BofA delays Countrywide bankruptcy

The word is that BofA did in fact consider declaring their Countrywide subsidiary bankrupt to ring fence the rest of the company from Countrywide. It got as far as a board vote this past summer.

This Wall Street Journal video discusses the issues of why it has postponed the bankruptcy filing

You Sexy M.F.

Here are a bunch of videos and links which update you on MF Global

M.F. Euro Takes Down Equities

Lots of debate out there what took the market down today. We’re not certain you can tag the first 15 S&P points on a single factor — MF Global, euro, Italy, yen intervention and strong dollar, or simple profit taking — but willing to up our bet the last 15 points, which began around 2 PM, was the floppy Euro. The Euros will have to find a way — and soon — to come up with a hard number and clear path to the big bazooka EFSF to head off contagion to Italy. This whole exercise is about restoring confidence because that is what, at the end of the day, drives sovereign credit fundamentals. If Italy blows, game over

How not to resolve a banking crisis

Much of macroeconomic policymaking is trial and error. This column discusses calamitous error on the part of Iceland’s policymakers, in the hope that others can at least try something else

More on the S&P bear market and the central bank liquidity train

Just a few moments ago I posted on the fact that the US is officially in bear market territory. On Twitter, I said that “in Fall 2008, 10-year yields went to extreme lows and then the liquidity train went into overdrive. Stocks rallied, bonds fell.” I wonder if we will have a repeat now. Felix Zulauf believes so

Central Falls Leads the Municipal Field

Central Falls, Rhode Island faces a plight that should be studied for its application elsewhere. It is nearly out of money. This is common news today, whether in Greece or California. The various parties are assumed to possess a means to carry on. This is assumed because it is generally so. Despite the band aids, the trend towards insolvency continues. Central Falls has reached a dead end

Farewell, Sheila Bair

Sheila Bair is a regulator no more. She will be missed

Contagion Fear in Europe

Most analysts agree that Greece is insolvent. This column argues that the issue is whether Greece’s troubles are contagious

The Myth that the Banks are Solvent

As James Galbraith has argued, the problem is said to be no more serious than some clogged plumbing. A bit of Drano in the form of government handouts and guarantees should be sufficient to get credit flowing again. Nonsense. Private debt loads remain too high, income and employment continue to fall, and delinquencies and foreclosures continue to rise. Assets are overvalued even at current depressed prices. Many financial institutions (probably including most of the big ones) are hopelessly insolvent, holding mountains of toxic waste that will never be worth anything

Greece is considering withdrawal from the Euro-zone (rumour)

This is my translation of an article from the German magazine Der Spiegel which says: “The debt crisis in Greece is getting worse. According to information available to SPIEGEL ONLINE, the country’s government is considering leaving the euro zone. The monetary union’s finance ministers and representatives of the EU Commission will meet this Friday evening in a secret crisis meeting.”

The S&P Downgrade and Sovereign Government Bankruptcy

The claims about “unsustainable deficits” gained new urgency this week as S&P warned that it was downgrading US federal government debt from stable to negative (see here for recent debate).

This appeared to be a blatantly political move, designed to influence the debate in Washington, adding fuel to the fire to cut budget deficits.

The deficit hysteria has nothing to do with economics, government solvency, or involuntary default. A sovereign government can always make payments as they come due by crediting bank accounts—something recognized by Chairman Bernanke when he said the Fed spends by marking up the size of the reserve accounts of banks.

Ignorance and Opportunity

Frederick J. Sheehan is the author of Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession  (McGraw-Hill, 2009) and "The Coming Collapse of the Municipal Bond Market"(Aucontrarian.com, 2009) Following are some of my remarks prepared for Allen & Company’s Fifteenth Annual Arizona Conference. The discussion,