Mishkin’s band-aid

Will the interest rate cut be seen as prescient salvation or impulsive band-aid in the coming months? The Fed, it seems, were swayed by Frederic Mishkin who, notes The Economist, argued forcefully in a recent speech that central bankers can cushion the impact of falling house prices on the economy, provided they act quickly and …
Continue reading Mishkin’s band-aid

US housing slump could raise headline inflation

 This extract from John Mauldin’s Thought’s From The Frontline suggests that the downturn in US housing could be bad for inflation: Indeed, there may be some concerns that the CPI (Consumer Price Index) number could come under pressure from the housing component. Given that home prices are falling, that may be considered odd by many. …
Continue reading US housing slump could raise headline inflation

5th Global Corporate Climate Change Report issued by CDP

The Carbon Disclosure Project released its fifth Global Corporate Climate Change Report, tracking carbon disclosure and attitudes toward climate change in the world’s largest companies. The CDP this year also launched the Climate Disclosure Leadership Index, an honor roll for companies who are best addressing climate change issues. The launch coincided with the U.N. summit …
Continue reading 5th Global Corporate Climate Change Report issued by CDP

After the FED dropped rates … the illusion continues

John Mauldin writes convincingly that the Fed is trying to preempt the negative consequences of the housing collapse. However, the players in the market are behaving as if a bail out had occurred. In order for the message to be correctly heard, other signals need to be forthcoming. The problem is that asset markets are …
Continue reading After the FED dropped rates … the illusion continues

EU rates held at 4%

The European Central Bank left interest rates unchanged at 4% on 7 September, but it is not clear that they will not be increased to 4.25%  soon. The ECB is reacting to the increase in perceived risk in financial markets, catalysed by the sub-prime meltdown.  At the same time as the hold on rates increase, …
Continue reading EU rates held at 4%

How We Got into the Subprime Lending Mess

This linked article, How We Got into the Subprime Lending Mess (published by my alma mater Wharton), describes the background to the changes in the mortgage industry that contributed to the dislocation between stated risk/return profiles and reality of the loans. The comments following are insightful too.

US Fed drops rates from 5.25% to 4.75% – oh dear …

Oh dear … Well, it wasn’t as if it wasn’t expected. Futures were pricing a 100% chance of a drop of 0.25% and a 50% chance of a drop of 0.5%. But I still think it was a dangerous mistake. Inflation is pulling at the rein and the speculative dynamic of stock markets continues to …
Continue reading US Fed drops rates from 5.25% to 4.75% – oh dear …

More money than deals in clean tech

As we expected, there appear to be more money than deals in clean-tech. New Energy Finance reports: 2006 was another record year for Venture Capital and Private Equity investment in the clean energy sector, with $18.1 billion invested in companies and projects. This represented a 67% increase on 2005 ($10.8 billion), and beat New Energy …
Continue reading More money than deals in clean tech

Is Northern Rock the “whale” that signals the rebalancing of the price of liquidity?

Anatole Galetsky presents GaveKal’s perspective in Here Comes the Whale that Northern Rock is the large problem that needs bailing out in order to pass through the financial liquidity imbalance that has accrued during the past few years. … on past experience, the long-awaited appearance of the whale – Continental Illinois, Chrysler, Brazil, Drexel Burnham, …
Continue reading Is Northern Rock the “whale” that signals the rebalancing of the price of liquidity?