Economists are such cowards. They have now moved from denial of a recession, to one of how much of a recession. Calculated Risk: Recession Predictions Many analysts gathered at the American Economic Association’s two-day annual meeting spoke of a recession as almost a given but differed over how severe it will be. Continue reading “A recession as almost a given but differed over how severe it will be”
Finally an economist calls it like it is in the US, with at least an acknowledgment that the potential impact of the sub prime crisis, is a genuine recession. Interestingly he relates it to a Japan type slump, following their bubble of the late 80’s. Top economist says America could plunge into recession – Times Online Professor Shiller, author of Irrational Exuberance, a phrase later used by Alan Greenspan, the former Federal Reserve chairman, said: “This is a classic bubble scenario. A few years ago house prices got very high, pushed up because of investor expectations. Americans have fuelled the … Continue reading Top economist says America could plunge into recession | The Times
The question that everyone is dancing around is whether a combination of business growth, profits, and Central Bank assistance can get the Banks through this crisis, without it spreading to the broader economy. World losses now suggested at $140Bn +. The question might be, just how large is the + … At some point it could become relevant to individual country economies, through size, and through Banks having to constrain their customers credit, because of their own problems. SUBPRIME LOSSES SET TO SOAR Financial Post Goldman Sachs warned of deepening subprime woes for the world’s largest banks yesterday, forecasting that … Continue reading SubPrime losses set to soar | double or more from previous estimates
More on the Canadian plan to fix the $35bn ABCP market. Turns out the Canadian Banks have indicated receptivity, but did not participate yet. The $35Bn appears to represent ABCP owned by various private funds. ABCP committee plans road show to sell deal Noticeably absent, however, were Canadian banks, which have yet to agree on their role in restructuring the market. There are three categories of ABCP involved. ABCP committee plans road show to sell deal About $3-billion of the total holdings in ABCP contain traditional assets, such as credit card receivables and auto loans, and those trusts will be … Continue reading “What we’re trying to do is save this $35-billion from a meltdown and destruction,” | Purdy Crawford
Reported in the Business section today, the Canadian financial institutions have agreed on a restructure of $33 Bn in Asset Backed Commercial Paper (ABCP). That ABCP has been frozen and not able to be traded since August, when the US Subprime crunch hit. The deal includes a $14 Bn credit facility, and basically exchanges short term notes for longer dated paper. Interestingly the spokesperson for the group that arranged the deal, is a Toronto lawyer, Purdy Crawford. The group is called Pan-Canadian Investors. Based on conversations with a colleague, I suspect this is all a front for the Bank of … Continue reading Canadian Banks restructure debt | Globe & Mail
The simple message here, is that the dollar value of sub prime mortgages (dark grey bars) that are subject to reset [read significant increase in loan payment amount] is still growing, and continues until October 2007 ($33 Bn in October), suggesting bad news still to come. However resets then begin to drop through till end of 2008, when its down to a relative trickle. The significant dark grey form Jan 2007, through to Dec 2008 will generate a lag effect through 2008, and well into 2009 on the US housing market. [hat tip mypocketchange] My Pocket Change » Pssst… I … Continue reading First the bad news … | Sub Prime crisis – the next 6 – 12 month view
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