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Quote of the day: Investment Bank Leverage

With Goldman Sachs and Morgan Stanley becoming bank holding companies, the traditional U.S. investment banking model has come to an end. But it bears remembering that investment banks are highly leveraged institutions. Both Goldman Sachs and Morgan Stanley will have to either deleverage significantly or merge with an existing depositary institution with less leverage in order to meet the stricter […]

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Why is this blog named Credit Writedowns?

I named my blog “Credit Writedowns” because I anticipated an historic wave of credit writedowns in the global banking system which would lead to a wave of deleveraging, systemic risk, and bank failures — in short, a massive financial and economic bust to rival the Great Depression. Up until now I have masked this dire view because, honestly, most people […]

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Bush job approval is now only 19%

Hank Paulson seems to be everywhere these days. However, it does seem that U.S. President George W. Bush has vanished since the credit crisis began. The result? The lowest approval rating of the Bush Presidency, with a full 78% disapproving of his handling of the economy. George W. Bush’s Overall Job Approval Matches ARG LowAs 82% Say National Economy is […]

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Dollar weakness

The serial bailouts by the U.S. government and Hank Paulson’s $700 billion bailout proposal have had very negative repercussions for the U.S. Dollar. The dollar is down against all major currencies, as well as gold, silver and oil. It seems likely that the dollar will resume it’s slide after a brief respite over the past few months.I looked at the […]

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Paulson and Bernanke got it wrong on Lehman

Paulson and Bernanke got it wrong on Lehman

FT Alphaville has two posts today that mirror my view on the Lehman Brothers bankruptcy. They basically say it was a huge mistake to let Lehman fail. Lehman was, in fact, too big to fail and the blow up in the markets since its failure is a direct result of the bankruptcy. Does this mean that we support bailing out […]

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Bradford & Bingley is being shopped by the FSA

Just in case you thought the crisis was over, I have to remind you that there are still firms out there that are very concerned about their futures. Principal among them is the UK buy-to-let specialist Bradford & Bingley. The word on the street is that the FSA, the UK banking regulator, is shopping the company to foreign banks including […]

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Goldman and Morgan Stanley are now banks

The Federal Reserve is pulling out all the stops to stop the spread of the financial meltdown contagion that claimed Lehman Brothers, Merrill Lynch and AIG. The latest move is to allow both Goldman Sachs and Morgan Stanley to become bank holding companies. By allowing the securities firms to re-designate as banks, the Fed is giving them both access to […]

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Australia bans short selling too

It seems incredible – this rollback of the free markets. But, six countries have now banned short sellers of financial shares as if they are solely responsible for the market meltdown we suffered in the wake of the Lehman bankruptcy. The latest to join in the curbs is Australia. The country has yet to see the attacks on financial services […]

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News round-up: 21 Sep 2008

Everyone and his brother is talking about the bailout plan from U.S. Treasury Secretary Hank Paulson. I am not going to add my voice to the cacophony just yet, except to remind readers that the executive branch and the Federal Reserve are taking a leadership role that constitutionally belongs with the U.S. Congress. Time and again, Congress has failed to […]

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How safe are your assets?

Recently I wrote a post on the safety of investment assets in the wake of the Lehman and AIG meltdowns. Even still, retail and individual investors are noticeably nervous about the safety of their funds. Last night on the radio, I heard a spot in which a consumer was asking whether to go with an IRA without FDIC insurance or […]

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Fundamentally insolvent

Fundamentally insolvent

Marshall Auerback here. Equity investors, perhaps unlike credit investors, don’t get the fundamental insolvency of the financial sector, an artifact of mega-leverage. This is a culture that responds to visual clues and marketing jingles. Substance is at best a second thought, and seriously, there is not time in these markets for second thoughts. It’s all about maximal distraction and info […]

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Ameribank: the latest FDIC bankruptcy takeover

Today, after the markets closed, in another Friday Night Special, the FDIC announced the failure of Ameribank. This represents the 12th bank failure this year and the 14th since the credit crisis began last August. See my list of Bankrupt global financial institutions for major bankruptcies and my Credit Crisis Timeline for all bank writedown announcements. This is no Lehman […]

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