Returning from a Labor Day weekend spent cleaning up after Irene, here are some notes as I clean out the desk drawer of Summer 2011: 

  • I spent the first week of August with my family on Martha’s Vineyard as the Dow Jones lost 1000 points, bond spreads blew out, securitized lending ground to a halt and the United States lost its triple-A credit rating. Past that, it seems the market held things together pretty well in my absence.
  • Not altogether unsurprising, but still notable that during the trading days following the U.S. downgrade, treasury yields decreased, leaving some doomsday investors scratching their heads. Of course, the thing about betting on the end of the world is that you can only be right once.
  • The third week of August saw the release of almost simultaneous reports that residential mortgage interest rates hit all-time lows and residential mortgage applications hit 15-year lows.
  • Meanwhile, the FHFA is suing 17 or so of the nation’s largest banks for billions in losses incurred during pre-bubble subprime securitizations. Many analysts are asking when (if?) the U.S. will stop punishing banks.

  • In mid-August, the Italian government passed significant austerity measures to forestall its (inevitable?) credit crisis. It’ll be interesting to gauge popular reaction to the measures when the country returns from summer holiday in a couple weeks.
  • Warren Buffet was able to pocket something north of $700 million in just under 30 minutes in his recent BOA purchase. It will take me years to make that kind of dough. And it represents a conundrum for shareholders – the investment is a welcome injection of capital, but is it a sign that our big banks are in worse shape than we thought?
  • The most important lesson I learned as a result of the August 23rd earthquake is to hide under your desk – you’re much more likely to die from falling debris than to die in a collapsed building. The common reaction here in the Northeast was to get outside and try to outrun it.
  • For 23 years, Crossfire aired on CNN. The concept was simple – you put righties and lefties on the air together and let them debate the matters of the day. Seems quaint in today’s world – the snarky, mean-spirited and misleading noise that passes for media-journalism on both MSNBC and FoxNews at this point is truly saddening.
  • The President is expected to speak to Congress this Thursday about his plan for job growth. He’ll need to be succinct – Green Bay and New Orleans kickoff the NFL season at 8:30. The end of the NFL lockout is the only positive labor data we’ve had this year.
  • Speaking of sports, ESPN has bombarded its viewers with hundreds of hours of the Little League World Series coverage this summer. Why is it that the best young American ballplayers get spread across a dozen regional squads, while Mexico gets to put its 9 best kids on the field at one time?
  • In late July, the U.S. District Court for the District of Colorado in In re DB Capital Holdings, LLC, No. 10-CV-03031, 2011 WL 3236169 (D. Colo. July 28, 2011), refused to overturn a recent Tenth Circuit Bankruptcy decision holding that anti-bankruptcy prohibitions contained in an LLC Agreement were enforceable – an interesting decision that suggests maybe you can contract around bankruptcy. Click here to read a Dechert OnPoint further discussing this case in detail.
  • I think we can all agree that Gaddafi’s removal from power after 42 years of despotism is a positive development. That said, I’m somewhat less convinced that the guys in the pick-up trucks driving around his front yard firing AK-47’s indiscriminately into the air represent a particularly stable alternative.
  • In closing, dual congratulations to Stewart McQueen on the birth of his second daughter, and to the entire staff, for passing the 100 post-mark. Don’t worry Stewart – it’s much easier the second time around.

By: Matt Clark