All Content

Why the bailout’s failure was a good thing

Everyone’s dancing and cheering now that the bailout has been rejected. So, as Ice-T used to say, “Bust the cork on the Moët!” (image via Flickr). The market’s up 500 points and all is well and swell. The guys over at Lombard Street Research certainly are dancing in the aisles. Here’s what Charles Dumas of Lombard had to say about […]

Read more ›
US Home prices down 16% over last year

US Home prices down 16% over last year

The headlines about home prices are pretty dire, showing a record plunge in home prices of 16.3% over last year. In reality, it’s not all doom and gloom. So, let’s dig behind the headlines about the S&P/Case-Shiller Index released today to get a sense of what is really happening with U.S. home prices.First, one must note the S&P/Case-Shiller index is […]

Read more ›

Writedown news: 30 Sep 2008

For me, the most important events of late have been the European banking sector meltdown. Just last week, German officials were lecturing the UK and the U.S. about their banking systems and now we see a number of European institutions falling prey to the credit crisis. No one should feel their banking system is safe in this environment. After all […]

Read more ›

Ireland guarantees bank deposits at six banks

Update: While the Irish were following the Swedish script, it became clear to me shortly after I wrote this that the bank debt guarantees were not a good idea. This post from Willem Buiter explains it best.  Along with American and British banks, Irish banks have been under heavy attack due to the turmoil in the financial services sector. The […]

Read more ›

The global economy has crashed: we need a comprehensive credit crisis plan

Despite the fall in markets, Congress’s not having passed the Economic Patriot Act may be a blessing in disguise. The FTSE is trading up. Dow futures show a rise of 170 points. So, maybe the sell-off was a one-day event.

In any event, it does give the U.S. Congress more time to pass new legislation crafted from scratch. And the new proposal can have the things we need in it:

Read more ›
S&P 500 off 8%, Dow off 667 points, and Nasdaq down 9%

S&P 500 off 8%, Dow off 667 points, and Nasdaq down 9%

UPDATE 6:15 PM ET: The Dow ended down 777 points for it’s largest one day loss ever. The S&P and Nasdaq were both off 9%. The futures market show even greater losses are expected tomorrow. A brutal day in the markets was made that much worse by the rejection by the U.S. House of Representatives of the Emergency Economic Stabilization […]

Read more ›

Lehman gets $2.15 billion for Neuberger Berman

The price tag was less than one would have liked, but these are desperate times for sellers of financial assets. Lehman Brothers secured a sale of its crown jewel investment management division for $2.15 billion in a sale to private equity buyers. When Lehman Brothers first proposed a sale weeks ago while still a solvent company, the price tag was […]

Read more ›

Stephen Roach and Jim Grant: Video of credit crisis thoughts

The Financial Times caught up with two great economic pundits in Jim Grant and Stephen Roach. Below are links to six video interviews by the FT with these two gentlemen (three each). They should be enlightening regarding the global credit crisis, the U.S. bailout and financial markets and the global economy more generally. Videos Sep 29: STEPHEN ROACH on Asia, […]

Read more ›

The House defeats the bailout plan and shares plunge

The House of Representatives in the United States has defeated the proposal originally crafted by U.S. Treasury Secretary to help bail the U.S. out of financial difficulties. My hope is that Congress can get to business and craft a comprehensive solution, which this legislation was not. Meanwhile markets have imploded on the news and further immediate bankruptcies are almost certain. […]

Read more ›

The U.S. financial system is effectively insolvent

I have said before that a systemic response is necessary to deal with the present banking crisis in the United States. This crisis has nothing to do with subprime assets and little to do with things like predatory lending. Those are issues that populists will use to prosecute the scapegoats we are likely to see down the line. The crisis has everything to do with low interest rates, zero regulation and a credit bubble of monumental proportions.

The banking system of the United States is effectively insolvent. Buying up $700 billion in assets is not going to solve this basic fact. A systemic response is needed. If we do not address these issues, we may see significant dead-weight loss as many institutions fail.

Read more ›

Financial shares now diving

I am listening to C-Span where the House of Representatives is debating whether to pass the deeply flawed bailout bill that has been crafted on the heels of major disturbances in financial services. Unfortunately, this bill is not going to prevent further share price falls. The House is moving to final vote now. As we speak, many shares are falling […]

Read more ›

Subprime, Alt-A Delinquencies Rise

Connecticut-based Clayton Homes, now owned by Berkshire Hathaway and called Clayton Holdings, (not to be confused with Clayton Homes, a subsidiary of Berkshire Hathaway)*, has warned that Subprime and Alt-A delinquencies in the U.S. are still rising. This suggests that the fundamental problem underlying the banking crisis has not been addressed. At its core, the credit crisis is the result […]

Read more ›