There are markets, and there is the Market. Markets are networks of people who come together to exchange one thing for another. The Market is the cornerstone of a belief system whose biggest proponent has been the University of Chicago. Chicago: Hog Butcher for the World, according to Carl Sandburg in 1912, whose economy was […]
In Rope-A-Dope 101, we said there are five ways to mask the credit quality of a structured bond, that it is done by manipulating an “invisible” boundary where the consequences of being on one side or the other are not symmetrical, and that the boundary is only invisible to the investor. In Rope-A-Dope 201-205, we […]
The high road of securitization is forward-looking. It promotes economic growth and rewards superior asset quality. Securitization is alive and doing well in grass-roots economies. But maybe you have not come to our blog to read about the high road of securitization. Maybe you have come looking for a map to lead you off the […]
The last entry in this journal was rather pessimistic. In it, we recounted what was likely to happen from the Fed’s irresponsible attitude towards cutting interest rates without a workable plan in mind about what to do next. Our verdict was that nothing good was to come out of it. However, that still left open […]
By admin | Published:
January 28, 2008
Just a few days ago, the Board of Governors of the Federal Reserve pumped enough cash into the US economy to lower interest rates by 75 basis points. For the average American citizen, who would be hard pressed to define what a basis point means, this most recent Fed action is at best meaningless. To […]
In early 2004, we were asked to join a professional support team to help a new equipment lessor get financing through the structured market. The premise of the deal, the team, and our role in it, were not new. The endgame, to get a monoline insurance company to wrap the senior tranches so as to […]
By admin | Published:
December 31, 2007
The last six months have brought American finance to the edge of the abyss. Mortals who, not so long ago, had seemingly achieved demiurge deal-making status are now experiencing their Götterdammerung. A single question now poses and imposes itself: what will the next six months reveal about our financial understanding? As always, only two possibilities […]
So, structured ratings are not good indicators of secondary market value, and market prices are not working their usual magic. Why are we surprised?
More importantly, how do we want the sector-wide securitization crisis of confidence to turn out? Do we secretly desire a return to financial feudalism? Because, unless we step up and take ownership […]
Also posted in Ann Rutledge |
By admin | Published:
August 24, 2007
By Caroline BaumAug. 24 (Bloomberg) — Ever since financial markets went into their summer swoon, economists, analysts and journalists have been trying to explain why a small number of defaults on a small number of home loans morphed into a global liquidity and credit squeeze.
How on earth did the subprime mess come to this? […]
By admin | Published:
November 7, 1970
A cautionary tale about finance
The collapse of the Tacoma Narrows Bridge, due to unforeseen resonance effects, is more than a watershed in the history of bridge design and civil engineering. It is an object lesson in the need to fully understand a problem before designing its solution.
The Tacoma Narrows Bridge, November 7th 1940
Bridges and airplanes represent decades […]