Rolfe Winkler

Evening Links 2-8

February 8, 2010

Housing rebound in Canada spurs talk of new bubble (Dvorak, WSJ) Last week Paul Krugman toasted the sobriety of Canadian banks. Among other things, he said that low rates aren’t enough to cause a bubble since Canadian rates are low and, well, they don’t have a bubble. If this article is to be believed, Krugman didn’t look closely enough. Banks may use less leverage in Canada, but low rates are encouraging households to borrow big — debt to disposable income is a bubbly 1.42x. Key quote in this piece is near the bottom, where a real estate agent notes that rising prices mean rents are only barely covering mortgage payments for real estate investments. The best definition of a bubble is when debt service payments finally eclipse rents. Then buyers/lenders are betting on continued appreciation, which can only be driven by still-easier credit. Canadian real estate appears to be headed in that direction.

2010: Walking away will gain cachet

December 31, 2009

Why bother? That’s the question more underwater Americans are asking themselves about their mortgage.

Lunchtime Links 12-29

December 29, 2009

Was the global financial crisis a mathematical error? (Steve Keen, Business Spectator) Keen’s latest. Another great piece explaining the flaws of neoclassical economics. (ht Yves)

Evening Links 12-23

December 23, 2009

(Reader note 1: posting will be light through the weekend….taking a few days off)

NYT: Fight to extend the house tax credit

September 16, 2009

It’s perhaps no surprise that the National Association of Realtors is fighting to extend the tax credit for homebuyers. They also want the credit enlarged and they want it to apply to everyone. From NYT:

Banks want accounting rules relaxed

May 22, 2008

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

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.

Is the Oracle Optimistic?

May 5, 2008

Warren Buffett hosted the annual shareholders meeting in Omaha today. If the investing world has a rock star, Buffett is it:

FT: Treasury proposes new powers for Fed

April 30, 2008

This article isn’t long on details. Treasury feels “enhanced regulatory powers” would be a “better tool than interest rates” to “contain asset price bubbles.”

Homes are still too expensive, but by how much?

April 19, 2008

Using a phrase like “too expensive” would seem to be subjective. But compare median house prices with median income (via Patrick). If people’s incomes aren’t climbing, how can they afford so much more house? (Click on the image to see a larger version of the chart….and the back button to return to the post)

The Newswire

April 16, 2008

A few interesting items to pass along today.

The first is an interesting interview with an anonymous hedge fund manager (via JL). It’s a longish interview, but a good insider’s view on everything from the credit crunch to the downfall of Bear Stearns to the hedge fund business itself. A highlight:

Should CDS be regulated like insurance?

April 10, 2008

Arthur Kimball-Stanley published a fascinating op-ed on Credit Default Swaps in the Providence Journal on Monday. I spoke with the author and he gave me permission to republish his piece in its entirety. A 30-page version of this argument was accepted for publication in a law journal to be published this fall. The author gave me a recent draft, though the article below offers the essential elements of the argument. Hopefully it gets traction……