Another new thread?? This blog is killing me--it is addicting! I just started reading it last week and cannot get away from it. I have work to do (and need to sleep)
What do all of you folks do for a living that allows you to do to hang out here all of the time? I need to change my career...
For instance, one gauge that banks use to determine lending rates rose to an all-time high. The difference between the London interbank offered rate, or Libor, and the Overnight Index Swaps rose to an unprecedented 2.08%. The Libor-OIS "spread," or difference between the two rates, measures how much cash is available for lending between banks. The higher the spread, the lower availability of cash for lending.
Another lending measure rose to a 26-year high. The "TED spread" - the difference between three-month Libor, what banks pay to borrow money for three months, and the three-month Treasury borrowing rates - rose to 2.92% after hitting 3.1% earlier in the day, the widest margin for that measure since 1982. Just a month ago, the TED spread was at 1.11%.
"If banks don't have the market to sell off illiquid assets, we're just going to be stuck in the same situation a year from now," Van Order said. "There's just no market for whole classes of asset- backed securities, and the government is the only one that is large enough to create a market."
I don't mean to sound ignorant, but how critical are these spreads to regular people and the real economy? The other day they were going on and on on CNBC about how Caterpillar had to pay 7% on some bonds. But at least 1/2 of the time over the last 50 years, interest rates have been higher than 7% and companies seem to have managed. I can understand 20% like in 1980 makes it hard to do business, but if you can't afford 7%, you need to take another look at your business model.
It seems that mortgage rates decline after FRM and FNM rescue was short lived. Recently, we have seen 4 up and down cycles in the TED spread. It may go down and up again after the rescue.
he uncertainties caused a stampede into cash and safe-haven assets before the crucial quarter-end, sending one-month T-bill rates briefly below zero percent and three-month rates below 0.5 percent on Wednesday.
The U.S. 2-year interest rate swap spread jumped beyond 163 basis points, the widest on record, signalling extreme risk aversion and deepening credit market problems.
The spread eased to around 150 basis points in Europe on Thursday, still very high by historical standards.
This is a shorthand answer and the technical treatment your question about TED spread deserves.
In short, you are right. The spread will make a lot of firms reexamine their business model, and regular folks will feel when that re-examination comes their way via layoffs.
don't mean to sound ignorant, but how critical are these spreads to regular people and the real economy?
"Up until quarter end, I believe you will see nothing but buyers of T-bills," said Ted Ake, executive director and head of bond trading with Mizuho Securities USA in New York.
"A lot of people are very, very, very risk-averse right now. Money market funds are being inundated with (investors making) the case that they only want to be in Treasuries," Ake said. "Eventually that will subside."
Ultra-short-dated Treasuries beckoned as the refuge of choice for money market funds, which are under intense pressure to load up on government paper and cut back their holdings of riskier money market instruments after a U.S. money market fund's net asset value fell below $1 per share last week.
In response, the government late last week made plans to put up $50 billion to guarantee money market mutual funds' safety. That move may now slow the safe haven exodus out of other money-market instruments into very short-dated government paper, analysts said.
Yet Wednesday, the rush into T-bills sent one-month rates below 0% overnight and three-month rates below 0.50%.
Bean counters help management decide what projects to undertake and how much to charge their customers. One input, along with material and labor costs etc., is how much it costs between starting the project and getting paid by the customer, cost of capital or interest rate.
A project that is profitable at 5% may not be profitable at 7%.
In addition, why undertake a project that will yield 5% in net margin (profit) when you can just deposit it in the bank and get 7%.
"This will probably be one of the first indicators to show any benefit from any plan"
I am going to go out on a limb here:
I think any plan to recap the banks wont change the TED spread at all. I think there is a want to hold money and stay afloat. Also as JPM has shown us - building the empire is more important. So any bucks to the banks will either end up in their coffers or to peck at the financial bodies in the street.
I am getting emails from a few people about Wachovia, the news is starting to spread. If they go BK this afternoon, do we see a bank run or any type of panic? Or does j6p just wonder why his ATM card doesn't work tonight?
The intense T-bill demand could crimp demand for longer-term Treasury paper, so the market will closely watch the Treasury's auction of a record $34 billion of two-year notes later Wednesday, analysts and traders said.
Is TED for real? I've read a number of articles suggesting TED is 'not operational' since no one reports what rates they are really paying. Or aren't lending at any rate...
The question, and it is a good one, is why are these LIBOR or A2/P2 rates so bad when they were that high such a short time ago?
The answer is the rates themselves are not all that bad, but the delta between those rates and the lower risk rates are an indication of stress in the system - the higher the spread, the less actual lending is taking place.
Ricky Ricardo writes:
tbapple-I understand that. But weren't rates around 7% pretty routine in the 1980s and 90s and the economy seemed to do OK, no?
7 or 8%?
Hell, I paid 12% for my first home loan in 86. I bougth 16% tax free muni's in 1981. Anything under 10% was seen as a gift in the 80's. Rates didn't start really coming down until the 90's.
Bank runs are for the movies--the name of today's game is electronic transfers. Clicking on the computer is so easy, a baby can do it while regurgitating.
The U.S. Treasury's sale of $40 billion 7-day cash management bills at a high rate of just 0.05 percent on Wednesday showed that in exchange for safety, investors were asking for virtually no return on their money.
The Treasury Department said it will auction $40 billion in 34-day bills on Thursday. It has sold a total of $124 billion in T-bills so far this week.
The risk-aversion move into T-bills has siphoned credit availability away from cash-strapped companies and consumers.
The spread, or risk premium, for borrowing three-month dollar funds in the London interbank offered rates market over the expected three-month rate on benchmark U.S. federal funds grew to 130.275 basis points from 128.25 basis points on Tuesday.
"Substantial strains continue to exist in the money market, as evidenced by Libor and T-bill rates," Tony Crescenzi, chief bond market strategist at Miller, Tabak & Co. wrote in research note.
--
The ONLY change in America has been which group of aristocrats were the real behind-the-scenes rulers (at the founding they were landed and commercial aristocrats). Today, it is Bankrupters and Fraudsters of New York City (BFNYC), truly evil financial gangs. The only fit description for the current rulers of America is Financial Nazis of America (FNA).
Americans, and the rest of the world, must, and will, pay the price for supporting the criminal financial gangs.
Banks - anxious over bailout and WaMu failure - tighten lending to each other, businesses and consumers.
Banks are also eyeing next Tuesday on the calendar. That would be Sept 30th, end of the reporting quarter. I think they would all like to have nice warm tier-1 capital ratios on that day (regardless of what they do on the 1st of Oct).
Be interesting if the Bailout Bill stagnated until Wednesday.
So did I, Comrade. Well, '83 actually. I had an ARM that I rode up and them all the way back down to eventually under 3%.
If liquidity is so precious today then it should be worth more, but it is not. We really do have a case of confusing "can't" with "don't wanna".
Treasuries traded up because it's nearly impossible for people to assess where the risks lie in the securities they own so they go to the de facto risk-free securities which are Treasuries," said Lance Pan, director of credit research at Capital Advisors Group in Newton, Massachusetts. "In this market, no one wants anything other than Treasury bills."
Treasury bills were in such demand that the U.S. Treasury Department said it would sell $40 billion in cash management bills on Wednesday to help the Fed finance a rescue plan for AIG under which the New York Fed offered $85 billion in loans in return for an AIG stake of nearly 80 percent.
The cash-management bills will allow the New York Fed to advance $85 billion to AIG without putting downward pressure on the benchmark federal funds rate, which the Fed is holding steady at 2 percent, and "has the additional benefit right now of satisfying the strong demand for bills that exists in the marketplace," said Michael Moran, chief economist at Daiwa Securities America in New York. https://personal.vanguard.com/us/FixedIncomeNewsArticle?storyID=1221674384nN1748466
Hell, I paid 12% for my first home loan in 86. I bougth 16% tax free muni's in 1981. Anything under 10% was seen as a gift in the 80's. Rates didn't start really coming down until the 90's.
Comrade Baron Von Helmut III | 09.26.08 - 2:47 pm | #
At that same time (1982) I got a 20% raise after being on the job for just six months coming out of college. I got another 20% raise the next year. Over 40% (compounded) in a little over 18 months.
I don't think too many workers today are experiencing those kinds of raises...
The business models of the 70's and 80's were created in an environment of those higher rates.
Also, today's huge corporations are not as nimble and are having tremendous trouble, obviously, adjusting to changes that should have been anticipated.
Part of the reason IMO that most of the people on this blog have such schedenfrued(sp?) is that they knew this had been coming for years.
Anyone remember seeing a chart recently from a Fed report that shows declines/growth in economic activity by U.S. state. It was a red/blue coding (no relationship to politics)and it basically showed that the agricultural center of the country was still okay (blue), while the rest of the country was hurting... red. If anyone saw it... and has a link... I'd be grateful... Thanks
joe- But why is the spread such a big deal? Isn't it the actual rate you pay that's important? And 7% seems pretty OK to my naive brain.
You're looking at nominal interest rates. Real interest rates are what matters. If your revenue is increasing at 10% a year, 7% interest rates isn't such a problem. If it's falling at 10% a year, 7% is a death sentence.
Baron: Yes I remember those days, which is why I'm having trouble wrapping my feeble brain around this thing. Are we really in a credit cruch or have we simply gone from ridiculously loose lending to normal lending (i.e., to those who will pay the loan back?). Is this a case of the alcoholic who was drinking a case/day feeling deprived because he's cut back to a 6 pack?
Hell, I paid 12% for my first home loan in 86. I bougth 16% tax free muni's in 1981. Anything under 10% was seen as a gift in the 80's. Rates didn't start really coming down until the 90's.
Comrade Baron Von Helmut III
Don't tell the kids scary stories like that. They won't sleep tonight. LOL
Question - is seeing what the TED spread does the only way to determine if any plan that gets passed was actually needed and did any good? Or would there be other indicators, beyond the fact that the money has to go somewhere, so someone is bound to be happy about it, even if it doesn't do what it was intended to do?
As I understand it, there's no real way right now to figure out if a bailout is needed and did what it was intended to, or if it's just Wall Street seeing if extortion works if you manipulate the right indices, since either way, the idea is that things go back to "normal", which means there's nothing actually built to look at afterwards.
I'm assuming that insisting that any member of Congress who votes for it + Paulson + Bush give all their current assets to the bailout plan and not get paid back until after the Treasury is repaid is probably a non-starter, no matter how useful it would be to see how scared they were.
Anyway, any suggestions about how to evaluate effectiveness and use of any plan passed would be appreciated.
Check out Setser. There you will find the following comment below Brad's leading post that is instructive. It is posited the "Rush" to get this done is the Fed is out of cash. The Bernanke bailout stash has been wasted on trash paper. Cedric posted this and it needs to be reflected upon.
Up to $700 billion to buy assets from struggling institutions. The plan is aimed at sopping up residential and commercial mortgages from financial institutions but gives Treasury broad latitude.
Up to $50 billion from the Great Depression-era Exchange Stabilization Fund to guarantee principal in money market mutual funds to provide the same confidence that consumers have in federally insured bank deposits.
The Fed committed to make unspecified discount window loans to financial institutions to finance the purchase of assets from money market funds to aid redemptions.
