Recent Blog Posts
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The Times' Rorshach Geithner Story
Apr 27 20099:26 am EDT -
Sinking Animal Spirits
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Counter-cyclical Urban Policy
Apr 26 200910:00 am EDT -
Be Your Own Counterfeiter
Apr 26 20099:36 am EDT -
Being Tim Geithner
Apr 25 200912:37 pm EDT -
Notes From a Press Conference Naif
Apr 25 20099:41 am EDT -
What Good is the News?
Apr 25 20098:32 am EDT -
Stressful Enough
Apr 24 20092:29 pm EDT -
Not Regretting the Pound
Apr 24 20091:09 pm EDT -
Introducing the New Ford Squeeze
Apr 24 20099:47 am EDT
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When Markets Break
How do you know that markets are broken? Sometimes it's the presence of a clean arbitrage like that in Thomson Reuters shares. But there's a much bigger weirdness going on right now: as John Carney reports, the spread on long-dated agency debt hit 215bp today. Which is roughly the same as the spread on Tunisian bonds, and is actually wider than where Panama is trading. And that's after Hank Paulson came out and made explicit what everybody knew to be the case all along -- that there's no conceivable way that the US government is going to allow the agencies to default on their senior debt.
On the other hand, sometimes you know the markets are broken because Fortress has bought a 16 billion of your lovingly-crafted triple-A CDO tranches at between 10 and 12 cents on the dollar.
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