Comment du jour, on the Fed-overdraft solution: “It’s a pragmatic solution to a dogmatic problem” — Reuters
How disastrous is the increasingly-inevitable downgrade of US sovereign debt going to be? I talked to David Gaffen about this yesterday, and he reckons it’s probably not going to be such a big deal. And he’s backed up today with a report from Fitch Ratings, behind a registration wall here.
I’m not sure where this meme originated, but people are saying with great confidence these days that Treasury has to borrow money just to pay the interest on the national debt. It simply isn’t true.
Muhammad Yunus is in town, plugging the new movie about Grameen America, the US version of his hugely successful Bangladeshi microfinance institution. It’s three years old at this point, and growing fast: it already has four branches, in Queens, Brooklyn, Omaha, and Manhattan, and plans to open another two by year-end. At the moment it has about 6,500 members, growing at a rate of about 5,000 a year.
Ezra Klein reckons I’m wrong about the tactical failures among Democrats which led to the current debt-ceiling fiasco and the probable loss of America’s long-prized triple-A credit rating. The big failure, he says, wasn’t at Treasury, and wasn’t at the White House: it was in the Senate. Specifically, this is all the fault of Harry Reid.
Many thanks to Van Tsui and Scott Barber for putting this chart together for me. We’re all used to seeing yield curves — charts which show the yield, for any given credit, at various points along the maturity spectrum. This chart is different: it’s a price curve. It just shows the price at which Greek bonds are trading, plotted according to their maturity.
What does it mean, when a bank takes a 21% haircut on its Greek debt? With the release of Deutsche Bank’s results yesterday we have an interesting case in point: the bank took an impairment charge of €155 million on its Greek government bonds. That’s just under 10% of Deutsche Bank’s stated €1.6 billion in Greek sovereign exposure.