Monetary System

Just moments ago Federal Reserve Chairman Ben Bernanke gave a speech in which he said the following about Lehman Brother: "there was not enough collateral to support the lending." This was Bernanke's response to a question about whether…

Yesterday, I laid out some of my general thinking on the business cycle and the economy. Obviously, understanding the business cycle is important to economic forecasting and is, therefore, central to personal financial planning, general…

Now that policy makers worldwide have finally stepped in to stop the bleeding, we have had a relief rally of monumental proportions. Most global indices were deep into oversold territory, meaning that there was lots of pent-up demand for a…

In Scotland, one of the UK's most venerated names, the Royal Bank of Scotland, a bank that prints its own bank notes as legal tender, has been eviscerated by the over-leveraging and risk-taking of its CEO Sir Fred Goodwin. Sir Fred, an…

If you don't think that the recapitalisation scheme by Gordon Brown doesn't matter, then take a look no further than Nationwide Building Society. The mutual company is not under pressure in the equity markets like RBS, HBOS or Barclays.…

Spanish banking giant Banco Santander has pulled through the credit crisis with a much higher profile than ever before. I was initially skeptical that the firm was hiding huge losses at it had exposure in Spain, the UK and the US, all…

You have probably heard people bandy about the term pro-cyclical as it has become a key concept for economists as we enter a downturn. The crux of pro-cyclicality is that some things rise with an upswing, but fall with downswings --…

Marshall Auerback here: I am somewhat simplistic about this, but if the issue is one of a drive for dollar liquidity, the Fed should be able to address that problem. Before the week ending September 17th, the Fed was not, in fact,…

Given the historic nature of the Lehman Brothers bankruptcy, it bears explaining how the credit default swaps market work and why it matters.

This comes via Credit Fixings. The auction process to settle Credit Default Swap trades on Lehman Brothers bonds put the value of the debt at 9.75 cents on the dollar. That is much lower than one would have expected (12 cents on the…