At least $10 billion in Treasury direct purchases of mortgage-backed securities in September. In doubling the program on Friday, the Treasury said it may purchase even more in the months ahead.
Up to $144 billion in additional MBS purchases by Fannie Mae and Freddie Mac.The Treasury announced they would increase purchases up to the newly expanded investment portfolio limits of $850 billion each. On July 30, the Fannie portfolio stood at $758.1 billion with Freddies at $798.2 billion.
$85 billion loan for AIG, which would give the Federal government a 79.9 percent stake and avoid a bankruptcy filing for the embattled insurer. AIG management will be dismissed.
At least $87 billion in repayments to JPMorgan Chase for providing financing to underpin trades with units of bankrupt investment bank Lehman Brothers. Paulson said over the weekend he was adamant that public funds not be used to rescue the firm.
$200 billion for Fannie Mae and Freddie Mac. The Treasury will inject up to $100 billion into each institution by purchasing preferred stock to shore up their capital as needed. The deal puts the two housing finance firms under government control.
$300 billion for the Federal Housing Administration to refinance failing mortgage into new, reduced-principal loans with a federal guarantee, passed as part of a broad housing rescue bill.
$4 billion in grants to local communities to help them buy and repair homes abandoned due to mortgage foreclosures.
$29 billion in financing for JPMorgan Chases government-brokered buyout of Bear Stearns in March. The Fed agreed to take $30 billion in questionable Bear assets as collateral, making JPMorgan liable for the first $1 billion in losses, while agreeing to shoulder any further losses.
At least $200 billion of currently outstanding loans to banks issued through the Feds Term Auction Facility, which was recently expanded to allow for longer loans of 84 days alongside the previous 28-day credits.
-so, so, so is this the correct total?
$1,800,000,000,000.00
$1.8 Trillion? Oh. My. God!
The Treasury Department also auctions from time to time short-term Cash Management Bills with maturities up to 50 days that are sold to institutional buyers in lots of $1 million or more. These have replaced Treasury certificates of indebtedness and Tax Anticipation Bills as short-term debt instruments.
The Ted Spread speaks to perceptions of risk and is a better indicator than absolute interest rates.
When the Baron got his 12% mortgage it probably wasn't hard to get the mortgage. Income, money down, documents, etc - standard procedure.
Today, mortgage rates are lower, but mortgages are suddenly much harder to get. The int rate itself doesn't tell that story, but the Ted Spread does.
Investors with cash have a choice of by 3 mo t bills or going else where for a much higher rate. they are going to the T Bills even as the T Bill rate goes to zero.
Say other parties want to lure some of that money. They say, T Bills going to 0%, we'll offer a little more. 7%, then 8%, then 9%.
It is the same as banks that now offer higher CD rates. Looks great, right? Invest there, right? . . .
Or look at the extra high CD rate say that bank is in trouble and is panicking to get deposits. hmmmm. Must be near default.
One-month T-bill yield traded 0.14 percent, down 43 basis points from late Tuesday. It reached briefly below zero percent, according to analysts, which is the lowest level since the one-month bill was reintroduced in 2001.
The scramble for short-dated government debt was sparked by troubles at the Reserve Primary Fund. The money market mutual fund fell below $1 a share in net asset value due to losses on its holding of securities issued by Lehman.
I think this is the money market going into Main Street, says William Larkin of Cabot Money Management. "Retail investors are running with fear into T-bills or government backed money market accounts.
It is the same as banks that now offer higher CD rates. Looks great, right? Invest there, right? . . .
Or look at the extra high CD rate say that bank is in trouble and is panicking to get deposits. hmmmm. Must be near default.
tedspreadmatters: when cash comes into a bank it is a liability. It is correct to say that when any institution offers above market returns for demand deposits then they are cash, oops, debt instrument hungry.
They must immediately pool their liabilities and create assets. Theses are called loans and they are leveraged to the extent that their board permits and the system limits.
This got lost at the end of the last thread from JP
JP writes:
holy moly: phone call summary-
Deal is blowing up. house r's realize that they get unelected if they do this thing. If armegeddon happens, they come back to admin the clean up. D's looking for reason to walk cuz they're getting the same calls, will pin on house R's.
Everyone looking for a token out.
Guys, which is why I don't buy this " liquidity crunch" pitch. FF rate at 2%, 10 yr under 4%,and we have no liquidity?
More like the huge carry trade is unwinding, and the days of REAL lending with REAL guidelines is back.
The FED has no liquidity because they drained all the short term reserves on bailing out these Wall Street crooks. That I agree on, but there is plenty of private money. They are just smarter than the FED and want an actual return for the risk.
joe-It's clear investors are perceiving very high risk (rightly or wrongly) but if I'm looking for a loan, the only things that I give a crap about are rates and availability. Rates are still very reasonable. Availability-what is the evidence that loans are less available than they were in 1985, let's say?
If the House Repubs want to eliminate or cut Cap Gains tax to free up cash for investors to buy these MBS assets isn't that just a back door way for the government to be funding it?
Also, that assumes the problem is that there isn't enough money in investors' pockets to buy the assets. That's not the problem, the problem is price and value, not availability of investment funds.
Are we starting to notice a pattern here? The vote on the bailout RIGHT NOW stands at:
Dem. yea...131.../nay...3
Repub. yea..1/nay...119
This is EXACTLY what happened with the Fannie/Freddie vote. Overwhelming Wall street support by the Dems aand Overwhelming "We the People" support and rejection of Wall street by the Repubs.
Call your Democrat reps. and tell them to stuff it.
They are siding, once again with Bush and Wall Street. They need to cross over to the House Republicans and support Average Americans.
The U.S. Federal Reserve is undertaking an outright purchase of agency discount notes, according to the New York Fed Web site on Friday.
A week ago, the Fed said it would start purchasing short-term debt obligations issued by mortgage agencies Fannie Mae, Freddie Mac and the Federal Home Loan Banks System, in response to stress in this sector of the money markets.
In the past week, the Fed has bought some $10 billion of these securities.
These operations also add permanent reserves to the banking system.
Interest rates may vary from time to time. The rate at which intermediate cashflows are reinvested may differ from the original interest rates on the security, which can affect the total earnings from the security.
Money Market Instruments include CPs ,commercial bills, Corporate Debt, T-Bills, and Government securities having an unexpired maturity up to one year, CDs, usance bills, CBLOs, Repo/ Reverse Repoand any other like instruments having a maturity of 1 year or less, as specified by the RBI from time to time.
I'm trying to say the Ted Spread is the sign of evidence you seek. Other evidence is that firms are collapsing becaue they cannot prop themsleves up. Other evidence is that houses go into escrow and fall out because the buyers can't get financing. Other evidence is in the auto industry .....
OT-Don't you think it's wierd that markets go up 200 pts yesterday on deal is done rhetoric, now you here about negative sentiment regarding Reps. saying no deal and market is still up.
Who is buying? the home team...
largest bank failure ever...home team..
These guys are good..Evil geniuses
At rally last night in SF I talked to Pension manager and he stated they were mostly in gold and cash...
anyone know why it is that when I click links here to Bloomberg video I just get the Bloomberg screen, but a black video box. What does bloomberg use? Flash? anyone? Bueller?
Who said calling your Reps doesn't accomplish anything?
I should should call my D-critter and chastise them for voting Yea, and tell them to switch to Nay. Then call my R-critter and chastise them for voting Nay, and insist they switch to Yea.
On one of the numerous previous threads a comment was made along the lines of 'if it all goes to hell and you see me with a CR logo on my backpack, don't shoot.' And above, Whereis... said "We need t-shirts."
So an appeal to CR and Tanta, being all capitalists here...
What about it? CR t-shirts and sew-on / iron on patches for backpacks and the like. Made in China / Guatemala / or by American Apparel in LA? Somehow I think there is a ready made market, and it'd be a nice way to both financially and publicly support our gracious hosts.
Conjure is one fucking amazing bag. Fucking amazing.
One of these days I want to hear about the historic relationship between Conjure and Marx's theory of commodity fetishism. I mean, tobies are at the base of it all.
Found this interesting. Paulson the piker, really needs 5 trillion.
Swiss investor Marc Faber, known for a long track record of good calls (he was a commodities bull until late this spring, for instance, when he reversed his view) and a fine grasp of financial markets history, confirms the estimate earlier in the week by Ken Ohmae that the US needs a salvage operation much bigger than the one envisaged by the Treasury plan, and the damage may come to $5 trillion:
Marc Faber, managing director of Marc Faber Ltd. in Hong Kong, said the U.S. government's rescue package for the financial system may require as much as $5 trillion, seven times the amount Treasury Secretary Henry Paulson has requested....
The $700 billion is really nothing,'' Faber said in a television interview.The treasury is just giving out this figure when the end figure may be $5 trillion.''...
The decline in home prices of 20 percent is a relatively minor decline so far and it has created so many problems,'' Faber added.The US is in much worse shape'' than Japan was when its stock market crash ushered in a decade-long slump in 1990.
There is other juicy stuff in the Bloomberg video. Some of Faber's other comments:
The problem is excessive leverage, not housing per se.
Stocks may rally once a bailout package is in place, since on a short-term basis stocks are oversold, but a durable bull market for financial is "out of the question."
The one bubble that has not been pricked is US Treasuries. Higher interest rates are in the offing.
While the dollar may decline sharply in the next few days, Faber regards it as attractive because even though the US is in bad shape, the rest of the world is even worse off.
US future=long term stagnation and probably inflation. Good times are gone for as long as most people can imagine.
Ricky Ricardo writes:
tbapple-I understand that. But weren't rates around 7% pretty routine in the 1980s and 90s and the economy seemed to do OK, no?
There's a lot more leverage out there now than there was 30 years ago. Rates don't matter so much when you aren't carrying much debt, but when you're stuffed to the gills with it even a small rate increase can push you under.
Bumper stickers, patches that spell out COINZ!, key chains. Bottle openers and glass pipes. The list is endless. Seriously, anyone in the tchotchke / t-shirt biz? I'm not but have several friends in those lines of work.
Then, at the convention, everyone could compare their schwag. Be like collecting Star Trek stuff.
So the D's want to take money from some ethereal source and give it to Wall Street (ethereal source presumably SWF.
So SWF>B&P> Wall Street
R's want to use private financing paid for by wiping out cutting taxes for I presume private equity funds
So B&P> PEF> Wall Street.
But I presume that SWF+PEF are pretty well interconnected.
So a Chinese Fable comes to mind(thanks to Thomas Merton)
A zoo keeper needed to cut his budget and so reduced the food to his monkeys to three peanuts in the morning and four at night.
The monkeys were outrages. They demanded FOUR peanuts in the morning and THREE at night. Zookeeper reluctantly gave in.
--Chuang Tzu 3rd or 4th Century BCE
I am SURE that Marcy Kaptur, D. OH., is one of the NAY Dems. On the Fannie/Freddie vote, she was one of ONLY THREE Dems (versus 149 Repubs!) who voted "nay".
I called her office the day after the F/F vote, thanked her profusely on behalf of all Americans and told her I would never vote Dem. again after seeing that anti- American vote.
I told her she should QUIT the Dem Party and she and the 149 Repubs should just band together and start a new party.
On the F/F vote, there was also one Dem from Oregon who voted "nay" and one other from some Eastern State (sorry, way to vague there!).
