September 2008
Libor rockets to nearly 7%!
From Bloomberg:
The cost of borrowing in dollars overnight surged the most on record after the U.S. Congress rejected a $700 billion bank rescue plan, heightening concern more institutions will fail. The London interbank offered rate, or Libor, that banks charge each other for such loans climbed 431 basis points to an all-time high of 6.88 percent today, the British Bankers’ Association...
Interesting...
“Remembering” When al Anbar was “Lost”
By Michael Fumento
Human Events, September 10, 2008
IED triggermen captured outside of Fallujah, Anbar Province. Photo by Michael Fumento
How strange! I spent all three of my Iraqi embeds in western Al Anbar because that’s where the war was worst. Birthplace of al Qaeda in Iraq (AQI) and cradle of the Sunni insurgency, graffiti declared it “Graveyard of the...
You Can't Rescue the Financial System If You Can't...
by John P. Hussman, Ph.D.
This is a bad idea.
However the final legislation is written, the Troubled Assets Relief Program (TARP) being rushed through Congress will evidently be built around its single worst provision, which is that the Treasury will have authority to purchase distressed mortgage securities from U.S. financials.
As I noted last week in An Open Letter To Congress Regarding the...
The most under reported story of 2008
The $55 trillion question
By Nicholas Varchaver, senior editor and Katie Benner, writer-reporter September 30, 2008 (Fortune Magazine)
The financial crisis has put a spotlight on the obscure world of credit default swaps - which trade in a vast, unregulated market that most people haven’t heard of and even fewer understand. Will this be the next disaster?
More…
Open the spigots
From Bloomberg:
The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression. The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed’s emergency...
House to Wall St.
…………………./´¯/) ………………..,/¯../ ………………./…./ …………./´¯/’…’/´¯¯`·¸ ………./’/…/…./……./¨¯\ ……..(‘(…´…´…. ¯~/’…’)...
Looks like the floor is dropping out from under...
Fed Expands Swap Agreements to $620 Billion to Aid Bank Funding
Bloomberg 09/29/2008 09:44 AM
Somalia: Pirates die strangely after seizing MV...
A tense standoff has developed in waters off Somalia over an Iranian merchant ship laden with a mysterious cargo that was hijacked by pirates. Somali pirates suffered skin burns, lost hair and fell gravely ill “within days” of boarding the MV Iran Deyanat. Some of them died.
Andrew Mwangura, the director of the East African Seafarers’ Assistance Programme, told the Sunday Times:...
Wachiti?
Citigroup Agrees to Buy Wachovia’s Banking Business
Bloomberg 09/29/2008 07:57 AM
Citi releases terms of Wachovia deal, says it will pay $2.16 billion in stock for Wachovia’s banking subsidiaries and assume $53 billion in debt. Citi also plans to cut dividend, raise $10 billion in new capital.
The drums beat louder (according to Robert...
Bet on Israel bombing Iran
By Robert Baer
Saturday, September 27th 2008, 6:45 PM
Are we going to have an October surprise, an attack on Iran by either the Bush administration or by Israel to stop the regime from becoming a nuclear power?
It could happen - and alter the dynamics of the presidential race in the blink of an eye - but only if Israel pulls the trigger. Don’t expect the United...
Ahhhhh....the ZZZZZZZs
From Lifehacker.com:
Sleep Boosts Creativity by 33% A Harvard sleep researcher finds that if you sleep on new ideas and information, you’re 33% more likely to make connections between distantly related points. Sleep helps you make tough decisions, and solve problems, too.
From the man who knew...
From Nouriel Roubini’s blog at RGE Monitor:
Whenever there is a systemic banking crisis there is a need to recapitalize the banking/financial system to avoid an excessive and destructive credit contraction. But purchasing toxic/illiquid assets of the financial system is not the most effective and efficient way to recapitalize the banking system….. In the Scandinavian banking crises...
Maybe the markets won't rally...
From NYT: Asian Markets Retreat Despite Bailout Agreement
“People are starting to think, ‘hang on, this is a rescue package but it’s designed to forestall a complete collapse, not stimulate a rally,’” said James Chirnside, who manages $65 million at Asia Pacific Asset Management in Sydney.
Who loves ya, baby?
To: Washington, D.C. From: Wall Street Re: Credit Crisis
Dear D.C.,
WOW, WE’VE MADE QUITE A MESS OF THINGS here on Wall Street: Fannie and Freddie in conservatorship, investment banks in the tank, AIG nationalized. Thanks for sending us your new trillion-dollar bailout.
We on Wall Street feel somewhat compelled to take at least some responsibility. We used excessive leverage, failed to...
The Other Crisis: Food, Fuel Prices Pose Continued...
