Chapter Eleven.
I have to integrate bonds and bond insurance into the over-all picture I've sought to create of what happened, especially in the US though we did all too good a job of then exporting it, in the period 2007-08. This requires backing up chronologically. It was in the world of quasi-public agencies that the notion of "too big to fail" got its start when Nelson Rockefeller and John Mitchell (before he was immotalized by the Watergate scandal) planned a novel way of financing affordable housing, although they didn't actually use that phrase.
1. Nelson Rockefeller and the "moral obligation" bonds of New York
2. The rise of the muni bond insurance industry
3. Who is really paying for this insurance? Third party payment as a regular matter is a common symptom of systemic trouble.
4. MBIA, accounting chicanery, and crack houses as collateral
5. Elliott Spitzer and rumblings in early 2008. (Valentines' Day)
6. Fall of Bear Stearns. Spitzer's fall served as comic relief.
7. The rest of that year from the bonds/insurer POV.
The material included under this heading in my book proposal can serve as the chapter's ending:
Where do we go from here? The credit crunch of 2007 and the stock crash of 2008 are in the history books and time travel is impossible, so we only work forward.
We should be wary of a “hair of the dog that bit us.” We should refuse to resolve this hangover by easy-money nostrums and loose-accounting remedies, or by making it easier for corporate managers to entrench themselves. That dog will only get more rabid and bite still more devastatingly if we indulge him further.
Showing posts with label municipal bonds. Show all posts
Showing posts with label municipal bonds. Show all posts
21 April 2011
30 January 2011
Annual Dilbert Post
Scott Adams, the cartoonist who created Dilbert, likes to say that there are only nine news stories, constantly re-written.
Every once in awhile I like to check the newspaper with his list in mind, to see if he is right. I'll start with his wording unmodified by examples.
1. EXTREME WEATHER BATTERS SOMEPLACE
2. IDIOTS KILL INNOCENT PEOPLE
3. POLITICIAN DOES SOMETHING ILLEGAL
4. PRIMATE ATTEMPTS INAPPROPRIATE SEX
5. EXPERTS WARN OF FINANCIAL CALAMITY
6. BIG COMPANY BUYS ANOTHER BIG COMPANY
7. FAMOUS PERSON DOES SOMETHING INTERESTING
8. A SCIENTIFIC DISCOVERY MIGHT BE USEFUL IN TEN YEARS
9. GOVERNMENT FAILS TO ACHIEVE A GOAL
Does that break-down hold up for the news of the past week or so?
1. The extreme weather story. One word: Australia.
2. Idiots kill innocent people. Always too easy. I won't even include a link. Check your local paper this morning.
3. Politician does something illegal. For this one, I've got a cool link, and it brings us in imagination to sunny Italy!
4. Primate attempts inappropriate sex. A porn-film operation under the primatological name "Cheeky Monkey Inc." seems to have made inappropriate use of a food vending truck.
5. Experts warn of financial calamity. And the municipal bond market is the target of many of the latest warnings.
6. Big Company Buys Another Big Company. These mergers often take on a trans-national cast. That's nothing new. But when the industry that is consolidating is defense consulting, it's still news.
7. Famous Person Does Something Interesting. Ah, the celebrity news category! Ricky Gervais seems to have touched a few Hollywood nerves.
8. The scientific discovery that might be useful in ten years? That CERN thing -- wasn't it supposed to have found that all-important Higgs boson by now? How long will it remain elusive before particle physicists wonder (a) whether it exists and (b) if it doesn't, how to patch up their theories?
9. Government fails to achieve a goal. The governments of Europe have experimented in recent years with the creation of a unified currency zone. That experiment may be crashing to an end. Symptoms of the crash are in all the papers.
Yes, I think Scott Adams has a point.
Every once in awhile I like to check the newspaper with his list in mind, to see if he is right. I'll start with his wording unmodified by examples.
