over CDOs

M&T sues Deutsche Bank over CDOs

U.S. regional bank M&T has sued Deutsche Bank because of losses M&T suffered on CDOs sold to it by the German bank, according to the German website Der Spiegel. Deutsche Bank allegedly told M&T that the CDOs were “safe” and “nearly risk-free.” Later the derivatives plummeted with the mortgage meltdown. Now M&T wants Deutsche to pay $82 million for losses […]

Read more ›

UK housing starts hit a post-war low

According to the Telegraph, UK housing starts hit their lowest level in 63 years. With a lack of new business, how will Barrat’s and Taylor Wimpey survive? The Telegraph suggests that investors will save them, much as they have saved the banks who are also in need of capital. “Housebuilders’ share prices surged by up to 13pc yesterday despite predictions […]

Read more ›
Chart of the day: FTSE 1800-2007

Chart of the day: FTSE 1800-2007

These two charts are interesting just for historical purposes. This tracks the FTSE All-share index from 1800-2007. While there were a number of peaks and valleys, the FTSE went pretty much nowhere until after World War II. At that point, the 25-year average yearly return began to turn up markedly. The charts are not adjusted for inflation. The blips at […]

Read more ›

The Fed will not cut

Below is the inside scoop according to famed Washington insider Robert Novak (It remains to be seen whether his sources are reliable). At the bottom is a link to an article from the Telegraph quoting Morgan Stanley’s economic team suggesting the Fed and the ECB may be working at cross purposes. The Fed’s Rates Dilemma By Robert D. Novak Monday, […]

Read more ›
Measuring P/E Ratios for Financials

Measuring P/E Ratios for Financials

I was reading a report by the New York Times today, which outlined that Wall Street has earned half of what it earned last year because of massive credit losses. That’s a pretty spectacular fall. What it actually got me thinking about was how one measures P/E ratios. Only a year ago, Wall Street reveled in an era of superlatives: […]

Read more ›
Floods increase the chances of inflation

Floods increase the chances of inflation

My greatest concern is deflation. Hence the title of my blog “Credit Writedowns.” However, inflation is still a short-term threat to destabilizing the global economy. The recent floods in the heartland of America is not only tragic, but inflationary due to crop losses. Bloomberg News has reported on its inflationary potential. Corn climbed to a record near $8 a bushel […]

Read more ›
Credit deflation and the Japanese problem

Credit deflation and the Japanese problem

The world has experienced three periods of extreme financial dislocation in the past century, 1929, 1973, and 1990. Two of these have been deflationary. While most observers have their eyes firmly peeled on 1973 and its aftermath, 1929 and 1990 are the scenarios of greatest concern today. These deflationary periods should be instructive as to what the worst case scenario […]

Read more ›