Why do we keep playing the protectorate game?

The crown dependencies are possessions of the British Crown: the Isle of Man, Jersey and Guernsey are the principal dependencies. The British Government is solely responsible for defense and international representation of the dependencies, although each island has responsibility for its own customs and immigration. All ‘insular’ legislation has to receive the approval of the […]

Baltic Dry

The Baltic Dry Index is an index covering bulk shipping rates. It is calculated by the Baltic Exchange and is the most commonly quoted proxy for the price of moving dry goods by sea. What is interesting is what has been happening to the BDI over the last few years. Take another look at that. […]

Warren’s timing…

…is pretty near perfect as usual, or so it appears. The FT reports: Shares in bond insurers MBIA and Ambac fell sharply on Friday amid concerns that a rival US bond insurer planned by billionaire Warren Buffett will eat into their ability to win new business and further damage efforts to boost their flagging capital […]

What works replaced by what we believe

The following quote comes from a post on the Guardian website: What I find most striking about this, as about other items in this government’s moralistic agenda, is how opposing arguments simply are not heard. It isn’t just closed mindedness, the government and its supporters are in the grip of a kind of exclusivist belief […]

Hard looks in Zurich

Sneaked out in the scrag end of the year, we find in the FT: UBS, one of the biggest casualties of the subprime crisis, faces the additional prospect of scrutiny by Switzerland’s bank regulator. The Federal Banking Commission (EBK) said on Sunday it would look into how the world’s largest wealth manager was forced to […]

Happy Christmas

I hope yours wasn’t quite as tacky as these deliciously awful figures.

Implicit liquidity support in the US

The FT in the dog end of the year has an insightful article on the Federal Home Loan system. Continuing one of this year’s themes – that the hardest core free marketeers are among the most interventionist when it comes to their own business – it points out how the FHLBs are providing state aid […]

Felix on Finance

I am currently reading The Last Tycoons, an excellent book about the rise of Lazard Frères. Felix Rohatyn is a prominent character in the book: he was one of Lazard’s best known bankers in the 70s and 80s, perhaps one of the best known investment bankers in the world. One quote from Felix particularly struck […]

Death to the MLEC and a delay to the ABX 08-01s

An update on two deaths foretold (neither of which you need an instrument as sophisticated as the Lowell refractor here to see): As suggested earlier, the MLEC is dead. Confirmation from the WSJ is, here. And also as predicted, the ABX 08-01s aren’t coming any time soon. Finally, in the bleedingly obvious category, Bloomberg tells […]

On the management of liquidity risk

Some highlights from FSA’s discussion paper 07/07, Review of the liquidity requirements for banks and building societies follow. On the nature of liquidity risk: Liquidity stresses are low-frequency, but extreme severity, events that are not well-understood … liquidity risks can grow in severity very rapidly… liquidity risk appears to be that it is hard to […]

Renaissance man

Alea reports a talk that James Simons, founder of Renaissance Technologies, gave at NYU recently. Simons is a highly successful quant investor so his remarks are interesting. The part of the Alea article that really piqued my interest was: [...] perhaps the most interesting observation came in response to a question posed by the moderator, […]

Making an impact

I said a little while ago: To make a real difference, the central banks need to parachute in hundreds, not tens of billions. And now (from Bloomberg): The European Central Bank loaned 348.6 billion euros ($501.5 billion) for two weeks to banks to bring down the cost of money at year-end. The FT comments further: […]

A grand to come in

From the Guardian: Families who sponsor visits by overseas relatives to Britain will first have to pay a bond, expected to be £1,000, under new immigration proposals out this week. This is a bad idea in so many ways. Firstly I bet the cost of deporting an illegal immigrant is a lot more than £1K: […]

A Christmas present from the ABX

It’s not much, but the ABX BBB- has bounced since the lows of late November:As you would expect, the effect is more noticeable on the AAAs:Now of course things can go down again from here, but this is at least that rare commodity, positive news on the ABX.

Jump to the courts

The WSJ reports an amusing scrap over Sagittarius, a $985M CDO sold to investors in March by Wachovia and structured, it appears, by Deutsche (who is the trustee). Several UBS funds are investors, and an MBIA affiliate, LaCrosse, is a swap counterparty to Sagittarius. Sagittarius has MBS assets so apparently there was a default event. […]

The MLEC finally falls

Vikram has bowed to the more or less inevitable and consolidated his SIVs. The MLEC is dead. Long live the MLEC. But not the capital noteholders, obviously. Now let’s see how long the dividend lasts. Anybody want to buy Smith Barney?

Dying for Goldie

Goldie has announced that it will publish a mortality index, presumably to stimulate growth in the mortality swap business. Insurance-linked capital markets products have been around the market for a while without really catching on – I remember being told that mortality swaps were the new credit derivatives – but this might stimulate the market […]

Capital substitutes

Bloomberg reports that Ambac is doing something to try to stave off the loss of its AAA: Ambac Financial Group Inc., struggling to avoid the crippling loss of its AAA credit rating, took out insurance on $29 billion in securities it guarantees. The world’s second-biggest bond insurer agreed to transfer the risk that the securities […]

A AAA monoline failure edges closer

According to Bloomberg: Security Capital Assurance Ltd. may lose its AAA credit rating at Fitch Ratings, the first top-ranked bond insurer put on notice since the industry came under scrutiny last month because of rising defaults on subprime mortgages that back securities they guaranteed. Short munis, long treasuries. Update. The tail end of the field […]

Wolfing down the crunch

There is a fascinating article by Martin Wolf in today’s FT. As usual, let me quote selectively and comment. [The credit crunch has] called into question the workability of securitised lending, at least in its current form. The argument for this change – one, I admit, I accepted – was that it would shift the […]