1. EXTREME WEATHER BATTERS SOMEPLACE
2. IDIOTS KILL INNOCENT PEOPLE
3. POLITICIAN DOES SOMETHING ILLEGAL
4. PRIMATE ATTEMPTS INAPPROPRIATE SEX
5. EXPERTS WARN OF FINANCIAL CALAMITY
6. BIG COMPANY BUYS ANOTHER BIG COMPANY
7. FAMOUS PERSON DOES SOMETHING INTERESTING
8. A SCIENTIFIC DISCOVERY MIGHT BE USEFUL IN TEN YEARS
9. GOVERNMENT FAILS TO ACHIEVE A GOAL
Does that break-down hold up for the news of the past week or so?
1. The extreme weather story. One word: Australia.
2. Idiots kill innocent people. Always too easy. I won't even include a link. Check your local paper this morning.
3. Politician does something illegal. For this one, I've got a cool link, and it brings us in imagination to sunny Italy!
4. Primate attempts inappropriate sex. A porn-film operation under the primatological name "Cheeky Monkey Inc." seems to have made inappropriate use of a food vending truck.
5. Experts warn of financial calamity. And the municipal bond market is the target of many of the latest warnings.
6. Big Company Buys Another Big Company. These mergers often take on a trans-national cast. That's nothing new. But when the industry that is consolidating is defense consulting, it's still news.
7. Famous Person Does Something Interesting. Ah, the celebrity news category! Ricky Gervais seems to have touched a few Hollywood nerves.
8. The scientific discovery that might be useful in ten years? That CERN thing -- wasn't it supposed to have found that all-important Higgs boson by now? How long will it remain elusive before particle physicists wonder (a) whether it exists and (b) if it doesn't, how to patch up their theories?
9. Government fails to achieve a goal. The governments of Europe have experimented in recent years with the creation of a unified currency zone. That experiment may be crashing to an end. Symptoms of the crash are in all the papers.
Yes, I think Scott Adams has a point.
31 December 2010
Top Financial Stories 2010
I generally ask myself at this time of year what were the biggest stories of the past twelve months, in business/financial news.
By "stories," I don't mean themes, such as "China Rising" or "EU unraveling." I mean stories, such as one might have seen in a particular newspaper on some specific day. Of course, I choose the ones I do largely because they illustrate an important theme. But the theme itself isn't the story.
Further, I don't rank them, as in a top ten list. I generally assign one top story to each of the twelve months.
All that said, here is this year's list.
January. Google announcement. Google said that it was no longer willing to censor its searches in the People's Republic of China in accord with the desires of the authorities there. This was part of an escalating dispute that would lead to Google pulling out of China altogether in March.
February. Two competing biotech companies in Denmark claimed a break through in the production of commercially viable cellulosic ethanol.
March. U.S. health care reform bill finally passed -- though the actual changes are to be phased in over a period of years. Judicial challenges to the new law are an ongoing story as the year ends.
April. Greek bonds. The S&P rating for these bonds was lowered to junk level. The unfortunate acronym "PIIGS" for the 'periphery' countries of the EU receives some currency. (For the record, that's Portugal, Ireland, Italy, Greece, and Spain.)
May. The EU Finance Ministers. The Finance Ministers over-rode the strong objections of both the outgoing and the incoming UK government, approving the Alternative Investment Fund Manager (AIFM) Directive.
June. The Gulf of Mexico oil spill. This spill had begun with an explosion on the Deep Horizon platform in April, but it grew as a story week after week, and only this month did it attain totemic full-sh!t-storm significance, even at the level of diplomacy between US and UK.
July. The Dodd-Frank bill reforming the way the financial services industry in the U.S. is regulated, passed. Obama signed it. Much of it kicks the can forward, authorizing reports and possible new regs by a variety of agencies. Some obvious reforms, like the consolidation of CFTC with SEC, go still unmade.
August. The Hong Kong Monetary Authority. The HKMA announced the tightening of its rules on mortgage lending. This reflected its concerns about a developing real estate bubble in the Special Administrative Region.
September. Muncipal bonds in the U.S. Meredith Whitney put out a 600 page report predicting big trouble ahead for the municipal bond market in the US. By serendipity, she released this just as Harrisburg, PA was getting into big fiscal trouble.
