Commentaries
Now raising intellectual capital
from Rolfe Winkler:
Evening Links 12-10
Loopholes lurk in bank bill (Paletta/Enrich, WSJ) Companies with connections get to buy exemptions...
Treasury yield curve widens to most since 1992 (Walker, Bloomberg)
Dems want to raise debt ceiling a whopping $1.8 trillion (Rogers, Politico) So they don't have to revisit the issue before the 2010 midterm elections...
The job market: Is a college degree worth less? (Oloffson, Time) Yes! The net present value of a B.A. has been declining for years. Look for the trend to continue as tuitions increase even as unemployment stays high and wages fall. Don't go into debt to buy that fancy degree from a private school kids. A good state school is a much better deal right now. Save your money for an advanced degree...
Wells writing off principal on option ARMs (Cambell, Bloomberg) This is the proper way to modify mortgages if you're hoping to keep people paying. My question is whether Wells has to write down the loan on its balance sheet and take a hit to capital. My impression was that they already took huge writedowns on Wachovia's book of option ARM loans when they acquired it. So would guess principal forgiveness is not leading to asset writedowns.
Hedge funds = households?
Data showing that American households and their spendthrift ways meant big purchases of U.S. Treasuries got a lot of traction earlier this week. Not surprising given the ongoing concerns that one day we’ll wake up and foreign central banks and other overseas investors will decide they’re no longer enamored with the growing pile of U.S. debt. Someone has to step up and it may as well be those U.S. savers.
The data in question came from the Federal Reserve’s flow of funds data. David Ader, CRT Capital’s intrepid bond analyst, decided to take a closer look to see what’s going on.
The case for GDP bonds
Around the world, governments are struggling to drum up buyers for the mountain of bonds they need to sell. And that’s especially true for big deficit, low savings countries like Britain and the United States.
The returns they are offering on conventional government bonds are low and there’s the risk of inflation eating away at their value. Perhaps it is time for a different approach.
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The Wall
