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What’s a central bank to do?

Global financial institutions are deleveraging because they can’t build enough equity capital any other way except by going to Asian and Middle Eastern sovereign wealth funds, cap in hand. So, the Fed and the Bank of England (BoE) have both cut interest rates. Yet, LIBOR remains stubbornly high. The TED spread is still 85 beeps. Banks just don’t trust each […]

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De-leveraging

The term deleveraging is one bandied about a lot in the press recently. But, what does it actually mean? De-leveraging is the process by which financial institutions and investors reduce the relative size of their assets to equity ratio. Generally, it means shedding assets in the financial sector, thus reducing credit and slowing the economy. Intro The basis of my […]

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News Round-Up: 02 June 2008

Has Oil Production Reached a ‘De Facto’ Peak? Read It Here First: States’ Impact on Economy States and Cities Impact On GDP Taleb’s Harsh Assessment of Bankers, Economists, and the Fed Housing Woes Hit Affluent Middle-Class Homeowners UBS CDS Lawsuit: Harbinger of Things to Come? The Opinionator: Enraged and ‘Confused’ Alt-A Borrowers Looking More Like Subprime Than Prime S&P slashes […]

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S&P cuts ratings of big U.S. banks

This just in from the Globe & Mail via Reuters: Standard & Poor’s in a sweeping move Monday that rocked markets cut ratings on a number of major U.S. securities firms including Lehman Brothers Inc. and said outlooks on the large U.S. financial institutions are now mostly “negative.” Other major firms downgraded were Merrill Lynch & Co. Inc. and Morgan […]

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Chart of the day: Case-Shiller 2005

Chart of the day: Case-Shiller 2005

Question: Could one see a bubble in housing back in 2005 when house prices were still rising? Well, to answer that question, I took the S&P/Case-Shiller Composite 10 Index and mapped it the rate of inflation. See, Robert Shiller, one of the Case-Shiller index authors, said in his seminal book Irrational Exuberance that house prices over the long-term have grown […]

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RBC clients file lawsuit

Royal Bank of Canada joins the list of financial institutions sued by clients over the large losses associated with the credit crisis. The Globe & Mail reports: Royal Bank of Canada has been hit with a proposed class action lawsuit in New York alleging that it told clients that auction rate securities were safe short-term investments for anyone with at […]

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UBS legal dispute with Paramax

This is a story I caught over at Michael Panzner’s site this morning. Apparently Paramax, a hedge fund, entered into a swap arrangement with UBS based on the value of a subprime CDO back in February 2007. Under the terms of the swap, the hedge fund was required to post additional collateral with UBS if they value of the CDO fell. It did.

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B&B secures private equity rescue funding

The Times reports today that Bradford and Bingley was rescued from the verge of collapse by private equity investors. This follows their report at the weekend on the dismissal of the Chief Executive and the profit warning they have issued. See my Saturday post on that topic. The events at B&B are absolutely shambolic. Down from a high of 536p […]

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Additions to Credit Crisis Timeline: 02 June 2008

Below are only the latest writedown stories from the web as of June 2nd. If you are linking in from DailyKos and looking for the full timeline of writedown news and the credit crisis, visit my credit crisis timeline, the most comprehensive on the web. Also see my list of Bankrupt Global Financial Institutions. Latest Additions2008 05 26 UBS Falls […]

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More warnings on regional banks

The President of the Boston Fed, Eric Rosengren, has in effect said that small and regional banks are at risk in the next wave of writedowns for U.S. financial institutions. He sites construction loan exposure in particular as a place to worry. I give the story of small and regional exposure to construction loans six months before it hits the […]

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Irish property dam about to burst

Irish property dam about to burst

Along with the residential housing bust in Ireland, a commercial real estate (CRE) bust is definitely on the table. According to the newspaper the Irish Independent up to 10 billion euros of writedowns are possible for the Irish property developers and banks.

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Spain: Week’s News Round-Up

This is a Spanish-language only News Round-Up on the economic situation in Spain from El Pais. Zapatero pisa el acelerador por la crisis ¿Crisis? ¿Qué crisis? “Escenario de dificultad”, “periodo de ajuste fuerte” o “desaceleración profunda de la economía”. Éstos son algunos de los términos que empleó ayer el presidente del Gobierno, José Luis Rodríguez Zapatero, para referirse a la […]

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