STRONG SUGGESTION to Dem voters: Vote ALL these "yea" Dems OUT OF OFFICE. Period.
"I mean, if the stock market is anticipating the bail-out, why can't the credit markets?"
I know you know the answer to that so I'll just respond for other's who are perplexed by that.
You can't force banks to lend. They have already had over $3t in repo's for that very purpose. At least that is what the Fed says they are for. They have just been using the cash to pad balance sheets and inflate the commodity trade so that they have some form of results to report. But they are certainly not lending at the same clip that they receive repo. cash at to supposedly do it with.
Two reverse repo's last time I looked today...could be more...i'll go look later.
godhatesfangs writes:
about 30 house repubs wouldve voted for it
godhatesfangs | 09.26.08 - 3:08 pm | #
Was watching a Dem 'operative' on the tube this morning - said Pelosi demanded 80 bodies from GOP House leadership - didn't care who they were but cough them up or no deal. We got 'No Deal'. Saw it in CNBC Squak
My guess is more than a few Dems are breathing a sigh of relief too - best thing that could happen to them is GOP scotchs the deal and tTHEN the market blows up... blame GOP for 'obstruction'.
Best thing that can happen to GOP is the bill passes w/ all Dem votes and THEN market blows up.
Anyone think maybe a 100-point drop in the final hour or so of the day, as people get out of the market? ... Or are most folks just too stunned to do anything?
From Sept 19-23 the effective rate was 1.5%/50bp cut. This was response to a significant jump. For the past 2 days, Sept 24-25, it has been at or below 1.25%/75bp cut.
The precedent for a dramatic cut was a spike in the rate at Dec 31, that forced the fed to bring the effective rate down to 3% at a time the target was 4.25%. On Jan 25: a 50bp cut, on Jan 30: 25bp cut.
Given the spike in other important rates, the stable dollar and inflation, and people begging for any kind of leadership -- this 75bp cut is a no brainer if you're the Federal Reserve.
Anonymous: well if this sucker is going down, I want it to go down while I'm Rolling On The Floor, Laughing My Ass Off, Busting A Gut, All For The Love Of Ponies. (roflmaobagaflop)
If the bailout collapses and the big money banker boys decide it's the Republican's fault, look for their fellow big money boys at GE, Viacom, and ABC/Disney to destroy McCain et al. in the next few weeks. Economic populism is as well and good but you don't meddle with the primal forces of nature without having to atone. And they'll do the same thing to Obama if need be.
My guess is more than a few Dems are breathing a sigh of relief too - best thing that could happen to them is GOP scotchs the deal and tTHEN the market blows up... blame GOP for 'obstruction'.
Best thing that can happen to GOP is the bill passes w/ all Dem votes and THEN market blows up.
Funny how they think stock market performance is the same as a referendum on this bill. They should go home to their constituents.
INSTRUMENTS OF THE MONEY MARKET
The need for a money market arises because receipts of economic units do not coincide with their
expenditures. These units can hold money balancesthat is, transactions balances in the form of currency,
demand deposits, or NOW accountsto insure that planned expenditures can be maintained independently
of cash receipts. Holding these balances, however, involves a cost in the form of foregone interest.
A final way banks raise funds in the money market is through repurchase agreements (RPs). An RP is a
sale of securities with a simultaneous agreement by the seller to repurchase them at a later date.
Money market futures contracts and futures options are traded on organized
exchanges which set and enforce trading rules. A money market futures contract is a standardized
agreement to buy or sell a money market security at a particular price on a specified future date. There are
actively traded contracts for 13-week Treasury bills, three-month Eurodollar time deposits, and one-month
Eurodollar time deposits. There is also a futures contract based on a 30-day average of the daily federal
funds rate.
blah, blah...
The evolution of the over-the-counter derivatives market has revolutionized the nature of financial
intermediation in money markets in a span covering a little more than a decade. Along with the benefits
derivatives offer firms in managing cash flows, however, the rapid growth of the market has raised new
concerns for regulators and policymakers. Industry spokesmen argue that existing market arrangements are
adequate to address such concerns, a view increasingly shared by regulators and policymakers.12
12
For example, see Hansell and Muehring (1992), Phillips (1992), and Shale (1993)
The market - SPX as an example - doesn't quite want to break into the lows of the high volume hourly bar from two Thursdays ago (scam turnaround Thursday). But it can't seem to bust it higher. Today's SPY volume is still at the lows, as well as volume at Wenesday's lows, and that SPX 1166 is the bottom of that hourly bar. So it'll take some effort to get down there.
I'm reading a bunch of traders positioning (gambling) for a bailout by Sunday and 50-100 point SPX gap up Monday. I think any movement to the upside will simply be an effort to bring volume back to the market and take it downtown again. That's my latest take.
Best deal out of all of this will hopefully be a return of manufacturing to the States. The $ won't worth shit so we will be the World's leading low cost producer. I'm in NC and involved with obtaining environmental permits for companies to operate. Lately there has been a trickle of activity involving a return of manufacturing to NC that was in China.
What is the worse job, being the intern who has to answer the phone at a Congressman's office on a day like today, or the person who receives all the Microsoft error reports?
I'm seeing more and more guests experts on financial news shows stating that a "deal doesn't have to happen by next Monday, if it's done in a week and the markets know that negotiations are ongoing, it should be fine".
However, the newscasters seem irritated by this; to them, it seems that this deal must be done NOW.
The financial media in action.
And quite a few "experts" are (gulp) saying that the Paulson/Bernanke plan may not be the best way to handle this mess.
One last point...a financial newscaster was trying to "demonstrate to main street" what this package means to them in "real terms", by asking "would WaMu still be around if the package had gone through earlier". The answer was "maybe, but they had a lot of toxic assets." It's a bad example for him to bring up, because to Joe Sixpack on the street, NOTHING happened. Just a name change from WaMu to JPM.
Funny how they think stock market performance is the same as a referendum on this bill. They should go home to their constituents.
Bond Girl | 09.26.08 - 3:18 pm | #
If the market blows up their constituents opinions will change OVERNIGHT no matter what they say this weekend.
80% of folks could care less about ideological wonks on either extreme - they want the system to work and do NOT pay attention to this nonsense until forced to. Wake them up and they will be pissed.
Both GOPers & Dems understand this viscerally - they will do everything they can to keep the sleeping asleep.
Events are spiraling out of their control so now it is positioning & spin to pin the blame. Its a toss up who pulls it off better.
Here's another brilliant Dem. Plan, just introduced last week by
Al Green, D. TX
Maxine Waters,D. CA
and two others:
HR 6694: Down Payment Assistance!!!!
Can you imagine the nerve of these Democrats to introduce a DP Assistance Bill at this time, when the whole financial system is collapsing because of people buying with no skin in the game !?
They want American taxpayers, not only to pay for the sins of Wall street to the tune of 700 Billion, but also , to KEEP paying "downpayments" for people who will default in the near future.
The Dems heads are jammed so far up the A$$ of Wall Street, NAR, Home Builders,etc. that NOTHING ELSE MATTERS to them.
Barney Frank, of course loves this new DP Asssistance Bill.
Then why does anybody think this bail-out will help?
Handing out money usually makes things better in the short-term, which is what politicians care about.
Of course the long-term consequences, namely deferring any genuine solution to the crisis and rewarding destructive behavior, appears to offset any short-term benefits.
If the bailout collapses and the big money banker boys decide it's the Republican's fault, look for their fellow big money boys at GE, Viacom, and ABC/Disney to destroy McCain et al. in the next few weeks. Economic populism is as well and good but you don't meddle with the primal forces of nature without having to atone. And they'll do the same thing to Obama if need be.
If the big money banker boys decide it's the Republicans' fault, the Republicans will win this election with 80% of the vote because there's nothing America hates more than the big money banker boys.
That's why the insane enthusiasm Harry Reid and Nancy Pelosi have for giving Paulson whatever he wants is so disturbing (if you're a Democrat, that is; if you're a Republican you have to be thrilled to see Barney Frank fellating George Bush and demanding that the House GOPers do whatever Paulson wants).
If the market blows up their constituents opinions will change OVERNIGHT no matter what they say this weekend.
Yeah, I guess they can only see as far as the election. I don't know why anyone would want to be president right now. Your "legacy" is going to suck no matter what.
80% of folks could care less about ideological wonks on either extreme - they want the system to work and do NOT pay attention to this nonsense until forced to. Wake them up and they will be pissed.
Right. typical American is 90% complacent and 10% in panic-mode. When the ATMs all stop vending cash, and the gas pumps stop pumping, then the ratio might change.
Then why does anybody think this bail-out will help?
My 2¢, this bailout simply delays price discovery. That is what prolonged the 'great' depression, that is what prolonged Japan's 'lost years'
To get beyond a financial crisis you need to clean out all the rotten counter-party risk, and all the unrealized 'impaired gains'.
Every dollar loss that is ignored for now, will sap growth in the future and discourage investment which further compounds/prolongs the problem.
Six months ago it was common for people to espouse the US will never do what Japan did, we're not afraid of accepting losses. Now look at everyone involved.
I better get to see Bernanke commandeer a fleet of helicopters and throw bags of money out
dryfly-Absolutely. This is toxic situation for both parties regardless what they do. Most folks have 401Ks; the elderly do NOT want their retirement funds to evaporate. They don't hang out on blogs or tend to EMail Congress dudes, but they VOTE.
Congress-types have learned well that call to their offices often don't correlate with votes.
Plus Palin and her comments about Putin's airspace is making it very scary for the non-rapture crowd to vote for McSame, regardless of the $700 bill. Bet he wishes he'd picked Romney now.
America forms it's political opinions on the 10 minutes of "news" it watches a day. And in the next 5 weeks if the big money boys wanted to do so, they could could convince 80% of the voters that John McCain wasn't really in the Hanoi Hilton but was instead collaborating with Vo Nguyen Giap during those 5 1/2 years.
That's why the insane enthusiasm Harry Reid and Nancy Pelosi have for giving Paulson whatever he wants is so disturbing (if you're a Democrat, that is; if you're a Republican you have to be thrilled to see Barney Frank fellating George Bush and demanding that the House GOPers do whatever Paulson wants).
Comrade Midwest Product | 09.26.08 - 3:27 pm | #
Exactly - my guess is Dems will posture to make it look like a 'good faith effort' then 'let' it die.
Then wait and see if the Fed is out of liquidity magic sauce - if it is we'll know soon. Before the election, that's for sure.
This puppy is sick and maybe having the electorate know just how sick prior to the election would be the best thing ever. That DIDN'T happen w/ S&L. Went through the elections on 'autopilot' then woke up afterward to surprise crisis & RTC.
Dems will only pass this bill if they want to go back to 'minority status' - stranger things have happened.
Right. typical American is 90% complacent and 10% in panic-mode. When the ATMs all stop vending cash, and the gas pumps stop pumping, then the ratio might change.
Comrade RayOnTheCollective | 09.26.08 - 3:31 pm | #
Could be. Apparently the gas pumps have been running dry in Charlotte and Atlanta, but the national MSM seems to be ignoring it so no panic yet.
If the market blows up their constituents opinions will change OVERNIGHT no matter what they say this weekend.
80% of folks could care less about ideological wonks on either extreme - they want the system to work and do NOT pay attention to this nonsense until forced to. Wake them up and they will be pissed.
