Finance Commentary
Investment Bank Regulation Is Changed Forever
This morning in the New York Times, Andrew Ross Sorkin draws attention to the the fact that the Fed was calling the shots behind the Bear Stearns "bailout." This point was obvious last week. Just because the price moved from $2 to $10 and there is speculation about whether or not the Fed set the [...]
What are the Aims of Future Fed Rate Cuts?
What are the aims of future federal reserve rate cuts? The Prince agrees with many bloggers out there that believe the problems in the market are not being caused by interest rates that are too high. If we are already in a recession, why not just let it come? Let the business cycle run its [...]
The Latest Sign of Pressure On the Consumer
"Leaning on outside mortgage brokers for home-equity business was "one of the biggest mistakes we’ve made." Those loans have performed worse than home-equity loans generated by J.P. Morgan." -Charles Scharf, head of J.P. Morgan’s retail business.
The Prince, like many financial bloggers, has followed the plight of the increasingly burdened U.S. consumer for some time. (See [...]
AAA Bonds in ABX Fail Test for Investment Grade
Check out this interactive chart from Bloomberg which looks at the 80 AAA bonds in the ABX. It compares the ratio of credit support to collateral at risk for these 80 bonds. It makes it pretty clear that 74 of 80 of these funds fail the test used by the ratings agency’s for investment grade [...]
Incentives Killed CDOs but CLOs Will Live
An interesting article by Vipal Mongra, entitled "In death, afterlife,” appeared in The Deal on Monday predicting the future of Collateralized Debt Obligations (CDOs). In the article, Messieur Mongra speculates how CDOs may fare in comparison to other products/strategies that were pronounced dead only to rise again from the ashes. Most notably, the article points [...]
Private Equity is Down but Not Out
A diamond is forever even if it spends years in a drawer only to periodically emerge for moments of brilliance. Business cycles continue but the existence/relevance of private equity should not be doubted. This downturn will pass and private equity will come roaring back with the largest war chest it has ever possessed and more [...]
The Municipal Bond Conversation Moves Forward
3 Mar 2008 - Felix Salmon over at Market Movers on Portfolio.com has some interesting commentary on how municipal ratings between different firms diverge and some commentary on this NYT article this morning. Many thanks to Abnormal Returns for drawing attention to The Prince’s idea for how municipal bond issuers should respond to the current [...]
Munis Should Form Cooperative Entity to Self-Insure
The Prince has been following the troubles of the bond insurance business for the last few weeks. Many thanks to Naked Capitalism, Alea Blog, and Information Arbitrage for their commentary to supplement The WSJ. It now appears that many of the largest monolines (bond insurers), if they are able to raise additional capital and follow [...]
CFC Cuts Ad Spending But Why is the Real Question
Here is some very interesting data posted by Paul Kedrosky over at Infectious Greed which shows that Countrywide’s online ad spending fell off a cliff in January. Yet, it wasn’t just Countrywide that cut back, financial servicers advertsing was off by 17% on a month-to-month basis. The Prince isn’t surprised by this since anything that [...]
The Prince’s Monoline Roundup
The Prince has come to the conclusion that the financial blogosphere is doing a much better job covering the monoline (i.e. bond insurers) debacle than the traditional financial press. There has been a plethora of interesting analysis and thought provoking work done on the recent trauma involving bond insurers by bloggers.
The Prince has contributed [...]
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