Archive for December 7th, 2009

Repo timb-bomb redux

Monday, December 7th, 2009

Full story here from Henry CK Liu via AsiaTimes.

“On December 2, 2009, the US House Financial Services Committee approved a bill to regulate systemic risk in financial markets which, aside from proposing a new systemic regulator, includes a little-noticed proposal that when any large bank fails in the future, it should be placed into a resolution regime, with creditors losing up to 20% of the value of the debt.

While haircuts are normally part of any restructuring, haircuts have never been applied to the repo (or repurchase) market, where banks raise short-term funds by lending out assets. The new rule would destroy the repo market as a low-cost source of borrowed funds. “The implications will be horrendous … doing this would be madness,” the Financial Times quoted what it said was the head of one large bank as saying. (more…)

Copenhagen climate summit dirty details

Monday, December 7th, 2009

Full story here. We’ll see who wins the Accidental Irony Award…

“On a normal day, Majken Friss Jorgensen, managing director of Copenhagen’s biggest limousine company, says her firm has twelve vehicles on the road. During the “summit to save the world”, which opens here tomorrow, she will have 200.

“We thought they were not going to have many cars, due to it being a climate convention,” she says. “But it seems that somebody last week looked at the weather report.”

Ms Jorgensen reckons that between her and her rivals the total number of limos in Copenhagen next week has already broken the 1,200 barrier. The French alone rang up on Thursday and ordered another 42. “We haven’t got enough limos in the country to fulfil the demand,” she says. “We’re having to drive them in hundreds of miles from Germany and Sweden.” (more…)

The problem is lack of jobs, not lack of resources

Monday, December 7th, 2009

Full story here from Marshall Auerback via One viewpoint on the economy. I can make arguments for and against this, but as with art it’s good to expose yourself to different points of view.

“The government of the largest economy has run short of money. At least that is what Mr. Obama sought to convey at his “jobs summit” last week.  The President said he would entertain “every demonstrably good idea” for creating jobs, but he cautioned that “our resources are limited.”

What a confidence inspiring notion!  How can we possibly solve the problem of unemployment in these circumstances?  The preposterousness of the statement is only matched by the paucity of economic understanding that it manifests. (more…)

Where is Neel Kashkari?

Monday, December 7th, 2009

Full story here. Remember that 35-year old who was 2nd in command at the Treasury back in the Paulson “Don’t move or the economy gets it” hostage days? Now decided to leave himself in isolation. 36 frickin years old and he can afford to retire? What else did he pick up at Treasury?


And you called us cynical for calling the Washington Post piece a public relations plant.

In addition to hiring a top equity team, we have also recognized the need for an experienced person to work closely with PIMCO’s Executive Committee to lead our entry into this and other new businesses over time. Accordingly, Neel Kashkari is joining us on December 14 to lead new investment initiatives. Neel will be based in our Newport Beach office.

Dealbreaker has the rest. (more…)