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Sea Change at the Fed "Of his bones are coral made: Those are pearls that were his eyes: Nothing of him that doth fade, But doth suffer a sea change Into something rich and strange" (The Tempest - Shakespeare) The term "sea change" has come to mean a profound transformation ever since...
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Should the Fed Cut Interest Rates? The Shocker in the Employment Numbers Should the Federal Reserve Cut Interest Rates? Will A Cut Make Any Difference? How Housing Woes Hurt the Rest of the Economy Home Again, Home Again The unemployment numbers came in today, and if you look under the hood of the data...
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The Panic of 2007 Muddle Through or End of the World? An Alphabet Soup of Credit Turning Nuclear Waste Into Gold (and Back Again!) Mrs. Watanabe and the Hedge Fund Connection The Rating Agency Blame Game Where Do We Go From Here? Hedge Funds to the Rescue! Warren Buffett Needs to Take Over Moody's...
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The Fugu Ultimatum In the early fall of 1998, I remember being on a flight to Bermuda from New York. I was upgraded and sat next to a very distinguished looking gentleman. He was going to a conference about re-insurance and I was going to speak at a large hedge fund conference. We hit it off, and began...
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The Subprime Virus The Subprime Virus 2007 Mid-Year Forecast Compete With the Pros When the Facts Change Credit? What Credit? global Warming, Maine and San Antonio As predicted in this letter early this year, the credit markets have finally begun to tighten, as a major re-pricing of risk is underway...
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Fun in the Subprime Summer Hot Fun In The Summertime Collateralized Loan Obligations The Economic Outlook for Leveraged Credits The New Mickey Mouse Club Planes, Trains and Automobiles This week I am already in Maine and getting ready for a weekend of fishing with my son Trey, so I am going to take off...
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Introduction This week we continue to look at an alphabet soup of problems: RMBSs, CDOs, Alt-A, BBB and - a new acronym to put on your radar screen - the very useful CDS. When does an AAA rating not mean an offering is ready for prime time? What type of contagion are we seeing from the Bear Stearns blow...
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$250 Billion in Subprime Losses? Is the subprime mortgage market collapsing before our eyes, or did we avoid a disaster as Bear Stearns stepped up to the plate with $3.2 billion to help its ailing funds? As we will see from the data, the problems in the subprime world are not over. The Fat Lady has not...
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Introduction At the risk of being all subprime, all the time, this week we look at what I think are the real risks for the economy as a result of the subprime debacle. How can one side say it is a contained risk (and in one sense it is) and not a problem for the economy while another side says it will...
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Introduction This week we look at the yen carry trade, delve deeper into the mortgage lending world, and see if we can find a possible connection between them and the economy in general through something called complexity theory. As I have written for many months, I think the subprime mortgage problems...
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Introduction Today's Outside the Box will feature one of the better pieces written in the last few years by my good friend Paul McCulley. In his article "The Plankton Theory Meets Minsky," Paul shows the importance of why the problem with sub-prime mortgages will affect the entire housing...
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Introduction This week we look at the recent upspike in volatility, see if we can connect some dots with the recent slew of earnings downgrades and the problems in the subprime mortgage world, and follow the money as risk is being taken off the table. I don't "buy" the China problem, but...