Redstate

Posted at 7:16am on Mar. 29, 2008 More on The Federal Reserve's St. Patrick's Day Massacre

The New York Fed Puts on a $29 billion Trade

By blackhedd

Two days ago, I wrote here on the widely-reported $30 billion loan that the Federal Reserve made as part of brokering the acquisition of the Bear Stearns Companies by JP Morgan Chase (the "St. Patrick's Day Massacre").

I now have much more information on what this deal is all about. I guessed quite wrong about the deal structure. The $30 billion loan is not a term repo as I originally thought. Nor is it likely to generate monetary losses for taxpayers. (In fact, the opposite is true.)

But it is something bold and different that's worth understanding. In fact, it's a major milestone event in the monetary and financial history of the United States.

Before I launch into this, let me set the context by reminding you why all this financial mumbo-jumbo is important: it's because of politics. Even before the full effects of the credit crisis make themselves felt, we're already deeply into a paroxysm of "the sky is falling! What is the government going to do about it?" I'll be posting as much as I can on this subject in the coming days and weeks, because there is at least as much danger to the real economy from a mad dash toward new regulations and Federal involvement, as there is from the financial-system disorders themselves.

Keep reading...

Posted in bailout | Bear Stearns | Economy | federal reserve | JP Morgan Chase | SIV — Comments (49)/ Email this page » / Read More »

Posted at 9:35am on Nov. 27, 2007 Citigroup Lands in Drudge's Doghouse

An Arcane Investment Product Hits the Front Pages

By blackhedd

I was nonplussed to see a big scare headline on the Drudge Report, linking this wire story, under an ugly three-month chart of Citigroup's stock price.

I was even more weirded out to see that the story was about Structured Investment Vehicles (SIVs), a form of engineered financial product that is abstruse enough to confuse professionals, let alone the average Drudge Report reader.

Actually, there was important news from the land of SIVs today, but it came from the London-based Hong Kong-Shanghai Banking Corporation (HSBC), one of the world's largest retail banks. Our intrepid wire reporter (and others) have been spinning Citigroup as bad guys and HSBC as good guys, but as usual there's more to the story.

Read on...

Posted in Citigroup | Economy | finance | Paulson | SIV | subprime mortgage — Comments (20)/ Email this page » / Read More »