News Round-up: 26 Sep 2008
I am going to do this round-up of news early because the news cycle is very fast. Top billing today is the WaMu bankruptcy and asset seizure by the FDIC and immediate asset purchase by JP Morgan Chase. Please see my synopsis here.
There is the Economic Patriot Act proposed by Hank Paulson and the long and short on the bailout is there is no agreement forthcoming despite what the politicians have said publicly.
In fact, Reuters has said a White House – Democrat meeting went badly and that the White House saw CEO pay and bankruptcy reform as deal breakers. We can still hope that Congress can overcome these impasses with the President or we can let the finger pointing begin.
As far as the plan itself, I pointed out earlier that Paulson wants to prop up prices using Treasury purchases to mark to market (or mark to Myth as Yves Smith has put it). Gillian Tett has an article below that I highly recommend about marking to market. She warns that the assets that are toxic are probably worth less than current marks. Given her research on Japan and book “Saving The Sun,” she is a voice to be reckoned with.
Housing (Dream locations and one nightmare)
Where the Music Never Stops – NY Times (Lovely places in Nashville, Tennessee)
Yucatán Village & Resort and Wilderness Trail – Breaking Ground (The Yucatan is a lovely place to visit. In December you can see whales swimming everywhere)
In the Chesapeake, a Place Apart – NY Times (just close enough to DC for me to visit)
Writing Her Way Home – NY Times (South Carolina!)
California Home Prices Drop Record 41% Amid Defaults – Bloomberg (adjusted for inflation we’re talking over 50% down, easy. Crazy.)
Deposit run at WaMu forced their hand, regulators say – LA Times
WaMu is largest U.S. bank failure – Reuters
Economic Patriot Act
Where Are the Grown-Ups? – Paul Krugman, NY Times
Putting dodgy assets in deep freeze will not remove rot – Gillian Tett, FT
The Paulson Plan: A useful first step but nowhere near enough – Willem Buiter, VoxEU
White House bailout meeting went badly: Democrats – Reuters
Global Credit Crisis
In a Time of Crisis, Is Obama Too Cool? – NY Times (my answer is no. Judge for yourself)
Morgan Stanley suffers cash flight – FT (They lost a third of Prime Brokerage assets. Wow!)
AIG slumps after signing up for $85 billion Fed loan – Market Watch
– National Post
Central banks dole out cash as bailout doubts grow – Reuters (If this isn’t the Great Depression redux, I’m afraid to see what would be)
Viewpoint: Anatomy of a Meltdown – Stephen Roach, Time
Time for the UK policy makers to wake up and tackle the crisis – Willem Buiter, FT
We need a new Global Monetary Authority – Jeff Garten