The US Fed decided to fight fire with fire. To solve the debt problem, they added debt! The genius of this plan was, we admit, not immediately obvious..Read more ›
Post Tagged with: "Bear Stearns"
The PIIGS owe $2 trillion, which might need to be restructured. Yes, dear reader, the sovereign debt problem is a big one – much bigger than Bear Stearns, Lehman Bros. and AIG.Read more ›
The S&P 500 hit a 14-month high overnight. The conventional wisdom is that two news events are responsible. This is probably wrong. But let’s look at both events anyway and see what happened.
The first is that Abu Dhabi extended a $10 billion in financing to debt-distressed Dubai. Hossanah! Remember, Dubai is not Lehman. It’s Bear Stearns.Read more ›
But first things first. Dubai World is not nearly large, leveraged, or systemically important as either Bear Stearns or Lehman Brothers when both those firms failed. For those reasons, it’s unlikely that the failure of Dubai World (and we’re not saying it will fail) would, by itself, cause a global deleveraging.Read more ›
If we compare consumer spending on services with hours worked in the service sector employment report, we find a huge surge in implied service sector productivity.Read more ›
Why aren’t the banks lending locally and what are they doing instead? Well, they’re probably terrified that commodity prices won’t recover any time soon, rendering the collateral posted by mining companies worth a lot less. Or, worried about future losses in commercial property, the banks are saving up for a rainy day.Read more ›
Last Wednesday, a bunch of peeved mortgagees protesting government favoritism in the Bear Stearns case entered the lobby of the company‚Äôs (soon-to-be-former) headquarters building in midtown Manhattan. While it might not seem like much, I view the symbolic ‚Äúpenetration‚ÄĚ of this corporate stronghold as the very first sign of a much broader citizen revolt against the extraordinary protections being shown to crapped-out investment banker boyz…Read more ›
The background for this latest crisis is what we’ve been reckoning within these Daily Reckonings for so many months. The geniuses at Bear Stearns had their calculators…their Black Sholes Option Pricing Model…their mathematicians…their risk figures… They had some of the finest minds in the country – or at least, some of the finest minds money could buy on Wall Street.Read more ›