Four Years Ago Today

September 18, 2012

It’s the single moment I remember most vividly from the 2008 financial crisis.

It was a warm September day, and I was waiting outside a tiny post office in a northern Connecticut town.  The top was down, and Bloomberg Radio was playing that Thursday afternoon.  The sun was gentle, and there was a slight breeze.

Everything was perfect, except for the fact that Lehman had declared bankruptcy on Monday, and on Tuesday AIG had nearly failed and the President had ordered the government to step in and pay 100 cents on the Dollar on its margin calls.

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Look Away from the Pressure Point

September 18, 2012

Where will the QE3 spending make the most difference in asset prices?

As soon at the Fed announced its open-ended commitment to buy MBS at the rate of $40 billion a month, the market sold off the dollar, bought stocks and bought investment grade corporates and junk bonds, sold Treasury Long Bonds, bought non-dollar currencies, and bought just enough MBS to keep prices almost flat (up 2 basis points in yield for the day).

Think about that for a minute — the Fed says they’ll buy MBS, and the price of almost everything else moves more than the price of the MBS.

So the thing to think about is what else might happen as the Fed steps in like the Duke brothers to buy the market (and some day, to sell).

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Semi-famous?

September 2, 2012

I just learned that an article I co-wrote got some airplay on nationalmemo.com.

http://www.nationalmemo.com/the-next-meltdown-how-we-have-failed-to-regulate-financial-derivatives/

Watch that space over the next few weeks for two more installments.

hh