All Content

Pre-payments are reducing value of mortgage-backed securities

If you read my recent post on How big banks earned so much money this quarter you would see that much of the income at Wells, JPMorgan, US Bank and others came from refinancing old mortgages. While this may be a boon to present income, it is very much a problem for the legacy mortgage-backed securities which contain the old […]

Read more ›

Reinhart: Not everybody can be above-average in stress tests

Irrespective of whether one thinks the stress tests used to test the U.S. banking system is a sham (10% unemployment is not a worst-case scenario), the fact of the matter is these tests MUST show some differentiation in order to be credible.  Vincent Reinhart, a former Fed official now at the AEI, makes this case in the video below with […]

Read more ›

McCulley: We need the political will to socialize the losses

Paul McCulley of PIMCO made a few comments back in March which caught my attention.  Given how well banks are doing this earnings season, I thought it relevant to quote him here.  The essence of his remarks was this: Deleveraging is a self-reinforcing vicious cycle brought upon by the Paradox of Thrift.  In order to stop this downward deflationary spiral, […]

Read more ›

The German econblogger space is just fine

This past Sunday Felix Salmon wrote a post called “10 reasons for the lack of German econobloggers.” I found it inaccurate and offensive. Let me tell you why. I was in Germany at the time I read the post and had been there for the better part of the week. In reading and watching German news, I was very heartened […]

Read more ›

How big banks earned so much money this quarter

We are a few weeks into earnings season and it should be abundantly clear that financial institutions are firing on all cylinders.  In fact, financials are leading the broader market for the first time since 1993.  Yet, loan losses have been absolutely enormous.  What gives? The Great Giveaway is the essence of recent market performance in a nutshell.  Let’s look […]

Read more ›

The New Credit Writedowns

I am just back from the Easter Holidays and have had a good two weeks for self-reflection.  In truth, I am feeling a bit exhausted despite the fact that I was supposed to have just had a two weeks’ holiday. So, I have decided to make a few changes.  Before I do, I would appreciate some feedback from you regarding […]

Read more ›

Links: 2009-04-22

FT Alphaville – The world’s 50 ’safest’ banks UBS as one of the safest? rubbish. Japan suffers first trade deficit since 1980 – guardian.co.uk Exports fell 16.4% last year to ¥71.1 trillion as makers of consumer electronics and cars – the driving force of the economy – counted the cost of plummeting demand in the US, Europe and China U.K. […]

Read more ›

Links: 2009-04-21

BBC NEWS – Detroit’s long road to ruinThis is a fairly good look at what Detroit faces for itself, its schools and its citizens. Very sobering. Jesse’s Café Américain: Break The Big Banks Up, and Let the Insolvent Parts FailThis will only happen in another period of acute crisis. Zero Hedge: Open Letter To The SEC Regarding Wall Street’s REIT […]

Read more ›

Statements on Capitol Hill by Geithner and Warren

Below you can watch a video clip of Congressional Oversight Chairperson Elizabeth Warren‘s introductory remarks at a hearing today on Capitol Hill. Afterward, Treasury Secretary Tim Geithner responds in a 10-minute open statement.

Read more ›

Simon Johnson: Too big to fail is “too big to exist”

Simon Johnson, a former IMF Chief Economist, who blogs over at the Baseline Scenario, is testifying before Congress today about ‘Too big to fail’ financial institutions.  Below is a video in which he tells Bloomberg his thoughts on the subject before his testimony. His overall message is that the government needs to deal with the fundamental weakness of banking more […]

Read more ›

GM and Chrysler to get more bailout money

Apparently the Obama Administration was just bluffing about bankruptcy for the automakers, because when push came to shove, they blinked.  The automakers are to get yet more bailout funds and the dates for restructuring plans hae been pushed back. General Motors (GM) and Chrysler are to get more loans from the US treasury as the troubled carmakers work on plans […]

Read more ›

Britain gets deflation

An increasing number of countries are recording negative year-on-year inflation numbers. I reported first on Spain, then on Switzerland.  Add the U.K. to the list as well. Deflation returned to Britain for the first time in nearly five decades last month as prices measured by the retail price index (RPI) were lower than the same time a year ago. The […]

Read more ›