That's the whole problem. Everybody is obsessed with the score board, not what's really going on.
So the the political system has become focused on rigging the score, not creating meaningful economic activity.
People's obsession with the ticker at the bottom of the screen and their belief that it accurately represents whether they're rich or poor is going to be the death of this economy.
last half hour...people are positioning in anticipation of a deal made this weekend. It'll happen. As much as it shouldnt. And McCain will look the hero. And we are screwed.
The Debt Service Reserve Fund (DSRF) has traditionally been invested in a long term treasury security combined with a simultaneous purchase of a par put option to insure liquidity and par value of the treasury. The problem with purchasing the treasury put is that it can be expensive (up to 100 bps), reducing the overall yield of the DSRF. Furthermore, once purchased, a treasury put is relatively illiquid with little resale value. Sometimes, the long term treasury is bought naked, that is, without the put option, which eminently sets up the issuer for a probable underfunded DSRF sometime in the future.
The DSRF Forward Purchase Agreement (FPA) provides essentially the same long term rate as long term treasuries, while eliminating the need for a treasury put option. The DSRF FPA works as follows: A FPA provider would initially deliver a 90 day T-Bill to the trustee. When that T-bill matured the FPA provider would deliver a new 90 day T-Bill in exchange for the cash resulting from the previous maturing T-Bill. This cycle would continue for the term of the agreement. The yield for this type of instrument is fixed for the term of the agreement. The agreement is extremely safe, as the issuer always has either cash or a T-Bill in the trustee possession, and will be approved by most bond counsel.
RhodesianGreenbackinAZ -- Sorry if this is a repost Philly Fed Coincident index --http://www.philadelphiafed.org/research-and-data/regional-economy/indexes/coincident/maps/2008/2008-08.jpg
An interest rate swap in which the fixed-rate payer has the right to terminate the swap after a certain time if rates fall. Often done in conjunction with callable debt issues where an issuer is more concerned with the cost of debt than the maturity. The embedded option is, in effect, a swaption sold by the fixed-rate receiver which enables the fixed-rate payer to receive the same high fixed rate for the remaining years of the swap in the event that interest rates fall. The fixed rate received under the swaption offsets the fixed rate paid under the original swap effectively cancelling the swap. In some definitions of a callable swap, the fixed-rate receiver has the right to terminate the swap. Also known as a cancellable swap.
An interest rate basis swap or a cross-currency basis swap is one in which two streams of floating rate payments are exchanged. Examples of interest rate basis swaps include swapping $Libor payments for floating commercial paper, Prime, Treasury bills, or Constant Maturity Treasury rates; this is also known as a floating-floating swap. A typical cross-currency basis swap exchanges a set of Libor payments in one currency for a set of Libor payments in another currency.
I still think of a deviant Ted Kennedy everytime I see "TED Spread." It is revolting. Can we change it to a name of an attractive woman?
Elvis | 09.26.08 - 3:45 pm | #
Fabian says "Front of the Yield Curve Still Remains the Strongest Spot"
Sep. 24 (Municipal Market Outlook) Matt Fabian, Managing Director at Municipal Market Advisors discusses how new money infrastructure volumes are down despite market expansion. Also; effects of the banking crisis on muni markets, the role of individual investors, and new legislation aimed at increasing underwriter participation. (13:41
Read that WaMU latest chief, just 3 months on the job, could get a severance pay out of $18M! What a crock!
Here was a juicy paragraph from the Money article:
"Fishman's sign-on cash bonus was $7.5 million as well as 612,500 shares of WaMu, which are now virtually worthless. Shares of WaMu plunged more than 90% to 16 cents a share on Friday."
If he actually keeps those 612,500 bonus shares (they say he might have to give them back), at 16 cents they are a worthless $98,000! Sure for people who purchased stock in WaMu their stock is worthless compared to what they paid, but to those of us who live in the real world $98,000 ain't something to sniff at. I guess $98,000 is worthless to the writer of the article and to Mr. Fishman who was slated to make $1M this year and got those shares just for signing on the dotted line of the golden parachute-equipped contract.
"In the late 19th century, Brooks Brothers tailored many distinctive uniforms for elite regiments of the New York National Guard. The Golden Fleece symbol was adopted as the company's trademark in 1870. A sheep suspended in a ribbon had long been a symbol of British woolen merchants. Dating from the 15th century, it had been the emblem of the Knights of the Golden Fleece, founded by Philip the Good, Duke of Burgundy"
I do like hung swine though.
Another tidbit: "Ralph Lauren, when his name was still Ralph Lifschitz, started out as a salesman at Brooks's Madison Avenue store. He was granted the right to use the Polo trademark from Brooks Brothers, which retained its rights to the iconic "original polo button-down collar" shirt still produced today"
In normal times, this would have gotten a thread on CR:
KB Home 3Q loss widens as housing slump drags on
LOS ANGELES (AP) -- KB Home, one of the nation's largest home builders, said Friday its third-quarter loss quadrupled from the year-ago period, missing Wall Street's expectations as revenue plunged by 56 percent amid falling sales and home prices.
Make that 50,001 who called Ms. Feinstein..Oh yes who really only made into power because of a murder..
That's a silly comment. Moscone was killed quite some time ago (1978) and was reelected as major and then senator quite a few times since. I am not fan of her but this is as silly as it gets.
Muni traders are waiting to see what happens. It would be crazy for anyone to do a new issue in this market as well. Plus 4 out of the top 8 underwriters of muni debt are sidelined.
They will be an interesting bet in the future as people realize what all this means and start looking for tax-exempt income.
But Lennar said a week ago that housing had bottomed. The realtor's association have said the same thing. Paulson says the mortgage paper, and implicitly the underlying asset -- housing, are undervalued at fire sale prices.
America forms it's political opinions on the 10 minutes of "news" it watches a day.
If this is true, why isn't J6P rabidly in favor of the bailout? The news media is totally and completely in the tank for it.
What's astonishing (and heartening) about all of this is that people are by and large rejecting outright what the media is trying to force-feed them. And it's remained that way even as the major indices have fluctuated wildly.
Over the past 14 years Crooks (VCs, CCA, BFNYC) were able to transfer most of the risk to dopes and their custodians (pension fraud and mutual fraud) via the Scam Market.
THEY HAVE NETTED $10Tr during the period!
The Scam Market exists to scam the dopes and their custodians. What a system!
Gov't fears the high spread. Why? Market's simply saying that interest rates should be higher -- that's all it is. But the Fed's don't want to pay a higher rate on their bills, notes & bonds! That's their "armageddon." They are struggling mightily to beat the market, but, in the end, the market will win and rates will go up.
"Markets say so, but I'll go on record stating that nothing happens until we see the "mushroom cloud"
Well you'd have thought the WAMU thing was it......That is why they do not need a bailout. The sun came out today even with the largest bank failure in HISTORY.
No bailout needed...it's all about L3 write-ups Baby.
Muni traders are waiting to see what happens. It would be crazy for anyone to do a new issue in this market as well. Plus 4 out of the top 8 underwriters of muni debt are sidelined.
They will be an interesting bet in the future as people realize what all this means and start looking for tax-exempt income.
Bond Girl | 09.26.08 - 3:52 pm |
Is the market signaling any more Jefferson County Alabama's out there?
The real test for municipal/country/state borrowing won't be the credit rating, it will be when they see draw downs on their pension plans
T-Bill and TED's excellent adventure
Lets all remember to tip CR...
I myself prefer natural butter to TED Spread.
thirtyth??
Tip? Okay. Short financials.
Oh... wait. Sorry.
OK, stupid question. Aren't markets supposed to anticipate the future?
I mean, if the stock market is anticipating the bail-out, why can't the credit markets?
Another new thread?? This blog is killing me--it is addicting! I just started reading it last week and cannot get away from it. I have work to do (and need to sleep)
What do all of you folks do for a living that allows you to do to hang out here all of the time? I need to change my career...
Fun True Fact: the TED spread is named after serial murderer Theodore Bundy
still say there's no deal coming
d's won't go alone, even though they can
r's won't because they don't have to
The game is called sweat
man-o-man, ringside on a comp ticket
too good
better than Ringling Bros
compared to "risk free" treasuries
Is that like "risk free" plutonium?
WB make it to Monday? What's the line in Vegas?
Lending freeze at all-time high
Banks - anxious over bailout and WaMu failure - tighten lending to each other, businesses and consumers.
Treasury prices rise, credit freezes on WaMu, bailout - Sep. 26, 2008
For instance, one gauge that banks use to determine lending rates rose to an all-time high. The difference between the London interbank offered rate, or Libor, and the Overnight Index Swaps rose to an unprecedented 2.08%. The Libor-OIS "spread," or difference between the two rates, measures how much cash is available for lending between banks. The higher the spread, the lower availability of cash for lending.
Another lending measure rose to a 26-year high. The "TED spread" - the difference between three-month Libor, what banks pay to borrow money for three months, and the three-month Treasury borrowing rates - rose to 2.92% after hitting 3.1% earlier in the day, the widest margin for that measure since 1982. Just a month ago, the TED spread was at 1.11%.
"If banks don't have the market to sell off illiquid assets, we're just going to be stuck in the same situation a year from now," Van Order said. "There's just no market for whole classes of asset- backed securities, and the government is the only one that is large enough to create a market."
Are A2P2 spreads following?
Tips? No way. Gotta buy alfalfa for the pony I'll be getting when this bailout passes.
Anon writes:
Another new thread?? This blog is killing me--it is addicting!
CR: consider pasting a link or an addiction risk warning along with the twelve steps of Blogaholics Anonymous.
Thank you. I am going to have a drink now.
I don't mean to sound ignorant, but how critical are these spreads to regular people and the real economy? The other day they were going on and on on CNBC about how Caterpillar had to pay 7% on some bonds. But at least 1/2 of the time over the last 50 years, interest rates have been higher than 7% and companies seem to have managed. I can understand 20% like in 1980 makes it hard to do business, but if you can't afford 7%, you need to take another look at your business model.
Can any of the experts splain this?
better than Ringling Bros
Greatest show on earth, it's so true.
It seems that mortgage rates decline after FRM and FNM rescue was short lived. Recently, we have seen 4 up and down cycles in the TED spread. It may go down and up again after the rescue.
I thought the "TED spread" was Theordore's 3-course dinner....
"...and the government is the only one that is large enough to create a market."
Create a market, that's what you call giving out truckloads of cash to reckless gamblers?
Can any of the experts splain this?
Crude fear-mongering manipulation? =)
Maybe we can lessen the cost of this bail-out by replacing some of the dollars with Melamine......
Comrade Doofus writes:
I thought the "TED spread" was Theordore's 3-course dinner....
You're thinking of the Dahmer dilemma
Comrade Volker the Viking writes:
still say there's no deal coming
d's won't go alone, even though they can
Filibusters in the senate means they can't go alone. The Rs are very good at block voting.
he uncertainties caused a stampede into cash and safe-haven assets before the crucial quarter-end, sending one-month T-bill rates briefly below zero percent and three-month rates below 0.5 percent on Wednesday.
The U.S. 2-year interest rate swap spread jumped beyond 163 basis points, the widest on record, signalling extreme risk aversion and deepening credit market problems.
The spread eased to around 150 basis points in Europe on Thursday, still very high by historical standards.
Ricky Ric
This is a shorthand answer and the technical treatment your question about TED spread deserves.
