There’s no way to understate the enormity of what happened yesterday evening, ladies and gentlemen. Yesterday morning, I wrote in this space that it was the first day of the rest of Wall Street’s life. But then, the Federal Reserve rebooted the financial world. Today is the first day of a brand new life. The events of the past four days have been so momentous | Read More »
Yesterday was the first day of the rest of Wall Street’s life. At the beginning of this year, there were five major broker-dealers. In March, the Bear Stearns Companies were acquired by JP Morgan Chase with a large assist from the Federal Reserve. Yesterday, Lehman Brothers filed for Chapter 11 bankruptcy. On Sunday, Merrill Lynch agreed to be acquired by the Bank of America. As | Read More »
As I described here, this is the weekend that the Treasury and the Federal Reserve decided to stop bailing everyone out. Secretary Paulson has been hinting for weeks now that we have to let capitalism work the way God intended it to. Which means: if you screw up, you die. This is what we free-market conservatives have been saying we wanted all along, folks. We’ll | Read More »
Ladies and Gentlemen, I’ve been faithfully chronicling the global credit and financial crises for you since the first cracks started appearing in early summer of last year. Tonight, with the almost-certain collapse of the investment bank Lehman Brothers, the crisis moves into a new and possibly very dangerous phase. I’m going to keep you up-to-date on the key developments over the next few days, or | Read More »
It’s been widely reported that Timothy Geithner (the President of the New York Fed) summoned a group of Wall St. and banking CEOs to a pow-wow in lower Manhattan on Friday evening, with Treasury Secretary Paulson in attendance. The subject: Lehman Brothers, the 158-year-old investment bank which is in dire need of new capital, partly because of losses in its large portfolio of commercial (not | Read More »
I’m going to get into three things with you this morning. First, I’d like to address the issues raised by many respected people, in regard to the suppression of private interests by an agency of government. To do this, I’m going to fill in some of the history of Fannie and Freddie. Second, I’ll give more detail on the exact terms of the Treasury takeover | Read More »
There are two points I want to make to you this morning, as the impact of yesterday’s nationalization of the mortgage GSEs works its way through the system. Here’s more information. First: while this is most definitely a fundamental change in the structure of the mortgage markets, it is not a change in our government’s existing policy of deep intervention in housing. The people who | Read More »
At 11AM Eastern Time on Sunday, September 07, 2008, the Treasury Department released the text of a joint statement regarding the GSEs, Fannie Mae and Freddie Mac. The statement contains remarks by Treasury Secretary Henry Paulson, and Director James Lockhart of the newly-chartered Federal Housing Finance Agency. (The FHFA now has regulatory oversight over the GSEs.) As expected, the GSEs will enter government conservatorship (which | Read More »
About two weeks ago, I wrote in this space that some very large tectonic plates were starting to move far below sea level in the financial world. That was based on some unusual patterns I was seeing in the overnight repo and money markets. I guessed (but had no information to confirm) that whatever was in the breeze had something to do with Fannie Mae | Read More »
Today’s trading has the dollar stronger than $1.47 against the euro. It started the week in the neighborhood of $1.53. Oil is down around $111 and gold is below $800. I told you folks that this shift would be rapid, once it got started.
One of the things we do for you here at RedState is to cut through the noise and spin so you’ll know what’s really going on. If you were reading the headlines yesterday, you doubtless heard about a new government study showing that a great many business corporations don’t pay any income taxes. Well, no [excrement], Sherlock. If you don’t make any money in a | Read More »
ABC News, by way of the Associated Press, is reporting that “most” US corporations, and foreign corporations doing business in the US, paid no income taxes between 1998 and 2005. What reportedly happened is that Senators Dorgan (D-ND) and Levin (D-MI) went to the Government Accountability Office (GAO) and asked them to find them a stick to hit business over the head with. Supposedly, this | Read More »
A vast movement involving enormous amounts of capital is now underway. Investors around the world are buying dollars again. And they’re selling the oil, gold and other commodities that have been serving as a hedge against dollar weakness since the Federal Reserve started aggressively cutting interest rates eleven months ago. As I write, the US dollar is trading above $1.50 to the euro. The dollar’s | Read More »
Ok, this is pretty interesting. Senator Obama told us a few weeks ago that John McCain’s proposal for a summer-long Federal tax holiday on gasoline was nothing but empty political theater. So now The One has given us a gesture with quite a bit more theater to it. He wants to give every adult American $500, right now. You can read his plan here. So | Read More »
We spend a lot of time worrying about the economy in the United States, especially as it relates to politics and policy. We’re facing very slow growth, well below the long-term trend, and certainly below what we’re capable of. At the same time, inflation is running well above normal (we reached a 5% annual rate in June). Europe faces similar problems, although their policy response | Read More »
Update: 9:40am EDT, 14Jul08: Overseas markets reacted well to the Paulson “we have a plan” statement. Asian markets ended lower on regional concerns while Euro markets are somewhat higher. The US stock market has opened up over 100 points, while the US Treasury market is only slightly lower. FNM and FRE stock were both up about 20% in pre-market trading, while their bonds, swaps, and | Read More »
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