Rolfe Winkler

Portrait of the Artist as a Fed Governor

May 30, 2008

Saving the financial system is probably more art than science. One gets that impression, anyway, when reading today’s Page One profile of New York Fed Governor Timothy Geithner. There are a few very juicy tidbits that suggest TG is driving the Fed’s response to the credit crisis, perhaps more-so than Fed Chairman Ben Bernanke. For instance:

LIBOR hiccups

May 30, 2008

This is what investigative journalism should be; it’s disappointing that we may be seeing less of it in the future.

Case-Shiller off Big in Q1

May 27, 2008

Off the wires 10 minutes ago:

NEW YORK – A closely watched housing index shows U.S. home prices dropped at the sharpest rate in two decades during the first quarter.

Smart money is betting against the dollar

May 27, 2008

Not long ago, I wrote a post about the dollar’s value and its relationship to interest rates. Part of that piece was concerned with the pressure some countries are feeling to break their currencies’ peg to the dollar, in particular the petro states and China. Their economies are importing dollars by the plane-load, which they receive in exchange for exports to the U.S. These countries maintain a constant–or near constant–exchange rate to the U.S. dollar. This peg enables their export industries to continue profiting from sales to the U.S.

Good news!

May 24, 2008

The stock market was down again last week, consumer confidence is at 30 year lows, house prices are declining nationwide for the first time. Is there any good news to report about the economy? Indeed there is: a gallon of gas is approaching $4 per gallon, which I think is just super.

Update on Walk-Away Congresswoman

May 23, 2008

Democratic Congresswoman Laura Richardson has even Hillary Clinton beat for selective memory problems. Remember how Hillary kept repeating the Bosnia story? That she dodged sniper fire, etc.? She always knew it was a lie, but she needed a concrete example of her foreign policy experience. It was telling that that was the only story she could come up with. I hope the Clintons (and the Bushes) disappear from American politics permanently.

R.I.P. W.S.J.

May 23, 2008

Let us pause for a moment of silence in memory of the institution that WAS the Wall Street Journal. As a long-time subscriber to the paper, I’ve noticed it’s devolution since Rupert Murdoch took over. Here’s a clue from the paper itself:

Banks want accounting rules relaxed

May 22, 2008

FT is reporting that banks are pressing their case to have fair-value accounting rules relaxed.

Too funny…

May 22, 2008

Democratic Congresswoman Laura Richardson of California was recently the victim of foreclosure, according to Capital Weekly. She quickly issued a statement “clarifying” the story; she says the house is not in foreclosure and that her loan has now been modified.

NYT editorial: Bring on the Bailout!

May 19, 2008

Today’s top NYT editorial is full of socialism and sophistry. House prices are falling but buyers aren’t yet returning to the market. This means prices may continue to fall. That could compound recessionary pressures that the housing sector is putting on the economy as a whole.

GSE Chief Regulator: Fan and Fred vulnerable

May 18, 2008

This blog is dedicated to more than the deterioration of Fannie and Freddie, I promise. I think the reason I devote so much space to the topic is the sheer size of these two entities and the risk they pose to taxpayers.

Deteriorating Lending Standards at Fan and Fred

May 17, 2008

Does anyone remember when Fan and Fred were still thought to be “prudent” lenders? Relative to the CFCs and WMs of the world they may always have been, but they still have far more risk in their portfolios than they should given the taxpayer guarantee backstopping their balance sheets.

Morgenson: Trash for Cash

May 17, 2008

Gretchen Morgenson’s column in tomorrow’s NYT is a decent discussion of the creative lending facilities to which the Fed has resorted to help out troubled banks.

Volcker warns: Don’t repeat the 70s

May 15, 2008

If Ben Bernanke keeps his present course, former Fed Chairman Paul Volcker warns we could repeat the 70s. “Core” inflation is still within the Fed’s “comfort zone,” but at a certain point, rising food and energy costs may pull other prices along with them. That’s the opposite of what the Fed is assuming will happen. The Fed appears to believe that food and energy costs will come back down as the economy slows.

Capital Raised

May 13, 2008

Following up on yesterday’s post regarding credit losses, here is an interview with Carlyle’s David Rubinstein from Bloomberg. The article notes that while credit losses have totaled $329b worldwide, banks have been able to raise $247b to offset those losses. Such capital raises dilute the shit out of common shareholders, though to the extent that those shareholders risk losing everything in bankruptcy if banks DON’T raise capital, a smaller share of ownership in the banks’ continuing earnings is an acceptable price to pay.