In short, you are right. The spread will make a lot of firms reexamine their business model, and regular folks will feel when that re-examination comes their way via layoffs.
oops... NOT the technical treatment, I meant to say
Persecuted Comrade Anonymouse writes:
Fun True Fact: the TED spread is named after serial murderer Theodore Bundy
The a Ted Spread is
"Assume the position"?
don't mean to sound ignorant, but how critical are these spreads to regular people and the real economy?
Investors.com - Page not found
joe- But why is the spread such a big deal? Isn't it the actual rate you pay that's important? And 7% seems pretty OK to my naive brain.
Ricky,
It sort goes like this:
Bean counters help management decide what projects to undertake and how much to charge their customers. One input, along with material and labor costs etc., is how much it costs between starting the project and getting paid by the customer, cost of capital or interest rate.
A project that is profitable at 5% may not be profitable at 7%.
In addition, why undertake a project that will yield 5% in net margin (profit) when you can just deposit it in the bank and get 7%.
This is grossly simplified but hope it helps.
"This will probably be one of the first indicators to show any benefit from any plan"
I am going to go out on a limb here:
I think any plan to recap the banks wont change the TED spread at all. I think there is a want to hold money and stay afloat. Also as JPM has shown us - building the empire is more important. So any bucks to the banks will either end up in their coffers or to peck at the financial bodies in the street.
Stupid question but can any of these figures be MANIPULATED or MANUFACTURED?
tbapple-I understand that. But weren't rates around 7% pretty routine in the 1980s and 90s and the economy seemed to do OK, no?
Silly, TED is named after Tex Baxter. The greatest anchorman ever.
Question to the crowd:
I am getting emails from a few people about Wachovia, the news is starting to spread. If they go BK this afternoon, do we see a bank run or any type of panic? Or does j6p just wonder why his ATM card doesn't work tonight?
The intense T-bill demand could crimp demand for longer-term Treasury paper, so the market will closely watch the Treasury's auction of a record $34 billion of two-year notes later Wednesday, analysts and traders said.
Is TED for real? I've read a number of articles suggesting TED is 'not operational' since no one reports what rates they are really paying. Or aren't lending at any rate...
Anyone w/ light to shed on this?
Darn phone line into congress switchboard are repeating
(all circuits are busy) That gets me pissed..
not as much as SRS getting the heck beat out of it..
tbapple,
The question, and it is a good one, is why are these LIBOR or A2/P2 rates so bad when they were that high such a short time ago?
The answer is the rates themselves are not all that bad, but the delta between those rates and the lower risk rates are an indication of stress in the system - the higher the spread, the less actual lending is taking place.
Anyone feel free to correct me.
Ricky Ricardo writes:
tbapple-I understand that. But weren't rates around 7% pretty routine in the 1980s and 90s and the economy seemed to do OK, no?
7 or 8%?
Hell, I paid 12% for my first home loan in 86. I bougth 16% tax free muni's in 1981. Anything under 10% was seen as a gift in the 80's. Rates didn't start really coming down until the 90's.
If Ts can go to 0, at what point is it called "negative interest"?
check this video out at krugman's blog.
Crisis at Princeton - Paul Krugman Blog - NYTimes.com
safe for work, unless you work in a bank.
"we have seen 4 up and down cycles in the TED spread"
Yes; the Fed tried three bullets and now a hydrogen bomb... but that one is still stuck in the bay. tick...tick...tick
Bank runs are for the movies--the name of today's game is electronic transfers. Clicking on the computer is so easy, a baby can do it while regurgitating.
T-Bill and TED's excellent adventure
Kim Jong Nemo
LOL. We neeed t-shirts.
The U.S. Treasury's sale of $40 billion 7-day cash management bills at a high rate of just 0.05 percent on Wednesday showed that in exchange for safety, investors were asking for virtually no return on their money.
The Treasury Department said it will auction $40 billion in 34-day bills on Thursday. It has sold a total of $124 billion in T-bills so far this week.
The risk-aversion move into T-bills has siphoned credit availability away from cash-strapped companies and consumers.
The spread, or risk premium, for borrowing three-month dollar funds in the London interbank offered rates market over the expected three-month rate on benchmark U.S. federal funds grew to 130.275 basis points from 128.25 basis points on Tuesday.
"Substantial strains continue to exist in the money market, as evidenced by Libor and T-bill rates," Tony Crescenzi, chief bond market strategist at Miller, Tabak & Co. wrote in research note.
--
The ONLY change in America has been which group of aristocrats were the real behind-the-scenes rulers (at the founding they were landed and commercial aristocrats). Today, it is Bankrupters and Fraudsters of New York City (BFNYC), truly evil financial gangs. The only fit description for the current rulers of America is Financial Nazis of America (FNA).
Americans, and the rest of the world, must, and will, pay the price for supporting the criminal financial gangs.
Jas
I mean, if the stock market is anticipating the bail-out, why can't the credit markets?
I think they are. They're just anticipating it's not really going to work.
Banks - anxious over bailout and WaMu failure - tighten lending to each other, businesses and consumers.
Banks are also eyeing next Tuesday on the calendar. That would be Sept 30th, end of the reporting quarter. I think they would all like to have nice warm tier-1 capital ratios on that day (regardless of what they do on the 1st of Oct).
Be interesting if the Bailout Bill stagnated until Wednesday.
"Hell, I paid 12% for my first home loan in 86."
So did I, Comrade. Well, '83 actually. I had an ARM that I rode up and them all the way back down to eventually under 3%.
If liquidity is so precious today then it should be worth more, but it is not. We really do have a case of confusing "can't" with "don't wanna".
Anonymous writes:
Stupid question but can any of these figures be MANIPULATED or MANUFACTURED?
Apparently LIBOR can
Treasuries traded up because it's nearly impossible for people to assess where the risks lie in the securities they own so they go to the de facto risk-free securities which are Treasuries," said Lance Pan, director of credit research at Capital Advisors Group in Newton, Massachusetts. "In this market, no one wants anything other than Treasury bills."
Treasury bills were in such demand that the U.S. Treasury Department said it would sell $40 billion in cash management bills on Wednesday to help the Fed finance a rescue plan for AIG under which the New York Fed offered $85 billion in loans in return for an AIG stake of nearly 80 percent.
The cash-management bills will allow the New York Fed to advance $85 billion to AIG without putting downward pressure on the benchmark federal funds rate, which the Fed is holding steady at 2 percent, and "has the additional benefit right now of satisfying the strong demand for bills that exists in the marketplace," said Michael Moran, chief economist at Daiwa Securities America in New York.
https://personal.vanguard.com/us/FixedIncomeNewsArticle?storyID=1221674384nN1748466
OT-the way the market is acting tends to make me believe the big boys no the bailout will be passed via some leaks....
Hell, I paid 12% for my first home loan in 86. I bougth 16% tax free muni's in 1981. Anything under 10% was seen as a gift in the 80's. Rates didn't start really coming down until the 90's.
Comrade Baron Von Helmut III | 09.26.08 - 2:47 pm | #
At that same time (1982) I got a 20% raise after being on the job for just six months coming out of college. I got another 20% raise the next year. Over 40% (compounded) in a little over 18 months.
I don't think too many workers today are experiencing those kinds of raises...
Ricky,
The business models of the 70's and 80's were created in an environment of those higher rates.
Also, today's huge corporations are not as nimble and are having tremendous trouble, obviously, adjusting to changes that should have been anticipated.
Part of the reason IMO that most of the people on this blog have such schedenfrued(sp?) is that they knew this had been coming for years.
Marc Faber just blew them away on CNBC.
Will try to post here.
Somebody needs to post something nice.
Israel asked US for green light to bomb nuclear sites in Iran |
World news |
guardian.co.uk
Anyone remember seeing a chart recently from a Fed report that shows declines/growth in economic activity by U.S. state. It was a red/blue coding (no relationship to politics)and it basically showed that the agricultural center of the country was still okay (blue), while the rest of the country was hurting... red. If anyone saw it... and has a link... I'd be grateful... Thanks
joe- But why is the spread such a big deal? Isn't it the actual rate you pay that's important? And 7% seems pretty OK to my naive brain.
You're looking at nominal interest rates. Real interest rates are what matters. If your revenue is increasing at 10% a year, 7% interest rates isn't such a problem. If it's falling at 10% a year, 7% is a death sentence.
Baron: Yes I remember those days, which is why I'm having trouble wrapping my feeble brain around this thing. Are we really in a credit cruch or have we simply gone from ridiculously loose lending to normal lending (i.e., to those who will pay the loan back?). Is this a case of the alcoholic who was drinking a case/day feeling deprived because he's cut back to a 6 pack?
cd writes:
OT-the way the market is acting tends to make me believe the big boys no the bailout will be passed via some leaks....
and they know what will be in it for them?
Hell, I paid 12% for my first home loan in 86. I bougth 16% tax free muni's in 1981. Anything under 10% was seen as a gift in the 80's. Rates didn't start really coming down until the 90's.
Comrade Baron Von Helmut III
Don't tell the kids scary stories like that. They won't sleep tonight. LOL
In support of Mel's electronic bank run comment
Tech Ticker: Run on Bank Helped Kill WaMu, But Your Money Is Safe:
Tiny URL - create a shorter link
Question - is seeing what the TED spread does the only way to determine if any plan that gets passed was actually needed and did any good? Or would there be other indicators, beyond the fact that the money has to go somewhere, so someone is bound to be happy about it, even if it doesn't do what it was intended to do?
As I understand it, there's no real way right now to figure out if a bailout is needed and did what it was intended to, or if it's just Wall Street seeing if extortion works if you manipulate the right indices, since either way, the idea is that things go back to "normal", which means there's nothing actually built to look at afterwards.
I'm assuming that insisting that any member of Congress who votes for it + Paulson + Bush give all their current assets to the bailout plan and not get paid back until after the Treasury is repaid is probably a non-starter, no matter how useful it would be to see how scared they were.
Anyway, any suggestions about how to evaluate effectiveness and use of any plan passed would be appreciated.
Check out Setser. There you will find the following comment below Brad's leading post that is instructive. It is posited the "Rush" to get this done is the Fed is out of cash. The Bernanke bailout stash has been wasted on trash paper. Cedric posted this and it needs to be reflected upon.
Up to $700 billion to buy assets from struggling institutions. The plan is aimed at sopping up residential and commercial mortgages from financial institutions but gives Treasury broad latitude.
Up to $50 billion from the Great Depression-era Exchange Stabilization Fund to guarantee principal in money market mutual funds to provide the same confidence that consumers have in federally insured bank deposits.
The Fed committed to make unspecified discount window loans to financial institutions to finance the purchase of assets from money market funds to aid redemptions.
At least $10 billion in Treasury direct purchases of mortgage-backed securities in September. In doubling the program on Friday, the Treasury said it may purchase even more in the months ahead.
Up to $144 billion in additional MBS purchases by Fannie Mae and Freddie Mac.The Treasury announced they would increase purchases up to the newly expanded investment portfolio limits of $850 billion each. On July 30, the Fannie portfolio stood at $758.1 billion with Freddies at $798.2 billion.
$85 billion loan for AIG, which would give the Federal government a 79.9 percent stake and avoid a bankruptcy filing for the embattled insurer. AIG management will be dismissed.
