Why did bill yields jump from 30 to 72 basis points in days, and why did regulators force Wachovia into a merger rather than let it fail?
Loading…
Late-September yields as a reading of sentiment
Record the three-month bill rising from 30–40 bp to 71–72 bp as the rescue-package impasse eased, the 30-year slipping to 4.22%, and the statement that there is no correct price, only current sentiment.
Shorting a T-bill versus issuing one
Distinguish shorting a bill from issuing one in a line, note that the Treasury borrowed into the panic, supplying liquidity, and record that prices alone decide bailout versus savvy investment.
Triage: stopping the bleeding versus the long-run fix
Write out the emergency-room analogy, separating what money alone achieves from the long-run work on foreclosures, valuing complex securities and market-wide insurance.
Wachovia, WaMu and the cost-minimizing takeover
Record the Citigroup-then-Wells Fargo resolution of Wachovia, the Reserve Fund contagion fear, the FDIC guarantee ($100,000, then $250,000) versus a going-concern takeover, WaMu to JPMorgan, and the three surviving money-center banks.