Latest Posts

Nationwide: U.K. house prices down 17.6% in year to Februay

The Nationwide has released its latest house price survey, showing a very large 1.8% fall in British house prices between January and February 2009. This brings the yearly decline to a record 17.6%.

Yet, incongruously, the Nationwide revealed this information on its website under the heading “improving affordability helps new and existing buyers.” If this does not smack of cheerleading, I don’t know what does.

Links: 2009-02-26

Citigroup close to reaching deal with government: report – Reuters The Banks’s Rigged Stress Test – Dean Baker Renters Lose Edge on Homeowners – TARP Said to Be Ripe for Fraud – £650,000 pension for former RBS chief Sir Fred Goodwin – Times Online Still waiting for Helicopter Ben – Simon Johnson and James Kwak, Guardian Bernanke rejects […]

John Paulson: Distressed assets best opportunity in a lifetime

The overall stock market may be declining, but that does not mean there are no bargains to be had.  Witness this article about John Paulson, the famed hedge fund manager who made billions shorting stocks over the past years. Distressed assets offer the best investment opportunities this year as the global recession may be deeper than consensus, billionaire investor John […]

Citigroup and Redecard: shedding international assets

Citigroup is looking to raise capital and shed assets in order to deleverage and prevent a worst-case outcome for the financial institution. Case and point is the fact that the company is putting its Brazilian subsidiary Redecard on the block for sale. What remains unclear is whether Citi is making these moves just to stave off a worst-case outcome (i.e. bank failure). These sales certainly make the company easier to sell or nationalize.

Did Sweden really nationalize its banks?

Since everyone seems to be talking about nationalization and pointing to Sweden as a model for the future, one should ask whether Sweden actually nationalized anything. No one is talking about outright Hugo Chavez-style expropriation here. The only nationalization I see is what was done in the case of AIG and we know where that led.

I certainly believe the knee-jerk reaction against the ‘N’ word, as Barry Ritholtz calls it, is overwrought and have suggested we dub it pre-privatization. After all, didn’t the word recession come into existence for similar reasons — fear of the ‘D’ word depression.

Back in August, I pointed to Sweden as a model as well. You can read the post, “The Swedish banking crisis response – a model for the future?.” But, the Peterson Institute also has a fine post by Anders Aslund on what really happened in Sweden and it was not nationalization.

Here’s a bit of what he had to say:

Links: 2009-02-25

Teed Off at Northern Trust – Deal Book German CDS debt spreads hit record as economy crumbles Japan exports drop 45% to new low – BBC News Citigroup May Sell Nikko Citigroup Unit in Japan, Mainichi Says – Hearst May Sell or Close San Francisco Chronicle – Deal Book Hockey Mom Skirts History’s Dustbin of Losers: Margaret Carlson – […]

TALF: A bailout if one reads the fine print

The TALF is a way for any and all comers, domestic and foreign, with toxic asset-backed securities, to dump those assets on to the U.S. government at taxpayers expense. This is happening right now right under your noses.

At least the Fed has the transparency to spell it out. But has anyone noticed?

Bloomberg talks Eastern Europe as Latvia downgraded

Yesterday, Latvia was downgraded to junk. Despite its diminutive size, this is a big deal. Fist, it is a harbinger of what is to come for the rest of Eastern Europe. But, more importantly it is a signal that Western European banks lending in the former Soviet Bloc are overexposed and threatened by large loan losses. In a global economy in which European banks lend at home, but also have significant U.S. mortgage debt and Eastern European loan exposure, events in Latvia will have a snowball effect.

While the EU, IMF and World Bank are all busily drafting up crisis solutions, the videos below should give a little colour on what this means for the economy, credit and investing.

EU planning 200 billion euro package for Eastern Europe

This comes from Austrian Daily Kurier: A plan to stabilise the economies of Eastern Europe exists. What is missing is a united EU. During and after the Eastern Europe tour by Austrian Vice-Chancellor and Finance Minister Josef Pröll, the Ministry always profusely denied that there was a plan to support the new [EU] countries. The talk was of 150 billion […]