At least $87 billion in repayments to JPMorgan Chase for providing financing to underpin trades with units of bankrupt investment bank Lehman Brothers. Paulson said over the weekend he was adamant that public funds not be used to rescue the firm.
$200 billion for Fannie Mae and Freddie Mac. The Treasury will inject up to $100 billion into each institution by purchasing preferred stock to shore up their capital as needed. The deal puts the two housing finance firms under government control.
$300 billion for the Federal Housing Administration to refinance failing mortgage into new, reduced-principal loans with a federal guarantee, passed as part of a broad housing rescue bill.
$4 billion in grants to local communities to help them buy and repair homes abandoned due to mortgage foreclosures.
$29 billion in financing for JPMorgan Chases government-brokered buyout of Bear Stearns in March. The Fed agreed to take $30 billion in questionable Bear assets as collateral, making JPMorgan liable for the first $1 billion in losses, while agreeing to shoulder any further losses.
At least $200 billion of currently outstanding loans to banks issued through the Feds Term Auction Facility, which was recently expanded to allow for longer loans of 84 days alongside the previous 28-day credits.
-so, so, so is this the correct total?
$1,800,000,000,000.00
$1.8 Trillion? Oh. My. God!
The Treasury Department also auctions from time to time short-term Cash Management Bills with maturities up to 50 days that are sold to institutional buyers in lots of $1 million or more. These have replaced Treasury certificates of indebtedness and Tax Anticipation Bills as short-term debt instruments.
lots of good input re TED spreads
But, is it not true that many, many must borrow at much higher rates now?
Look at the AIG deal for example, extreme though it might be, it is far from extreme for many other more risky enterprises.
LIB - OIS Spread:
Bloomberg.com:
Personal Finance
-so, so, so is this the correct total?
$1,800,000,000,000.00
$1.8 Trillion? Oh. My. God!
Bruce
and counting
Anonymous writes:
Stupid question but can any of these figures be MANIPULATED or MANUFACTURED?
Absolutely not! They come directly out of the hat.
Ricky and Baron V Helmut
The Ted Spread speaks to perceptions of risk and is a better indicator than absolute interest rates.
When the Baron got his 12% mortgage it probably wasn't hard to get the mortgage. Income, money down, documents, etc - standard procedure.
Today, mortgage rates are lower, but mortgages are suddenly much harder to get. The int rate itself doesn't tell that story, but the Ted Spread does.
Investors with cash have a choice of by 3 mo t bills or going else where for a much higher rate. they are going to the T Bills even as the T Bill rate goes to zero.
Say other parties want to lure some of that money. They say, T Bills going to 0%, we'll offer a little more. 7%, then 8%, then 9%.
It is the same as banks that now offer higher CD rates. Looks great, right? Invest there, right? . . .
Or look at the extra high CD rate say that bank is in trouble and is panicking to get deposits. hmmmm. Must be near default.
the Ted Spread matters
Brad is correct, but try substituting debt instruments for trash in lieu of cash.
House GOP: We'll Oppose Any Bailout of Wall Street
Page not found - - CNBC.com
With headlines like this, we know who the next president is going to be.
Setser reviewed Fed data and estimates they spent 370 B in the last two weeks propping up the house of cards.....
Anonymous writes:
Stupid question but can any of these figures be MANIPULATED or MANUFACTURED?
Link below related to acknowledge maniputation in last spring:
Stressed Banks Underreporting Libor Rates « naked capitalism
One-month T-bill yield traded 0.14 percent, down 43 basis points from late Tuesday. It reached briefly below zero percent, according to analysts, which is the lowest level since the one-month bill was reintroduced in 2001.
The scramble for short-dated government debt was sparked by troubles at the Reserve Primary Fund. The money market mutual fund fell below $1 a share in net asset value due to losses on its holding of securities issued by Lehman.
I think this is the money market going into Main Street, says William Larkin of Cabot Money Management. "Retail investors are running with fear into T-bills or government backed money market accounts.
Credit Markets Seizing Up - CNBC
Ac and Dryfly hit key points on Ted, too.
We're saying the same thing in different ways
It is the same as banks that now offer higher CD rates. Looks great, right? Invest there, right? . . .
Or look at the extra high CD rate say that bank is in trouble and is panicking to get deposits. hmmmm. Must be near default.
tedspreadmatters: when cash comes into a bank it is a liability. It is correct to say that when any institution offers above market returns for demand deposits then they are cash, oops, debt instrument hungry.
They must immediately pool their liabilities and create assets. Theses are called loans and they are leveraged to the extent that their board permits and the system limits.
Doomed, we are freaking doomed.
This got lost at the end of the last thread from JP
JP writes:
holy moly: phone call summary-
Deal is blowing up. house r's realize that they get unelected if they do this thing. If armegeddon happens, they come back to admin the clean up. D's looking for reason to walk cuz they're getting the same calls, will pin on house R's.
Everyone looking for a token out.
Guys, which is why I don't buy this " liquidity crunch" pitch. FF rate at 2%, 10 yr under 4%,and we have no liquidity?
More like the huge carry trade is unwinding, and the days of REAL lending with REAL guidelines is back.
The FED has no liquidity because they drained all the short term reserves on bailing out these Wall Street crooks. That I agree on, but there is plenty of private money. They are just smarter than the FED and want an actual return for the risk.
Is TED Spread better than Vaseline?
House GOP: We'll Oppose Any Bailout of Wall Street
Woo hoo! Go Republicans!
(I say this as someone who dislikes both parties equally)
Is TED Spread better than Vaseline?
Sir Tappa Kegga Swill
Ask Lefty.
By the way, where is Lefty????
joe-It's clear investors are perceiving very high risk (rightly or wrongly) but if I'm looking for a loan, the only things that I give a crap about are rates and availability. Rates are still very reasonable. Availability-what is the evidence that loans are less available than they were in 1985, let's say?
If the House Repubs want to eliminate or cut Cap Gains tax to free up cash for investors to buy these MBS assets isn't that just a back door way for the government to be funding it?
Also, that assumes the problem is that there isn't enough money in investors' pockets to buy the assets. That's not the problem, the problem is price and value, not availability of investment funds.
I mean, isn't it???
Novaonlooker: the game is called Sweat. Coards play this game every day. When a coward goes up against another coward they both lose.
New political paradigms/parties will emerge from this.
Okay, fellow Democrats/former Democrats.
Are we starting to notice a pattern here? The vote on the bailout RIGHT NOW stands at:
Dem. yea...131.../nay...3
Repub. yea..1/nay...119
This is EXACTLY what happened with the Fannie/Freddie vote. Overwhelming Wall street support by the Dems aand Overwhelming "We the People" support and rejection of Wall street by the Repubs.
Call your Democrat reps. and tell them to stuff it.
They are siding, once again with Bush and Wall Street. They need to cross over to the House Republicans and support Average Americans.
Anon:
"What do all of you folks do for a living that allows you to do to hang out here all of the time? I need to change my career..."
They are all independently wealthy from shorting financial stocks over the last year.
Now they have way too much time on their hands.
(I say this as someone who dislikes both parties equally)
JS | 09.26.08 - 3:01 pm | #
Me too, and I'm a Democrat.
Who said calling your Reps doesn't accomplish anything?
Errr, that is I dislike both parties equally.
Sir Tappa Kegga Swill writes:
Is TED Spread better than Vaseline?
Sir Tappa Kegga Swill | 09.26.08 - 3:01 pm | #
No one uses vaseline around here... only approved lube is FedLube. Get with the program bub.
"...and the government is the only one that is large enough to create a market."
Seems to me like anyone who "creates a market" these days goes bankrupt.
waitinginPNW writes:
Okay, fellow Democrats/former Democrats.
Are we starting to notice a pattern here? The vote on the bailout RIGHT NOW stands at:
Dem. yea...131.../nay...3
Repub. yea..1/nay...119
Any idea who nay Dems are?
WaMu Gives New CEO Mega Payout as Bank Fails
20 Million, 17 days on the job.
WaMu Gives New CEO Mega Payout as Bank Fails - Local News | News Articles | National News | US News - FOXNews.com
sorry if its a re-post.
The U.S. Federal Reserve is undertaking an outright purchase of agency discount notes, according to the New York Fed Web site on Friday.
A week ago, the Fed said it would start purchasing short-term debt obligations issued by mortgage agencies Fannie Mae, Freddie Mac and the Federal Home Loan Banks System, in response to stress in this sector of the money markets.
In the past week, the Fed has bought some $10 billion of these securities.
These operations also add permanent reserves to the banking system.
Fed undertaking outright agency discount notes purchase
| Reuters
Printing money honey.
Interest rates may vary from time to time. The rate at which intermediate cashflows are reinvested may differ from the original interest rates on the security, which can affect the total earnings from the security.
Money Market Instruments include CPs ,commercial bills, Corporate Debt, T-Bills, and Government securities having an unexpired maturity up to one year, CDs, usance bills, CBLOs, Repo/ Reverse Repoand any other like instruments having a maturity of 1 year or less, as specified by the RBI from time to time.
Look at your own friggn prospectus!
"It is posited the "Rush" to get this done is the Fed is out of cash."
THE FED'S BALANCE SHEET WAS DEPLETED LAST WEEK.
CONJURE BAG TALKED ABOUT IT HERE.
"(I say this as someone who dislikes both parties equally)"
Me too...I'm an equal opportunity to voter.
Does anyone see the irony here that the Dems are supporting Bush and the Reps are opposing him?
I believe we are witnessing the definition of: Politics makes strange bedfellows.
Dems are handing this election to McCain. I am so disappointed.
CONJURE BAG TALKED ABOUT IT HERE.
mp
I recall that.
Marc Faber: US Needs as Much as $5 Trillion Financial Rescue
Bloomberg video : Bloomberg News
Ricky Ric
I'm trying to say the Ted Spread is the sign of evidence you seek. Other evidence is that firms are collapsing becaue they cannot prop themsleves up. Other evidence is that houses go into escrow and fall out because the buyers can't get financing. Other evidence is in the auto industry .....
Re: "What do all of you folks do for a living
Watch por
I hope this is an end to the neo-cons and a return to being paleo-cons for the Repubs, and an end of the free-trade, pro-corporate dems.
As long as it doesn't make it to vote until after sept. 30th. I want to see those balance sheets.
OT-Don't you think it's wierd that markets go up 200 pts yesterday on deal is done rhetoric, now you here about negative sentiment regarding Reps. saying no deal and market is still up.
Who is buying? the home team...
largest bank failure ever...home team..
These guys are good..Evil geniuses
At rally last night in SF I talked to Pension manager and he stated they were mostly in gold and cash...
Also said he didn't know if it would help...
Are we starting to notice a pattern here? The vote on the bailout RIGHT NOW stands at:
LINK please!!!
Somebody says shit on the internet and its TRUE.... sheesh.
Anon writes:
Dems are handing this election to McCain. I am so disappointed.
Way too early to tell... at least wait until the debate
Re: "What do all of you folks do for a living
Work 3 12 hour shifts caring for financial industry workers who have suffered coronaries.
Anonymous writes:
Re: "What do all of you folks do for a living
Watch porn
I have copies available for download from my latest starring role in "Watch Benny Boy and Hankster Hide the Salami".
anyone know why it is that when I click links here to Bloomberg video I just get the Bloomberg screen, but a black video box. What does bloomberg use? Flash? anyone? Bueller?
