US banks want you to carry the can for their sub-prime mistakes

A rescue plan proposed by a group of large banks and backed by Treasury Secretary Paulson (who presided over Goldman Sachs massive foray in to sub-prime CDOs etc) recommends a massive rescue fund the Master Liquidity Enhancement Conduit (mmmm!) which would borrow from the public and invest the proceeds in mortgage-backed securities. So, banks (which …
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How the sub-prime melts …

A good explanation of how mortgages were packaged, sold and then turned to dust from Fortune: Junk mortgages under the microscope -A close-up of one deal shows how subprime mortgages went bad.  And here’s the graphic to keep you in the picture.

Global business confidence index still positive, just

The Economist launched a global business barometer conducted by EIU which polls 1,000 executives.  While it is just positive, I expect it to turn negative by January when the next poll will be taken.  There are differences by region and industry and these differences are in line with what you might expect.

Stock prices do not always go up

In case you are still entirely convinced that the softness in stock markets is temporary and can be relived by another interest rate cut, please read this potted history of bear markets by The Economist. Wall Street has had a good run for a quarter of a century, but if were to go the way …
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All the pork in China …

As food and toy safety concerns sizzle in the media, Ethical Corp published a readable article on the recent history of demand and supply of pork in China.  It is useful because it illustrates how markets work in China.  And it’s amusing.  Here’s an extract: Pig farmers responded the same way all Chinese producers of …
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The risk of a global coordinated slump

The Economist asks whether the golden age of stable growth enjoyed by America and others for 2 decades is coming to an end. Regular readers will know that my prognosis is not optimistic. While the risk of a global coordinated slump is low, it seems that economic imbalances have grown rapidly beyond historical norms in …
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Invest in Kenya: Focus Kisumu

A new African investment guide, Invest in Kenya: Focus Kisumu, was launched by the Millennium Cities Initiative and the Columbia Program on International Investment in Nairobi on September 26. MCI’s first investor’s guide focuses on Kisumu, the first city named a Millennium City. Kisumu, located on Lake Victoria, is Kenya’s third largest city and an …
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Sub-prime losses estimates rising

Fed Chairman said during testimony to the the House Committee on Financial Services on 20 September that losses from sub-prime mortgages have far exceeded “even the most pessimistic estimates”. This statement is disappointing because it undermines any build-up of confidence that might be encouraged by recent rate cuts and liquidity injections. But worse, his comments …
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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 …
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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, …
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