Rolfe Winkler

Walking away without, er, walking away

May 21, 2010

LPS

Who says you can’t get something for nothing?

James Hagerty quotes interesting data from LPS Applied Analytics that shows banks struggling to handle the backlog of mortgage delinquencies are allowing non-paying borrowers to stay in their homes longer.

Lunchtime Links 5-21

May 21, 2010

Euro’s slide may give U.S. more rope to hang itself (Crane/Swann, Reuters) Great piece from my Breakingviews colleagues Agnes and Chris. Flight to the dollar helps keep U.S. borrowing costs low, but that’s a curse because it discourages us from dealing with our own debt problem.

Lunchtime Links 5-20

May 20, 2010

FDIC says things look great! (Wutkowski, Reuters) FDIC’s quarterly profile of the banking sector was full of good news. Loss estimates for failed banks are down; bidders are paying more for failed banks; the deposit insurance fund has plenty of cash and the problem bank list only grew a bit. In other words, there’s light at the end of the tunnel. Trouble is, that light could be a freight train in the form of higher rates or reduced government support for housing. As support is removed, to the extent it flows through to mortgage rates, we’ll see house prices head back down, giving the banking system more seizures…

Lunchtime Links 5-19

May 19, 2010

Consumer prices unexpectedly fall (Mutikani, Reuters) The Fed will view this as support for its low rate policy. But while consumer prices are falling, asset prices have been on a tear, taking a breather only after the Greek crisis erupted. The re-inflation of asset prices is investors’ response to low rates: they’re chasing risk. That encourages more bubbly lending, sowing the seeds of more violent debt deflation later.

Euro’s deep dive continues…

May 18, 2010

As of this writing, the euro is cliff-diving again. It’s now down near $1.22, a four-year low. The proximate cause of the sell-off is a German plan to ban naked short-selling in stocks and certain government bonds.

Lunchtime Links 5-18

May 18, 2010

Blackstone-led group drops bid for Fidelity National (Davies, Reuters) Probably smart. Even at $32 per share, the buyout shops would have paid nearly 9x this year’s anticipated EBITDA while deploying over 5x leverage. Doable, but not cheap. Yes, Fidelity National has stable cash flows to pay debt, but its business is not immune to business cycle hiccups. Meanwhile, FIS is going to lever up anyway to buy back shares.

Shock therapy

May 18, 2010

The “flash crash” in U.S. stock markets on May 6 shocked investors. As one response, it makes sense to coordinate circuit-breakers and other safety switches across trading venues. But the goal shouldn’t be to eliminate sudden drops. Markets are volatile, and smart traders build in a margin of safety. That’s a useful message that is reinforced by the odd surprise.

Lunchtime Links 5-17

May 17, 2010

Must Read — The Great Consolidation (Douthat, NYT) A great column. Douthat is a solid addition to the NYT op-ed page. Given another hundred words, he might have also mentioned how Washington and other central governments are consolidating power by consolidating debt. As people/companies/pension plans/municipalities/states/countries face bankruptcy, more of their liabilities are being absorbed by national and supranational (IMF) balance sheets as opposed to being written off. But what happens when nations turn up insolvent? Sovereign default or printing money to buy debt are two very bad options.

Bank failure Friday

May 14, 2010

Ameris Bank, the acquiring institution of the night’s first failure, has now gone to the well three times. The company’s share price hit a low of $5.05 on Thursday 11/5/06, the day before it made its second FDIC-assisted transaction. Since then, the stock has more than doubled to $10.89. This is good business, acquiring busted banks!

Lunchtime Links 5-14

May 14, 2010

Detroit shrinks itself, historic homes and all (Kellogg, WSJ) Right-sizing the city is exactly the right approach to deal with decline. Shrinking the city’s fixed cost base frees up resources that can be spent more productively in places where folks still live.

Evening Links 5-13

May 13, 2010

Snippets from Goldman Sachs the Musical (New Yorker) Very clever. The lyricist has a strong grasp of what happened.

American bank failures pump up deal flow

May 13, 2010

Vulture investors like Wilbur Ross and small-town community bankers aren’t alone in cashing in on America’s steady flow of bank failures. While the mergers and acquisitions business remains largely in the doldrums, a coterie of investment bankers and advisers outside the bulge bracket is minting fees from the banking crash.

American bank failures pump up deal flow

May 12, 2010

Vulture investors like Wilbur Ross and small-town community bankers aren’t alone in cashing in on America’s steady flow of bank failures. While the mergers and acquisitions business remains largely in the doldrums, a coterie of investment bankers and advisers outside the bulge bracket is minting fees from the banking crash.

Lunchtime Links 5-12

May 12, 2010

New college loan rules put taxpayers at risk (Bennett, Forbes) New rules will make it easier for students to default on debt. It’s good to give them a way to escape debt slavery, but this is the wrong way to do it. Better to stop providing so much aid in the first place. It only serves to inflate a tuition bubble anyway.

$13 trillion….

May 12, 2010

Don’t look now, but total U.S. public debt outstanding is approaching $13 trillion.