Split Infinitives and the Bank of Queensland

Some inspired reporting from the AFR yesterday, touching on a Bank of Queensland guidance update:

“…the bank heartened investors by reiterating that impairment charges for the 2009 year remained in line with 2008, despite the rapidly slowing economy causing other banks to raise dramatically their own provisions for bad loans.”

This raises three important issues:

1. The AFR clearly trains its journos well in avoiding split infinitives.
2. Presumably if BoQ had cut their bad debt provisions investors would have been deliriously happy.
3. If this constitutes good news I wonder what constitutes bad news?

A Big Iceland

Some sobering thoughts from the Business Spectator on the drama unfolding in the UK.  Click here for the full article.

Odds on a Depression, or Depression Odds-on?

While Centrebet here may be running a book on the chances of a recession in Australia, Intrade has gone one better by doing the same thing for a depression.  I’m a bit confused about the definition they’re using for Depression, but the really depressing thing is the way the odds have moved in recent times, as the graph demonstrates.  Note that the prices on the right hand scale (currently 55.5) represent the likelihood of a depression (around 55% based on these numbers).  Click the graph to see contract specs etc.  It’s also worth having a look at Calculated Risk here for their summary of the definition of “depression” and why it’s flawed.

Closer to home, it’s encourage to see that Centrebet punters are taking a slightly less jaundiced view of the Australian economy, with the price for an Australian recession in 2009 drifting out to  $1.27 from $1.20 in mid-December.  Click the graphic for more info.

 

 

Alas there seems to be a bit of a disconnect between Centrebet and the SFE – the mid 2009 cash rate implied by bank bill futures prices clearly suggests a fairly serious recession in the offing.

First Home Owners Grant Inflates Housing Prices!

Who would have thought it?

Read the Crikey story here.  And how’s this for a wrap up?

“If the Government really wanted to help first home owners they would remove the Howard Government’s grant altogether, but who are we to let a sound economic policy get in the way of a populist vote grab?”

Kevin ‘07 Christmas Card

Subprime in a Nutshell

  …or as Basil would say: “Nutcase more likely”.

 

 

 

This is a very neat one page summary of the subprime fiasco and subsequent global financial crisis.  It ties together the roles played by the lenders, borrowers, investment banks and rating agencies, although there’s no mention of how or why the regulators went missing in action.

Click here to read the article.

'Greenspan Put' May Encourage Complacency

Terrific article from the FT warning us that the infamous "Greenspan Put" may encourage complacency and create moral hazard.

That was in December 2000, a mere eight years ago.  A nice call there by Peronet Despeignes.  Not so nice call by Big Al Greenspan, whose aura was so pronounced back in 2000 that it can be seen clearly in the photo to left.

Click on the article for the full story.