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    Thoughts From the Frontline, September 2008

    Who’s Afraid of a Big, Bad Bailout?

    September 26, 2008

    "A tournament, a tournament, a tournament of lies.
    Offer me solutions, offer me alternatives and I decline.
    It's the end of the world as we know it and I feel fine.
    (It's time I had some time alone.)"

    - Lyrics from R.E.M., 1987

    Flying last Tuesday, overnight from Cape Town in South Africa to London, I read in the Financial Times that Republican Congressman Joe Barton of Texas was quoted as saying (this is from memory, so it is not exact) that he had difficulty voting for a bailout plan when...

    Betting on Financial Armageddon

    September 19, 2008

    My Dad used to tell me there is no accounting for standards when looking at something that seemed odd. Today, we have faulty standards for accounting that are ripping apart the fabric of the world's economy. How can a security that has a high probability of full repayment be downgraded from AA to junk levels? What we will explore today tell us a lot about why we are in the crisis state of affairs. Since I wrote you last Friday, the financial landscape of the world has changed even more. And...

    Housing: Are We at the Bottom?

    September 12, 2008

    This week we look at the housing market in some detail. When can we expect it to turn around? Part of the problem is that a new wave of foreclosures is coming due, and this time it is not subprime. And that means more problems for the large financial companies. Also, as predicted here, consumer spending is taking a hit as consumers are finding it increasingly difficult to get credit and a deteriorating labor market is dragging down total spending. There are some very interesting details in the...

    Thoughts on the Continuing Crisis

    September 5, 2008

    We are entering the next stage of the credit crisis, and one which is potentially more troubling than what we have seen over the past year, absent some policy reactions by the central banks and governments world wide. The crisis was started by an intense run-up in leverage by financial institutions and investors world wide, investing in increasingly risky assets such as subprime mortgages and then the realization that leverage could hurt. The deleveraging process started to intensify last year...