October. Sarkozy, President of France. This month, the President pushed pension reforms through the French legislature despite crippling nationwide strikes. (And since we're talking about France, this was also the month that Kerviel was sentenced.)
November. Midterm elections in the US. The most remarkable development here, from the point of view of this list, was the defeat of a proposition designed to suspend AB32, in California, and the election of a Governor committed to enforcing same. AB32 is California's cap-and-trade bill regarding carbon emissions. This development has kept cap-and-trade alive, despite its political failure at the federal level.
December. Ireland. In crisis, and after cutting a deeply unpopular deal with the IMF, Ireland enacts legislation that readies a sweeping re-organization of the banking sector there. Memories of the "Celtic tiger" are just that.
A quick perusal of this list shows that it is much less of a US-centric compilation than most of its precursors in this blog. I have a hometown bias. In this case, though, only five of the stores that strike me as the biggest in their respective months are US-oriented. Five are European, and the other two are Chinese. What does that mean? Nothing much, I suppose.
Happy new year everyone.
By "stories," I don't mean themes, such as "China Rising" or "EU unraveling." I mean stories, such as one might have seen in a particular newspaper on some specific day. Of course, I choose the ones I do largely because they illustrate an important theme. But the theme itself isn't the story.
Further, I don't rank them, as in a top ten list. I generally assign one top story to each of the twelve months.
All that said, here is this year's list.
January. Google announcement. Google said that it was no longer willing to censor its searches in the People's Republic of China in accord with the desires of the authorities there. This was part of an escalating dispute that would lead to Google pulling out of China altogether in March.
February. Two competing biotech companies in Denmark claimed a break through in the production of commercially viable cellulosic ethanol.
March. U.S. health care reform bill finally passed -- though the actual changes are to be phased in over a period of years. Judicial challenges to the new law are an ongoing story as the year ends.
April. Greek bonds. The S&P rating for these bonds was lowered to junk level. The unfortunate acronym "PIIGS" for the 'periphery' countries of the EU receives some currency. (For the record, that's Portugal, Ireland, Italy, Greece, and Spain.)
May. The EU Finance Ministers. The Finance Ministers over-rode the strong objections of both the outgoing and the incoming UK government, approving the Alternative Investment Fund Manager (AIFM) Directive.
June. The Gulf of Mexico oil spill. This spill had begun with an explosion on the Deep Horizon platform in April, but it grew as a story week after week, and only this month did it attain totemic full-sh!t-storm significance, even at the level of diplomacy between US and UK.
July. The Dodd-Frank bill reforming the way the financial services industry in the U.S. is regulated, passed. Obama signed it. Much of it kicks the can forward, authorizing reports and possible new regs by a variety of agencies. Some obvious reforms, like the consolidation of CFTC with SEC, go still unmade.
August. The Hong Kong Monetary Authority. The HKMA announced the tightening of its rules on mortgage lending. This reflected its concerns about a developing real estate bubble in the Special Administrative Region.
September. Muncipal bonds in the U.S. Meredith Whitney put out a 600 page report predicting big trouble ahead for the municipal bond market in the US. By serendipity, she released this just as Harrisburg, PA was getting into big fiscal trouble.
October. Sarkozy, President of France. This month, the President pushed pension reforms through the French legislature despite crippling nationwide strikes. (And since we're talking about France, this was also the month that Kerviel was sentenced.)
November. Midterm elections in the US. The most remarkable development here, from the point of view of this list, was the defeat of a proposition designed to suspend AB32, in California, and the election of a Governor committed to enforcing same. AB32 is California's cap-and-trade bill regarding carbon emissions. This development has kept cap-and-trade alive, despite its political failure at the federal level.
December. Ireland. In crisis, and after cutting a deeply unpopular deal with the IMF, Ireland enacts legislation that readies a sweeping re-organization of the banking sector there. Memories of the "Celtic tiger" are just that.
A quick perusal of this list shows that it is much less of a US-centric compilation than most of its precursors in this blog. I have a hometown bias. In this case, though, only five of the stores that strike me as the biggest in their respective months are US-oriented. Five are European, and the other two are Chinese. What does that mean? Nothing much, I suppose.
Happy new year everyone.
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