Relevant and even prescient commentary on news, politics and the economy.

The OTHER Reason SonofaBirch and Biden would result in a McCain victory

No matter who “won.” Anyone who knows the phrase “think at the margin”—with or without the differential calculus and comparative statics—would have predicted that the Bankruptcy Bill (a.k.a. The Ken Lewis Retirement Subsidy Act) would damage to the economy when it was least able to survive the damage. What no one knew for certain was […]

The WSJ Editorial Page: Fumbling Toward Accuracy II

The editors of the WSJ agree with Brad DeLong that the Fannie/Freddie problem is that their short-term cash flows may be(come) impaired: The most immediate danger is that investors will shrink from rolling over the debt of the two companies, leading to a run a la Bear Stearns….With so much on the line, we’ve been […]

Before netting, before zero sum ownership society

Numbers work in Credit Crisis for Kindergartners. . AliceAssetsPhysical marbles: 4Marbles promised from Bob: 0Marbles promised from Sue: 2Total assets: 6 LiabilitiesMarbles owed to Bob: 7Marbles owed to Sue: 18Total liabilities: 25 Equity: -19 ——————————————————————————–BobAssetsPhysical marbles: 6Marbles promised from Alice: 7Marbles promised from Sue: 1Total assets: 14 LiabilitiesMarbles owed to Alice: 0Marbles owed to Sue: […]

‘Party on’ irony

CNN money points to pushback from non-US banks simply refusing to have a BS counterparty. Seems they were simply refusing to stay at the party. It’s unclear what exactly started Bear Stearns’ nightmare this week. Veteran repurchase agreement traders told that a major European bank last week refused to accept Bear Stearns as a […]

Bail or re-sell after the bums are kicked out?

NYT sells bailout story with no alternatives: “You get to where people can’t trade with each other,” said James L. Melcher, president of Balestra Capital, a hedge fund based in New York. “If the Fed hadn’t acted this morning and Bear did default on its obligations, then that could have triggered a very widespread panic […]

Has it begun?

The NYT reports on the Fed, Bears Stearns valuation, and interventions. The Fed, working closely with bank regulators and the Treasury Department, raced to complete the deal Sunday night in order to prevent investors from panicking on Monday about the ability of Bear Stearns to make good on billions of dollars in trading commitments. In […]