Fed draws a line in the sand 17 Mar 2008 Bear Stearns descent towards insolvency forced the US central bank to take drastic action: $30bn of support for JPMorgan s rescue of the Wall Street firm and discount window access for brokers to prop up the securitisation market. The Fed has rarely been this handson.
US should be congratulated on swift Bear bailout 17 Mar 2008 The contrast with the UK's months of dithering over Northern Rock is extreme. The Fed has had to oil a privatesector solution with $30bn of public money. But it has avoided nationalisation. What's more, the virtual wipeout of Bear's shareholders limits moral hazard.
What happens in Tibet may not stay in Tibet 17 Mar 2008 For the first time ever, the monks of Lhasa have political leverage from China s hosting of the Olympics. A successful revolt might embolden others particularly those hardhit by China s worryingly rampant inflation to rise up, too. There s a risk of general civil unrest.
The Fed’s alphabet soup 17 Mar 2008 The US central bank has expanded its financing menu for banks and brokers. Dwight Cass explains how the TAF, TSLF and PDCF programmes work.
Could the Fed run out of money? 14 Mar 2008 Its bailout of Bear Stearns is the third time it has relaxed the rules for pumping liquidity into the market in a week. If any more institutions need cash, the Fed's $700bn of conventional firepower might be depleted. It might then have to find yet more unconventional tools.
Losses of 40% will make SWFs wary of bank rescues 14 Mar 2008 Sovereign funds have put $50bn of equity into struggling Western banks. The shares are down by over a third. High dividends will cut their losses, but the debacle should be enough to deter SWFs from being so helpful the next time the begging bowl goes round.
Paulson misses multiple tricks on financial reform 13 Mar 2008 The US Treasury Secretary's plans to avoid a repeat of the current crisis are only soso. They apparently don't fully grasp the nettle on monetary policy, incentive structures, risk management, financial complexity, bank capital or ratings agencies. Marks out of 10? About 4.
Freddie and Fannie should raise more capital 13 Mar 2008 If they have called the housing market right, they may not need more. But that s a big if. And with capital tight, they can't easily help the US mortgage market their public mission. Raising new equity would dilute shareholders. But if it's spent wisely, they could benefit.
Did the Fed torpedo Carlyle Capital? 13 Mar 2008 Some on Wall Street argue the Fed s new $200bn Term Securities Lending Facility caused Carlyle s lenders to demand more collateral, so they could trade it for government bonds. That s farfetched. But a similar drama could unfold for other types of mortgage funds.
Make budget simplicity the helmsman’s course 11 Mar 2008 Alistair Darling must present a budget for an economy so far largely untouched by the credit crunch, but which could soon be hit hard. The UK chancellor's best course is to acknowledge the pending damage to growth and revenue, and trim accordingly.
US mortgage bailout options 11 Mar 2008 Pressure is growing in Washington to aid underwater homeowners. Robert Cyran handicaps the various government bailout plans.
Spitzer’s peccadilloes brighten Wall Street gloom 10 Mar 2008 But bankers shouldn t take comfort in their former scourge s downfall. Sure, he s done some strongarming over monolines recently. But even if revelations about his alleged use of a prostitute leads to his resignation, that s not going to help Wall Street.
Malaysian economic risk is population not Islamism 10 Mar 2008 Malaysia's election results show that Islamism is not a big threat the successful opposition coalition includes both Islamists and urban secularists. Population growth is a greater danger; at 1.8% it could impose an intolerable economic burden should commodity prices decline.
Spain starting to pay cost of Dutch disease 7 Mar 2008 The Spanish windfall was not gas or oil, but money the single European currency. It fuelled a construction boom, which is all but over. The shift to a more balanced economy will inevitably be painful. The incoming government elected on March 9 must be nimble to avoid the worst.
War would hurt Colombia more than Venezuela 6 Mar 2008 Hugo Chavez's belligerent threats towards Colombia may be smart. War would affect Venezuela's economy only if Colombia attacked its oil installations, while Chavez could use it to entrench himself. Colombia, a modern democracy with a balanced economy, is much more vulnerable.
Paulson and Bernanke should hold their tongues 6 Mar 2008 The supposed stewards of US banks have sown confusion by competing to float outlandish mortgage bailout schemes. Mr Market is ready to believe anything even the unlikely idea that the government would explicitly guarantee Fannie Mae s debt. They re making a bad situation worse.
Hillary can win by playing nice 5 Mar 2008 Not necessarily the presidency even after Ohio and Texas she is behind in delegates. But a graceful defeat would leave her poised to be a Democratic powerhouse for decades. An ugly primary victory could split the party, lose the White House and hobble her career in the Senate.
Will the real Barack Obama please stand up? 3 Mar 2008 His recent promise to renegotiate NAFTA and his campaign s subsequentlydenied reassurance to Canada are disquieting. His advisors are moderate, but Obama has been rated the US Senate s most liberal member. So which is he: thoughtful moderate or closet extremist?
Chavez fancies a distracting Colombian war 3 Mar 2008 Venezuela s president, Hugo Chavez, has sent tanks to the Colombian border and spoken of war against the Israel of the Americas . Chavez has disturbing imperial dreams. But he also wants to distract Venezuelans from shortages and soaring inflation.
President Medvedev just might change Russia 2 Mar 2008 The new presidentelect is Putin s anointed heir, but doesn t have the same background or ideas. Western countries can hope for more liberal policies, but not yet. Medvedev can t do anything until and unless he gets firm control of the security services.