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Speaking of T. S. Eliot, he disdains the intellectual vanity, of the kind his Mr. Appolinax exhibits: “There was something he said that I might have challenged.” Now read this from a commentary by Larry Summers in today’s Financial Times: In retrospect, the fact that 40 per cent of American corporate profits in 2006 went …
Genuine Insights, Bold Recommendations, Expressed Resolutely Read More »
What kind of a card game is being played if the lower card trumps the higher card? Low poker, of course. That is an easy one. What kind of a credit game is being played if subordinated debt trumps senior debt? The auction that settled figures for the senior and subordinated bonds of Fannie Mae …
In a front page article this past Friday, The New York Times suggested that an obscure decision by the Securities and Exchange Commission in ’04 to loosen the debt limits of the broker/dealers had set the stage for the meltdown in financial markets. The story had lots of tidbits in the tradition of the best …
In several places, I have written about the crisis in the money markets. Today’s Financial Times had an article on this subject under the heading “Triple blow spurs central banks”. As usual, there was no mention of the cause of the “blows”, only reporting of the facts. I thought two paragraphs in particular might be …
To the uncritical mind of finance professors who see the markets with the eye of a P.R. agent, the changes that have taken place in the past thirty years in the financial markets were a series of inspired events brought about by visionary bankers, insightful academics and bold traders. The result, naturally, was “sophisticated” and …
The Unraveling of the Money Markets: The Flip Side of Efficiency Read More »
I chose the wrong week to go on vacation and must now catch up with the unread papers of an eventful week. The demise of broker-dealers was news only in the manner it played out. But the business model was doomed. I wrote on this blog that for broker-dealers “to function, the system has to …
The most outstanding characteristic of the “pragmatic man” is lack of conviction. He believes in no ideology, honors no conventions, adheres to no principles, follows no set rules, finds nothing per se wrong and rules out nothing categorically. This is neither criticism nor moral posturing. It is an elaboration of what logically follows from the …
Treasury’s takeover of Fannie Mae and Freddie Mac over the weekend meant that Secretary Paulson’s bazooka strategy had failed – but only because he chose to fire without having to do so. Otherwise, following his own words that “government support needs to be either explicit or nonexistent,” he could have extended an explicit government guarantee …
Secretary Paulson Jumps the Gun – and Fires His Bazooka Read More »
Sometime in the fall of 1990, during a lunch conversation with colleagues in what was then Credit Lyonnais, I brought up the idea of writing a book on swaps. The head of HR who had some knowledge of the publishing industry thought I was setting myself up for disappointment. Publishers would not accept a book …
The Critical Role of Interest Rate Swaps in Financial Markets and the Real Economy Read More »
I had planned to write about this story earlier but got distracted by the events in the financial markets. On August 6 this year, 11 climbers died on the “K2”, the world’s second tallest mountain. Maurcie Isserman wrote an insightful Op-Ed piece in the New York Times in which he faulted the every-man-for-himself attitude of …