Articles by Gillian Tett at IntCom

Gillian Tett är en briljant kollega som efter en avhandling i socialantropologi – om Tadzjikistan – specialiserat sig på hur finansmarknaderna opererar.
Tett, som förvarnade om finanskrisen, kom för två år sedan ut med en genomträngande analys (Fool’s Gold) av hur giriga och kreativa ungdomar hos JP Morgan utvecklade instrument för billiga krediter till amerikanska egnahem (”sub-prime”)
Rolf Gustavsson, SvD 10 juki 2011

Gillian Tett is an assistant editor of the Financial Times and
oversees the global coverage of the financial markets.

If the Financial Times' Gillian Tett were hit by a bus, I'd be in a lot of trouble.
With all due respect to her colleagues, she is the best source of financial news.
naked capitalism blog, August 13, 2007
Click here for more of her articles

Similarly, my colleague Gillian Tett made headway because she asked simple but probing questions:
Where had all these derivatives come from?

As the policy debate intensifies, investors might spare a thought for Korekiyo Takahashi,
Bank of Japan governor from 1911 to 1913.
Gillian Tett, FT September 2 2010

Watch out for tail risks hanging over the $14,300bn US Treasuries market
Risky to fund long-term holdings with short-term debt.
Gillian Tett, Financial Times, 19 May 2011

"a loss of confidence – not merely in the idea that the future will be a brighter place, but also, most crucially, about whether anybody is able to predict that future at all."
So what on earth is going on? Optimists like to blame it on a summer lull, or temporary jitters about US unemployment or the eurozone. They may be right. But personally, I suspect that there is something more fundamental going on too.
Gillian Tett, FT August 5 2010

And just to make matters worse, the memory of the May 6 “flash crash” haunts the markets. In the past three months, US regulators and bankers have scurried around trying to work out what caused equity prices to gyrate so wildly that day. But, thus far, they have not offered any convincing explanation

Back in 2008 the US government effectively nationalised Fannie and Freddie
under the fig leaf of a “conservatorship” scheme.
$145bn of taxpayers’ money to prop them up, more than was spent on direct injections into the US banks or car sector.
Gillian Tett, FT July 22 2010

One fascinating idea now provoking a chorus of behind-the-scenes debate among regulators and central banks
to force creditors – not taxpayers – to swallow losses if disaster strikes
Gillian Tett, FT July 15 2010

When central banks start implementing exit strategies,
there is the potential to deliver a whole new range of currency upheaval,
particularly in relation to the crucial, but oft-ignored, issue of the dollar carry trade.
Gillian Tett in Davos January 28 2010

The $6,000bn dollar question for the wider financial system.
After all, it was a turn in the US property market that triggered the financial crisis.
And while many other financial disasters have since followed,
the state of the US property market remains crucial to the banking world as a whole.
Gillian Tett, July 9 2009

While the prices of mortgage-linked bonds have already slumped to reflect house price falls, the value of many tangible loans have not been fully marked down, because they are lodged in hold-to-maturity books – and the banks do not believe that prices will continue to fall. Indeed, in the town that I visited in West Virginia, some local bankers are refusing to sell foreclosed properties, because they think prices will soon rise. Thus, if prices fall instead, it can only mean one thing: yet more bank pain.

So will US property prices stabilise? Not if you believe a startling presentation I saw this week from a large, global financial group. This particular bunch of analysts – who have done a remarkably good job at predicting the credit crisis during the past four years – are currently warning their clients to expect a peak-to-trough fall in US residential prices of more than 40 per cent in this cycle.

The bad news is that houses are not yet cheap enough to prevent more price falls. On the contrary, this particular team of analysts thinks that when the problems of excess house inventory and rising unemployment are added into the model, average US house prices will still fall by another 14 per cent in the next few years – on top of the declines seen so far.
Taken as a whole, these projections imply that about 25m households in America end up in negative equity.

One is the degree to which the western banking system could face a secondary round of real estate losses (particularly as these analysts are even more alarmed about the commercial property outlook than the residential sector.)

The second fascinating question is what further house prices falls might do to consumer psychology. America has never experienced negative equity on this scale before. Thus nobody is entirely sure how households might respond. Will they default en masse? Will voters become so angry that they demand more populist public bail-outs of the housing sector (or financial reform)? Will consumers cut spending further?

The former Fed chairman urged central banks to avoid suppressing asset bubbles, which is "exceptionally difficult" to do. "The critical issue on the whole subprime, and by extension, the international financial system rests very narrowly on getting rid of probably 200,000-300,000 excess units in inventory," /-houses/
Alan Greenspan, CNN 2007-11-06

The collapse of Lehman Brothers has shown the havoc that can ensue when large, interconnected banks implode.
Quite apart from the fact that the world is littered with banks which are too big to fail (but too costly to keep saving),
the world also has banks that are too big to manage.
Gillian Tett, Financial Times June 18 2009

Until this week, most policymakers were reluctant to attack the big banks too publicly, in terms of size. After all, this has been the decade when global leaders – or the infamous “Davos man” – worshipped at the altar of free-market capitalism, globalisation and innovation.

Philipp Hildebrand, the next head of the Swiss National Bank, revealed that the central bank was considering introducing “direct and indirect measures to limit the size” of large international banks (which in the case of Switzerland means Credit Suisse and UBS).