All GLG News Analyses Filed Under: Asset Management & Private Banking

Write-downs for high-risk, high-yield corporate debt, known as "junk", could dwarf losses in the mortgage mess. History repeats itself again and again. Bottom is not here, coming in the next year or two.

While many companies and investors are planning on what to do with cheaper money due to the rate cuts, one of the implications has been that a rate cut will help re-start the mortgage industry engine. Yes, originators will get some new refi's completed and earn some fee income, and there will be a few...

What should the rating agencies do?   1 perhaps step back a little from ratings based largely on what they put forward as immutable quantitative stress tests that were not supposed to change with the credit cycle and turn a bit more to judgment and subjectivity because credit is not just a...

VaR requires past price series which is not reliablie for illiquid securities VaR can be used for credit risk to do Credit VaR but this is frequeently not done VaR does indeed miss liquidity risks VaR entails many assumptions and so it is hard to compare VaR from one to another institution Internal...

VaR is just a summary number for quantifying 'normal' market risk, it will lead you astray if you expect it to protect you from other risks, such as liquidity and credit risks. Do not hang your hat on just the one porfolio VaR number without knowing all other risks

Any near-term rally in the bear market is likely to be led by U.S. companies that will get the biggest bang from the Federal Reserve's latest interest-rate cut. But this is exactly the part of the economy where the reality of a slow recovery has the power to repeatedly dash premature optimism. Take...

To the extent that CDS swaps were insured or decisions to invest in them were made on credit ratings, the subprime experience shows that those ratings have proven to be faulty. Various instruments will be downgraded over the next several years, and as they are, the financial and legal systems will...

This is not merely a subprime crisis.  Several other (and larger) pockets of the credit market are also vulnerable, (such as) credit default swaps, relatively modern financial instruments that allow bondholders to insure against default.

FICO scores are a good toll, but not the only tool. Shortcuts used in the name of efficiency when evaluating credit risk does not count as prudent underwriting practice. Understanding what went wrong is the key to successful recovery.

 Fed rate cuts of the short term are not the right solution for what ails our modern financial system today. The Fed’s goal should be to solve the persistent problem in the Interbank market through the use of two solutions, one short-term and the other long-term that I describe.