Who said calling your Reps doesn't accomplish anything?
I should should call my D-critter and chastise them for voting Yea, and tell them to switch to Nay. Then call my R-critter and chastise them for voting Nay, and insist they switch to Yea.
about 30 house repubs wouldve voted for it
$1.8 Trillion? Oh. My. God!
Bruce
Dont worry Bruce - its all coming back. HP says so.
Completely OT
On one of the numerous previous threads a comment was made along the lines of 'if it all goes to hell and you see me with a CR logo on my backpack, don't shoot.' And above, Whereis... said "We need t-shirts."
So an appeal to CR and Tanta, being all capitalists here...
What about it? CR t-shirts and sew-on / iron on patches for backpacks and the like. Made in China / Guatemala / or by American Apparel in LA? Somehow I think there is a ready made market, and it'd be a nice way to both financially and publicly support our gracious hosts.
Printing money honey.
coins!
I will buy a CR t-shirt.
Conjure is one fucking amazing bag. Fucking amazing.
One of these days I want to hear about the historic relationship between Conjure and Marx's theory of commodity fetishism. I mean, tobies are at the base of it all.
the patch should say:
Calculate This!
American Apparel in LA, support garment workers here, I'll pay the difference.
Geoff,
You need to be running Windows (unlike my father, something higher than 3.1) and have the latest Media Player installed.
Count me in for a T.
A nice polo shirt please, with a pretty polo pony logo (or maybe a variation on the A&F "hung swine?")
im running windows on a mac (fusion) but am not sure about the media player link...
Re: Watch Benny Boy and Hankster Hide the Salami".
Dude I just got a copy on Rapidshare and I didnt pay a cent! Great stuff!
I want a well hung swine
and a pony
CR and Tanta bobble heads?
I have a hot mad crush on Bernanke. So totally anon for this...
I want mine made in America and tricked out with Pink Ponies..
Found this interesting. Paulson the piker, really needs 5 trillion.
Swiss investor Marc Faber, known for a long track record of good calls (he was a commodities bull until late this spring, for instance, when he reversed his view) and a fine grasp of financial markets history, confirms the estimate earlier in the week by Ken Ohmae that the US needs a salvage operation much bigger than the one envisaged by the Treasury plan, and the damage may come to $5 trillion:
Marc Faber, managing director of Marc Faber Ltd. in Hong Kong, said the U.S. government's rescue package for the financial system may require as much as $5 trillion, seven times the amount Treasury Secretary Henry Paulson has requested....
The $700 billion is really nothing,'' Faber said in a television interview.The treasury is just giving out this figure when the end figure may be $5 trillion.''...
The decline in home prices of 20 percent is a relatively minor decline so far and it has created so many problems,'' Faber added.The US is in much worse shape'' than Japan was when its stock market crash ushered in a decade-long slump in 1990.
There is other juicy stuff in the Bloomberg video. Some of Faber's other comments:
The problem is excessive leverage, not housing per se.
Stocks may rally once a bailout package is in place, since on a short-term basis stocks are oversold, but a durable bull market for financial is "out of the question."
The one bubble that has not been pricked is US Treasuries. Higher interest rates are in the offing.
While the dollar may decline sharply in the next few days, Faber regards it as attractive because even though the US is in bad shape, the rest of the world is even worse off.
US future=long term stagnation and probably inflation. Good times are gone for as long as most people can imagine.
Ricky Ricardo writes:
tbapple-I understand that. But weren't rates around 7% pretty routine in the 1980s and 90s and the economy seemed to do OK, no?
There's a lot more leverage out there now than there was 30 years ago. Rates don't matter so much when you aren't carrying much debt, but when you're stuffed to the gills with it even a small rate increase can push you under.
White House press secretary Dana Perino: "We don't have any reason to believe that we can't get it done by Monday."
LEH Ts on sale on ebay - to stay green we could buy them and stamp a big CR over top the Lehman logo and add the post script - Whoocudanood
Uncle Billy,
Our rating agency is about to freeze up, forget polo shirts, think snow and winter, but DO NOT think XMAS!
"I want mine made in America and tricked out with Pink Ponies.."
Conjure says, "Pink ponies, yeah."
Geoff,
Search the Google for latest WMP download. I can't guarantee that's your problem, but it was for me a while ago.
Bumper stickers, patches that spell out COINZ!, key chains. Bottle openers and glass pipes. The list is endless. Seriously, anyone in the tchotchke / t-shirt biz? I'm not but have several friends in those lines of work.
Then, at the convention, everyone could compare their schwag. Be like collecting Star Trek stuff.
Or maybe it was brooks brothers with the "hung swine"? I actually used to own a shirt like this, but can't remember where I got it.
Geoff,
Check your java applet, may need to reload or update...
OKay
The R's think us is real dumbbb
So the D's want to take money from some ethereal source and give it to Wall Street (ethereal source presumably SWF.
So SWF>B&P> Wall Street
R's want to use private financing paid for by wiping out cutting taxes for I presume private equity funds
So B&P> PEF> Wall Street.
But I presume that SWF+PEF are pretty well interconnected.
So a Chinese Fable comes to mind(thanks to Thomas Merton)
A zoo keeper needed to cut his budget and so reduced the food to his monkeys to three peanuts in the morning and four at night.
The monkeys were outrages. They demanded FOUR peanuts in the morning and THREE at night. Zookeeper reluctantly gave in.
--Chuang Tzu 3rd or 4th Century BCE
the Google? what the heck is that? Some series of tubes? Should I yell down my kitchen sink drain?
"What do you people do for a living?"...we dive for stray quarters before the path of the bulldozer.
Bong Girl-
I am SURE that Marcy Kaptur, D. OH., is one of the NAY Dems. On the Fannie/Freddie vote, she was one of ONLY THREE Dems (versus 149 Repubs!) who voted "nay".
I called her office the day after the F/F vote, thanked her profusely on behalf of all Americans and told her I would never vote Dem. again after seeing that anti- American vote.
I told her she should QUIT the Dem Party and she and the 149 Repubs should just band together and start a new party.
On the F/F vote, there was also one Dem from Oregon who voted "nay" and one other from some Eastern State (sorry, way to vague there!).
STRONG SUGGESTION to Dem voters: Vote ALL these "yea" Dems OUT OF OFFICE. Period.
I want whatever I get to be done on a brown shirt with any artwork as an arm band
emo-
"I mean, if the stock market is anticipating the bail-out, why can't the credit markets?"
I know you know the answer to that so I'll just respond for other's who are perplexed by that.
You can't force banks to lend. They have already had over $3t in repo's for that very purpose. At least that is what the Fed says they are for. They have just been using the cash to pad balance sheets and inflate the commodity trade so that they have some form of results to report. But they are certainly not lending at the same clip that they receive repo. cash at to supposedly do it with.
Two reverse repo's last time I looked today...could be more...i'll go look later.
Ciao
MS
Check your java applet, may need to reload or update...
cd
The have had several updates recently. Good advice.
Anonymouse, this morning you said that today's close would approach the days lows. Does it still look that way to you?
godhatesfangs writes:
about 30 house repubs wouldve voted for it
godhatesfangs | 09.26.08 - 3:08 pm | #
Was watching a Dem 'operative' on the tube this morning - said Pelosi demanded 80 bodies from GOP House leadership - didn't care who they were but cough them up or no deal. We got 'No Deal'. Saw it in CNBC Squak
My guess is more than a few Dems are breathing a sigh of relief too - best thing that could happen to them is GOP scotchs the deal and tTHEN the market blows up... blame GOP for 'obstruction'.
Best thing that can happen to GOP is the bill passes w/ all Dem votes and THEN market blows up.
Cynical? Yes. Would it be effective? Absolutely.
Politics is a rough sport.
There has been no vote on any of the proposed bailout plans. Vote counts thus do not exist. Check your sources, folks.
Anyone think maybe a 100-point drop in the final hour or so of the day, as people get out of the market? ... Or are most folks just too stunned to do anything?
Perhaps you would like to join me for lunch?
http://www.richmondfed.org/publications/economic_research/instruments_of_the_money_market/instruments.pdf
CR CalculatedRisk,
You can expect a 75bp cut in the Fed Funds rate within a month. This is not from the futures or the business press.
Federal Funds Chart
That link goes to the fed funds rate.
From Sept 19-23 the effective rate was 1.5%/50bp cut. This was response to a significant jump. For the past 2 days, Sept 24-25, it has been at or below 1.25%/75bp cut.
The precedent for a dramatic cut was a spike in the rate at Dec 31, that forced the fed to bring the effective rate down to 3% at a time the target was 4.25%. On Jan 25: a 50bp cut, on Jan 30: 25bp cut.
Given the spike in other important rates, the stable dollar and inflation, and people begging for any kind of leadership -- this 75bp cut is a no brainer if you're the Federal Reserve.
Waiting,
That was Defazio in Oregon..Prev. Thread has him going off govt selling repos via you tube...
Anonymous: well if this sucker is going down, I want it to go down while I'm Rolling On The Floor, Laughing My Ass Off, Busting A Gut, All For The Love Of Ponies. (roflmaobagaflop)
I rate your comment a quadruple Che+
United States Senator Jim Bunning, Kentucky : News Center
listen to the Audio
"You can't force banks to lend."
Conjure says, "What's it worth to you to find out?"
Now the bailout that "had" to be done Wendesday "has" to be done by Monday?
BWAHAHAHHAHA.. oh this is funny. I called my Congresscritters and demanded they put in that I get a pony or no deal. They were not amused.
If the bailout collapses and the big money banker boys decide it's the Republican's fault, look for their fellow big money boys at GE, Viacom, and ABC/Disney to destroy McCain et al. in the next few weeks. Economic populism is as well and good but you don't meddle with the primal forces of nature without having to atone. And they'll do the same thing to Obama if need be.
ive got the latest java update (automatic and done on 9/23) and I ran a windows update and seem to have the latest media player 11...
back to the tubes...
My guess is more than a few Dems are breathing a sigh of relief too - best thing that could happen to them is GOP scotchs the deal and tTHEN the market blows up... blame GOP for 'obstruction'.
Best thing that can happen to GOP is the bill passes w/ all Dem votes and THEN market blows up.
Funny how they think stock market performance is the same as a referendum on this bill. They should go home to their constituents.
I don't want a pony. ... I want a cow or goat -- much more useful when society collapses and I have to live off the land.
Why has there been no falling on swords yet? All I see is lot of smirking.
MS --
You can't force banks to lend.
Then why does anybody think this bail-out will help?
mp writes:
"You can't force banks to lend."
Conjure says, "What's it worth to you to find out?"
mp | 09.26.08 - 3:17 pm | #
What's it worth to me? It would be worth my vote.
I will vote for the Presidential candidate who promises to make Conjure the Sec'y of treasury.
BWAHAHAHHAHA.. oh this is funny. I called my Congresscritters and demanded they put in that I get a pony or no deal. They were not amused.
Comrade Baron Von Helmut III
If you really did this, you rule.
not interested as it's not going to happen with or without the bailout.
Ciao
MS
FFDIC writes:
Lets all remember to tip CR...
FFDIC | 09.26.08 - 2:33 pm | #
Thanks for the reminder. Gave my first tip yesterday.
