News round-up: 31 Oct 2008 – blog edition
- Legg Mason unit to cut one-third of jobs – FT AlphavilleReuters reports Legg Mason plans to cut a third of the jobs at a unit run by value stock picker Bill Miller after its assets more than halved this year.
- The Economist endorses . . . – Barry RitholtzGee, do you think Europe is looking for a change from the States?
- It’s All My Fault – Angry Bear
- Credit Markets and Macroeconomic Performance in the Great Depression – Mark ThomaGiven all the discussion recently about the relationship between credit flows and the macroeconomy, it seemed worthwhile to review what Ben Bernanke says about this topic with respect to the Great Depression.
- Report: Almost Half of Nevada Homeowners Underwater – Calculated Risk
- Trump – a (late-20th century) American icon – Tim IaconoDonald Trump will go kicking and screaming into the new American “culture of austerity” that was thrust upon us all last month.
- Fed Holds $145.7 Billion in Commercial Paper as of Oct 29 – Calculated RiskThe Fed released the weekly balance sheet report today. The Fed reported that the Commercial Paper Funding Facility LLC holds $145.7 billion in 16 to 90 day commercial paper.
- Chart of the Day: The Russia-Brazil Spread – Felix SalmonAfter writing about my BRIC decoupling thesis, I asked the friendly chaps at Markit if they could share with me the 5-year CDS spreads for the four countries in question. It turns out that India isn’t really much of a credit — it doesn’t like to issue foreign debt — and that therefore its CDS are very illiquid.
- At this rate the world’s financial architecture will have been remade before November 15th – Brad SetserToday the Federal Reserve indicated that it would swap U.S. dollars for Brazilian real, Korean won, Mexican pesos and Singapore dollars — effectively allowing a select group of emerging economies to borrow dollars on terms similar to those available to the G-10 economies. Or almost similar terms.
- Debating the Merits of Mark-to-Market – Deal BookAccounting rules don’t normally inspire fierce passions and flowery speeches. But one such rule has generated huge controversy during the recent financial meltdown: That’s FAS 157, the 2006 accounting rule that sets standards for when certain securities need to be “marked to market.”
- The Dollar’s Not That Strong – Felix SalmonFor the past five years or so, the dollar has been the single largest funding currency in a global carry trade worth untold trillions of dollars. People borrowed and sold dollars, buying all manner of other currencies, from the British pound to the Brazilian real. Now that carry trade is being brutally unwound, and the world’s currencies are snapping back to a much more natural level.
- Why Banks Have Become Schizophrenic – Barry RitholtzThey have become utterly schizophrenic. Whether its the TARP or the credit crisis or deleveraging or something else entirely, I cannot tell you. But damn, these guys have gotten weird.
- Jared Diamond: Why Societies Collapse – Paul KedroskyI’m a big fan of Jared Diamond, in particular his books Collapse and Guns, Germs, and Steel. both of which are laudable efforts to take on massive and highly complex subjects, albeit at opposite ends of societal evolution. Anyway, I see that a 2003 TED talk of his is now available online.
- The soaring yen – Brad SetserBack when it was fashionable to talk about the end of macroeconomic volatility, it was also common to note that volatility had disappeared from the currency market. The absence of volatility — in turn — made carry trades (borrowing in a currency with a low yield to buy a currency with a higher yields) attractive.
- That emerging market exposure – FT AlphavilleAs the world faces up to the risk of emerging market failure, banks’ current exposure – as estimated by the Bank of International Settlements (BIS) – is perhaps worth reiterating. According to Ambrose Evans-Pritchard of the Telegraph, the BIS states that Western European banks hold almost all the exposure to the emerging markets.
- U.S. public pension funds face big losses – FT AlphavilleU.S. public pension funds are facing their worst year of losses in history, exacerbating existing funding shortfalls and putting pressure on state governments to shore them up. In the nine months to the end of September, the average state pension fund lost 14.8 per cent, according to fund company Northern Trust