The Transparency Trap Tell Us What You Think We Want to Hear A Very Soft GDP Number Central Banks: A High-Wire Balancing Act What Does It All Mean? A Few Thoughts on LTRO Greek Exhaustion Syndrome Cape Town, Stockholm, Geneva, Paris, and London This week we take a brief pause in our series on...
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We have two bits of commentary from Kyle Bass today. First he gave his usual straight forward views to CNBC this morning. Second his latest letter. Unfortunately I cannot find a version of the letter that can be printed or downloaded, so you will need to read it online.
From the Interview
“If you get out a blank piece of paper and have a look at it, that’s the plan they’re working from right now. Everything is an agreement in principle. There are no details. It’s very difficult to arrange such a disparate group of people, and get them all to cede their fiscal sovereignty to call it a central taxing authority, and in the absence of that, it won’t work.
…I think that if you look at this last agreement, from the last summit, it’s somewhat of a doomsday machine. What they’re talking about, are the ECB and governments guaranteeing the debts of the banks which in turn buy the debts of their country that’s making that guarantee, pledging it at that central bank and getting more money to go buy more debt of those countries.
It’s somewhat sophomoric if you ask me. It is a circular reference that I don’t think institutional investors around the world are going to buy, they might hoodwink some retail investors into buying these things. When you look at the periphery today, there are no buyers of peripheral bonds.”
We have come to the end of yet another European Summit that was supposed to be the one to fix the problem. If you are confused as to what happened then you are not alone. There are two main points to be taken away from this week's meetings. First, the Germans really took control....
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As everyone knows the EU is meeting today and tomorrow in what is being billed as a last-ditch effort to save the Euro Zone. It is, of course, impossible to come up with a lasting solution in two days after almost two years of a patchwork series of conferences that have spurred short market...
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Despite markets having more moves than a MLB shortstop hitting .200, not all that much has changed in the past three weeks. We are still awaiting the latest iteration of a "plan" out of Europe, coincident economic data for the US remains ok, though leading indicators continue to forecast that a recession is already...
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This week we saw a coordinated effort by central banks to use their bazookas to head off another 2008-style credit disaster. The market reacted as if the crisis is now over and we can get on to the next bull run. Yet, we will see that it wasn't enough. Something more along the lines...
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An emergency ejection of liquidity to prevent immediate Armageddon is not even a first step toward solving Europe's deep-seated problems. It's more or less the equivalent of the proverbial doctor telling a patient to "take two aspirin and see me in the morning". It treats the symptoms, but not the disease. ...
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Investors should recognize that Euroland’s problems are global and secular in nature, reflecting worldwide delevering and growth dynamics that began in 2008. It will be years before Euroland, the United States, Japan and developed nations in total can constructively escape from their straitjacket of high debt and low growth.
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Inquiring minds and Barry Ritholtz wants to know:...there is no QE3.Global equities plummet 5%; Copper gets shellacked, Gold and especially silver see sellers. Bernanke gets criticized, but so was Volcker (unjustly) lambasted, as was Greenspan (deservedly so).
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John Hussman takes a close look at the Federal Reserve's options. As always a must read as he dissects the reason's why they didn't work last time (except to encourage speculation) and will not work this time.
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The Federal Reserve has for a long time eschewed increasing the money supply directly, and instead has manipulated credit to affect the economy and control inflation. This has led to three important things which are in my opinion at the root of this crisis. Asset price inflation (at least initially) as opposed to broader...
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From the New York Times: Earlier this year, Mr. Bush derided a modest plan to provide $4 billion to states and localities to buy foreclosed properties, saying that buying up empty homes helps only “the lenders or the speculators.” Actually, it protects entire neighborhoods and local economies from the effects of foreclosures by preventing...
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Martin Feldstein, stepping down from heading up the National Bureau of Economic Research since 1977, has piece in the Wall Street Journal that is rather pessimistic about the economic outlook. More tellingly he thinks the recession, if it occurs (and like me, he suspects it has already begun) will be more difficult to stimulate...
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Bad news for the monolines. FGIC just got downgraded today to AA. That pretty much puts them out of the business of insuring municipal bonds. NYS Commissioner of Insurance has suggested splitting the Muni bond business from the rest of the insurers. FGIC seems to now think that isn’t a bad idea. Of course,...
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So claims Alex Tabarrok. Alex and his blogmate Tyler are two of my favorite bloggers, but on this matter I think Alex is wrong. Unlike for some, his argument doesn’t invite scorn, because humility should teach us that sometimes things are different, and we cannot always fully understand why, at least not until after...
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Like me, Barry Ritholtz sniffed a whiff of panic in the Fed’s actions yesterday. The question he asks is why they acted before their meeting. Here are his questions, all good. I have pretty much stolen the whole post. Hopefully Barry will not mind: What does this mean for investors. Quite a number of...
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It seems world markets see the stimulus plan in the US as evidence for panic, not joy. Stock markets around the world plummeted Monday, prompted by pessimism about U.S. President George W. Bush’s plans to boost the U.S. economy. Share prices in Asia, Europe and the Americas all plunged by significant amounts; Wall Street...
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Reader ChrisB asks in response to yesterdays link to Anna Schwartz’s comment on the Federal Reserve: In retrospect, what should the fed have done differently? Risk and Return is really about implications for investment policy, and thus identifying which factors have implications is key. Pumping for particular policy choices really isn’t our role. Still,...
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Can I ask for some applause for this from Crossing Wall Street? I have to agree with Frederic Mishkin of the Fed: I think there is too much focus on what decision will be made about the federal funds rate target at the next FOMC meeting. What is important for pricing most financial assets...
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