Simon Johnson

Reggie Middleton's picture

Pending bond maturities due in 2010 are paving the way for the next wave of the Pan-European Sovereign Debt Crisis - Supply, potentially in excess of demand, which portends higher yields and more onerous debt servicing at a time of record fiscal spending!
This is how the crisis will spread through western Europe...

Frontrunning: February 2

  • Tom Hoenig for Treasury (Simon Johnson)
  • Moral hazard prompts TCW and AllianceBernstein to buy bank sub debt (Bloomberg)
  • The dollar-alternative trade continues: commodities rise as AUD drops on no OZ hike (Bloomberg)
  • A scoop of double dip (Barrons)
  • iTraxx Fin widest to iTraxx Europe since Lehman (Bloomberg)
  • Philippine bond sale fails for second time this year (Bloomberg)

Obama’s Plan To Be Judged By A Goldman Breakup

As we drill down into the details of ideas for breaking the economic and political power of oversized banks, we need this litmus test against which serious suggestions should be judged: Does a proposal, at the end of the day, imply that Goldman Sachs should break itself up into at least four or five independent pieces, with the biggest being no more than 1 percent of gross domestic product, or roughly $150 billion?

If the answer is yes, we are making progress in moving our financial system back toward where it was in the early 1990s, when it worked fine (and Goldman was a world-class investment bank) and was much less threatening to the global economy. If the answer is no, we are merely repainting -- ever so gently -- the deckchairs on the Titanic.