At a time of deep global concern about the crisis in U.S. financial markets, it is essential that we not lose sight of the “other crisis” that is having a direct impact on the world’s poor — surging food and fuel prices. That was the message from IMF Managing Director Dominique Strauss-Kahn at a briefing to announce an update on the Fund’s work related to the food and fuel crisis.
...
Hedgies are heading for the rocks...
From the Telegraph:
Hedge funds are preparing to return between 10 per cent and 50 per cent of their assets under management to investors who want their money back at the end of yet another quarter of dire investment performance. One prime broker said: “Many funds will have to close. There were a flood of redemption notices at the beginning of the quarter but many investors said they wouldn’t...
It's here!
From the House Financial Services Committee:
Emergency Economic Stabilization Act of 2008 Washington, DC - Click the following links to view documents: Emergency Economic Stabilization Act of 2008 Summary of Emergency Economic Stabilization Act of 2008 Section-by-Section of Emergency Economic Stabilization Act of 2008
Are the war drums beating louder? A 14-plane US...
September 27, 2008, 5:17 PM (GMT+02:00)
Huge US Air Force C-5 Galaxy and C-17 Gobemaster III transports have ferried the high-powered FBX-T anti-missile radar to Israel’s Nevatim Air Base south of Beersheba. DEBKAfile’s military sources report that the transportable radar surveillance/forward-based X-band radar was accompanied by some 120 American European Command personnel. The area of its...
WatchA nice metaphor for our financial system.
Way off Broadway...
The Bailout, A Play
by Johnny Debacle
Scene 1
A dark stage, with a single spotlight on Henry Paulson
Henry Paulson: Good morning, ladies and gentleman. My name is Henry Paulson and I run the Treasury. And I don’t mean to make you panic, but if you do not give me a balance sheet that can hold $700 billion on it, and unlimited funding, than the economy will die. That’s right it will die. I don’t...
Kind of makes you wonder...
Sept. 18, 2008 — UK bans short-selling of financial stocks Sept. 19, 2008 — US bans short-selling of financial stocks, requires reporting on all other short sales Sept. 26, 2008 — China approves short-selling and margin accounts for first time in order to develop market
The butcher's bill arrived early this week!
JPMorgan Buys WaMu’s Deposits as Thrift Is Seized by Regulators
By Ari Levy and Elizabeth Hester
Sept. 25 (Bloomberg) — JPMorgan Chase & Co., the third- biggest U.S. bank by assets, agreed to acquire the deposits of Washington Mutual Inc. as the thrift was seized by regulators in the biggest bank failure in U.S. history.
JPMorgan will pay $1.9 billion, the Federal Deposit...
Paulson plan kaput?
Bailout deal breaks down; Bernanke back to Capitol Sep 25 07:49 PM US/Eastern By JENNIFER LOVEN and JULIE HIRSCHFELD DAVIS
WASHINGTON (AP) - Urgent efforts to lash together a $700 billion rescue plan for the national economy broke apart Thursday night, hours after key lawmakers had declared they had reached a deal.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben...
WaMu's knight in shining armor?
JPMorgan investor conference call:
JPMorgan Chase & Co. (NYSE: JPM) will host a conference call at 9:15 p.m. (Eastern Time) tonight, September 25, 2008. You may access the conference call by dialing 1-877-238-4671 (U.S. and Canada) / 1-719-785-5594 (International) - access code: 814030 or via live audio webcast at www.jpmorganchase.com under Investor Relations/Investor Presentations. Materials...
Ghosts of Christmas Past
Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES Published: September 30, 1999
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15...
Factoid of the Day
For the past 10 Years, the inflation adjusted return on the S&P 500 was -17%. Including dividends, the inflation-adjusted return was only -2%.
Seems like the Paulson Plan is morphing into the 3...
From the WSJ:
Agreement on Principles 1. Taxpayer Protection a. Requires Treasury Secretary to set standards to prevent excessive or inappropriate executive compensation for participating companies b. To minimize risk to the American taxpayer, requires that any transaction include equity sharing c. Requires most profits to be used to reduce the national debt
2. Oversight and Transparency a....
In my own words...
OK. In a rare moment of clarity I have decided to weigh in with my own words on the insanity that is swirling around the US financial markets. It’s a big mistake but sometimes you have to say WTF.
For all of you who have been living under a rock for the past year, here’s a quick primer on how it is we find ourselves in this ridiculous situation.
1) What happened? Housing prices exploded (They...
“In Anticipation Of Your Questions, We Will Not Be Taking Questions”
– - Senator Christopher Dodd, Chairman of the Banking, Housing and Urban Affairs Committee, at today’s “press conference” on the Paulson Plan.
What's another $150 billion between friends...
FDIC May Need $150 Billion Bailout as Local Bank Failures Mount
A federal takeover of Washington Mutual, which has assets of $310 billion, could cost taxpayers $24 billion … according to Richard Bove, an analyst at Miami-based Ladenburg Thalmann & Co.
