In this corner, as previously mentioned, Yves Smith goes for the slam dunk: Let’s see, the credit default swaps market, due to some netting, is now somewhere north of $30 trillion (as opposed to its earlier “north of $60 trillion” level). Investment banks were believed to have hedged most of their exposure via offsetting contracts, […]

Dr. Black (you know the site) links to AIG Strike Three. And unlike the Citi debacle previously discussed (relatively) positively and rather negatively here, this one makes some form of sense. The difference comes down to the meaning of an accounting concept: ongoing concern. More below the break (yes, this might get wonkish. It’s me, […]

I’ve spent most of the past two weeks alternating between dizziness and sleep. Maybe the dizziness explains why I find myself in agreement with a WSJ editorial: In a better world, Citi would have long ago been put into bankruptcy. The FDIC could have taken over and disposed of the bank’s assets, while protecting insured […]

What my brain wants to do: Bank capitalisation, stress testing, book value, and discussion of other data that clearly indicates the need for the nationalisation of several LARGE banks. What my brain is currently capable of doing: The cheerleader who saves the world? Hayden Pantierre (Heroes) George W. Bush (ex-President of the USA) Christy Carlin […]

Duff and Phelps, which tends to be the rating agency you go to if S&P or Moody’s won’t rate you highly enough, provides a convenient evaluation table (p. 22 of this report) for the marvelous negotiating techniques and acquisition skills of the previous Administration. Since the current Administration is now threatening to continue with the […]

A correspondent notes CJR found a good scoop by the FT: Merrill Lynch paid out about $4 billion in bonuses just days before Bank of America took it over, the Financial Times says this morning. What raises the eyebrows is the timing: Merrill paid its bonuses before the year was even up, “an unusual step” […]

There is a reason I never believe people who judge the health of a company by its credit rating: the evidence isn’t there, and everyone in the market knows it isn’t there. Here is a prime example: General Electric (GE; the company that Jack eviscerated) has a AAA credit rating. It is also paying a […]

Robert Waldmann Brad DeLong boldly attempts to exhaustively list the factors which can affect the value of a fixed income asset. This is some Mac generated i document and I can’t cut and paste. Go here and search for “there are four”. The four are called “default”, “the safe real interest rate”, “risk”, and adverse […]

Robert Waldmann ended my last post 5 minutes ago wishing for part III of the saga and here it is !The final act for AIG by Robert O’Harrow Jr. and Brady Dennis The collapse was, of course, quick when it came. One interesting fact is that AIG Financial Products (AIGFP) stopped writing new CDSs in […]

Robert Waldmann The second of three parts of Dennis and O’Harrow’s series on the downfall of AIG introduces two new features—credit default saps and Joseph Cassano. Together the two managed to bring down AIG. Thus far we have only read about how AIG got into the business of writing CDSs — it seemed too good […]