INSTRUMENTS OF THE MONEY MARKET
The need for a money market arises because receipts of economic units do not coincide with their
expenditures. These units can hold money balancesthat is, transactions balances in the form of currency,
demand deposits, or NOW accountsto insure that planned expenditures can be maintained independently
of cash receipts. Holding these balances, however, involves a cost in the form of foregone interest.
A final way banks raise funds in the money market is through repurchase agreements (RPs). An RP is a
sale of securities with a simultaneous agreement by the seller to repurchase them at a later date.
Money market futures contracts and futures options are traded on organized
exchanges which set and enforce trading rules. A money market futures contract is a standardized
agreement to buy or sell a money market security at a particular price on a specified future date. There are
actively traded contracts for 13-week Treasury bills, three-month Eurodollar time deposits, and one-month
Eurodollar time deposits. There is also a futures contract based on a 30-day average of the daily federal
funds rate.
blah, blah...
The evolution of the over-the-counter derivatives market has revolutionized the nature of financial
intermediation in money markets in a span covering a little more than a decade. Along with the benefits
derivatives offer firms in managing cash flows, however, the rapid growth of the market has raised new
concerns for regulators and policymakers. Industry spokesmen argue that existing market arrangements are
adequate to address such concerns, a view increasingly shared by regulators and policymakers.12
12
For example, see Hansell and Muehring (1992), Phillips (1992), and Shale (1993)
Then why does anybody think this bail-out will help?
Kim Jong Nemo
exactly
"What do all of you folks do for a living that allows you to do to hang out here all of the time?"
I piss off/on strange people. Depending on the mood of day and how my dog looks at me.
JS,
The market - SPX as an example - doesn't quite want to break into the lows of the high volume hourly bar from two Thursdays ago (scam turnaround Thursday). But it can't seem to bust it higher. Today's SPY volume is still at the lows, as well as volume at Wenesday's lows, and that SPX 1166 is the bottom of that hourly bar. So it'll take some effort to get down there.
I'm reading a bunch of traders positioning (gambling) for a bailout by Sunday and 50-100 point SPX gap up Monday. I think any movement to the upside will simply be an effort to bring volume back to the market and take it downtown again. That's my latest take.
"What do all of you folks do for a living that allows you to do to hang out here all of the time? I need to change my career..."
I'm in real estate and construction, don't change your career...
Best deal out of all of this will hopefully be a return of manufacturing to the States. The $ won't worth shit so we will be the World's leading low cost producer. I'm in NC and involved with obtaining environmental permits for companies to operate. Lately there has been a trickle of activity involving a return of manufacturing to NC that was in China.
Comrade Bagholder Anon,
"What do you people do for a living?"
IT. What else? No one knows what we do so they don't know we're goofing off.
Nostrovia,
What is the worse job, being the intern who has to answer the phone at a Congressman's office on a day like today, or the person who receives all the Microsoft error reports?
"I'm in real estate and construction, don't change your career..."
best post ever!!!!!
I'm seeing more and more guests experts on financial news shows stating that a "deal doesn't have to happen by next Monday, if it's done in a week and the markets know that negotiations are ongoing, it should be fine".
However, the newscasters seem irritated by this; to them, it seems that this deal must be done NOW.
The financial media in action.
And quite a few "experts" are (gulp) saying that the Paulson/Bernanke plan may not be the best way to handle this mess.
One last point...a financial newscaster was trying to "demonstrate to main street" what this package means to them in "real terms", by asking "would WaMu still be around if the package had gone through earlier". The answer was "maybe, but they had a lot of toxic assets." It's a bad example for him to bring up, because to Joe Sixpack on the street, NOTHING happened. Just a name change from WaMu to JPM.
UB,
WTF? "I rate your comment a quadruple Che+"
I lost my decoder book, shit! Looks like chemistry!
Funny how they think stock market performance is the same as a referendum on this bill. They should go home to their constituents.
Bond Girl | 09.26.08 - 3:18 pm | #
If the market blows up their constituents opinions will change OVERNIGHT no matter what they say this weekend.
80% of folks could care less about ideological wonks on either extreme - they want the system to work and do NOT pay attention to this nonsense until forced to. Wake them up and they will be pissed.
Both GOPers & Dems understand this viscerally - they will do everything they can to keep the sleeping asleep.
Events are spiraling out of their control so now it is positioning & spin to pin the blame. Its a toss up who pulls it off better.
Hey, I got my WaMu early. It's Friday! Now what.
GO DOWN TONIGHT!
YouTube -
Here's another brilliant Dem. Plan, just introduced last week by
Al Green, D. TX
Maxine Waters,D. CA
and two others:
HR 6694: Down Payment Assistance!!!!
Can you imagine the nerve of these Democrats to introduce a DP Assistance Bill at this time, when the whole financial system is collapsing because of people buying with no skin in the game !?
They want American taxpayers, not only to pay for the sins of Wall street to the tune of 700 Billion, but also , to KEEP paying "downpayments" for people who will default in the near future.
The Dems heads are jammed so far up the A$$ of Wall Street, NAR, Home Builders,etc. that NOTHING ELSE MATTERS to them.
Barney Frank, of course loves this new DP Asssistance Bill.
busting a gut all for the love of ponies LOL
Hank Paulson is oddball-
YouTube - Kelly's Heroes - Oddball Needs a Bridge
I need a Bridge!!!!
Someday this war's gonna end...
Is that dude from WaMu really going to get $20 million? That is insane.
Anonymous:
Ernesto Che Guevara pictures
Then why does anybody think this bail-out will help?
Handing out money usually makes things better in the short-term, which is what politicians care about.
Of course the long-term consequences, namely deferring any genuine solution to the crisis and rewarding destructive behavior, appears to offset any short-term benefits.
I want a CR t-shirt with Mortgage Pig on it.
umm, you guys see this?
YouTube -
Bond Girl writes:
Is that dude from WaMu really going to get $20 million? That is insane.
I mean the source was Fox News, so take it with a grain of salt...but it wouldn't surprise me.
Hummm 3.11 and trying for bluesky....
Hold this for me, just a second:
money market tenders and bilateral dealings with cash management counterparties to neutralisethe remaining net daily cash flows.
If the bailout collapses and the big money banker boys decide it's the Republican's fault, look for their fellow big money boys at GE, Viacom, and ABC/Disney to destroy McCain et al. in the next few weeks. Economic populism is as well and good but you don't meddle with the primal forces of nature without having to atone. And they'll do the same thing to Obama if need be.
If the big money banker boys decide it's the Republicans' fault, the Republicans will win this election with 80% of the vote because there's nothing America hates more than the big money banker boys.
That's why the insane enthusiasm Harry Reid and Nancy Pelosi have for giving Paulson whatever he wants is so disturbing (if you're a Democrat, that is; if you're a Republican you have to be thrilled to see Barney Frank fellating George Bush and demanding that the House GOPers do whatever Paulson wants).
""What do all of you folks do for a living that allows you to do to hang out here all of the time? I need to change my career..."
I'm a Keecker....I keeck the ball
Ciao
MS
waitinginPNW, you haven't responded yet to Dryfly. WHERE is the link?
Took $5,000 in cash out of FITB today.
They didn't bat an eyelash.
"What do all of you folks do for a living that allows you to do to hang out here all of the time?"
IMO: we all "shrugged" and moved to a hidden valley in Colorado where we are building a new society paid for by all our short-selling profits.
If the market blows up their constituents opinions will change OVERNIGHT no matter what they say this weekend.
Yeah, I guess they can only see as far as the election. I don't know why anyone would want to be president right now. Your "legacy" is going to suck no matter what.
Here's another brilliant Dem. Plan, just introduced last week by
Nobody is willing to be responsible with finances, the political cost is too high.
The people who have the ability to take corrective action would have to commit career suicide to do so.
Never underestimate the power of the Dems to self-destruct.
Well if it didnt pass,,,i know of at least 4 major banks that are toast
IMO: we all "shrugged" and moved to a hidden valley in Colorado where we are building a new society paid for by all our short-selling profits.
And we would've gotten away with it if it weren't for those meddling CNBC anchors!
Comrade Bagholders,
""risk free" treasuries"
Bwahahahahahahhahahah!
Oh. CR you're killing me!
Nostrovia,
80% of folks could care less about ideological wonks on either extreme - they want the system to work and do NOT pay attention to this nonsense until forced to. Wake them up and they will be pissed.
Right. typical American is 90% complacent and 10% in panic-mode. When the ATMs all stop vending cash, and the gas pumps stop pumping, then the ratio might change.
So, gold jumped and oil fell today, eh?
Dow up 81 as of now....
We need more bank failures to move market higher..
Or maybe it was brooks brothers with the "hung swine"?
It's a sheep. They still use that logo.
Then why does anybody think this bail-out will help?
My 2¢, this bailout simply delays price discovery. That is what prolonged the 'great' depression, that is what prolonged Japan's 'lost years'
To get beyond a financial crisis you need to clean out all the rotten counter-party risk, and all the unrealized 'impaired gains'.
Every dollar loss that is ignored for now, will sap growth in the future and discourage investment which further compounds/prolongs the problem.
Six months ago it was common for people to espouse the US will never do what Japan did, we're not afraid of accepting losses. Now look at everyone involved.
I better get to see Bernanke commandeer a fleet of helicopters and throw bags of money out
Dr. Doom Turns Bullish
Video - CNBC.com
Where is the bull in the headlines?
Bernanke gets roasted again.
Dow spiking up 100 pts in last 20 minutes??
Any breaking news?
It's a sheep. They still use that logo.
The golden fleece
dryfly-Absolutely. This is toxic situation for both parties regardless what they do. Most folks have 401Ks; the elderly do NOT want their retirement funds to evaporate. They don't hang out on blogs or tend to EMail Congress dudes, but they VOTE.
Congress-types have learned well that call to their offices often don't correlate with votes.
Plus Palin and her comments about Putin's airspace is making it very scary for the non-rapture crowd to vote for McSame, regardless of the $700 bill. Bet he wishes he'd picked Romney now.
What do all of you folks do for a living that allows you to do to hang out here all of the time?
We're plutocrats.
America forms it's political opinions on the 10 minutes of "news" it watches a day. And in the next 5 weeks if the big money boys wanted to do so, they could could convince 80% of the voters that John McCain wasn't really in the Hanoi Hilton but was instead collaborating with Vo Nguyen Giap during those 5 1/2 years.
What do all of you folks do for a living that allows you to do to hang out here all of the time?"
Own a small Environmental Consulting / Remediation firm . Our clients are mostly CRE owners . Not real busy these days ....
"What do all of you folks do for a living that allows you to do to hang out here all of the time?"
I figured you were all a bunch of shorters--some day I need to learn how to do that...unless those days are over.
"What do all of you folks do for a living that allows you to do to hang out here all of the time? I need to change my career..."
I'm a bum, beats working for a living.
That's why the insane enthusiasm Harry Reid and Nancy Pelosi have for giving Paulson whatever he wants is so disturbing (if you're a Democrat, that is; if you're a Republican you have to be thrilled to see Barney Frank fellating George Bush and demanding that the House GOPers do whatever Paulson wants).
Comrade Midwest Product | 09.26.08 - 3:27 pm | #
Exactly - my guess is Dems will posture to make it look like a 'good faith effort' then 'let' it die.
Then wait and see if the Fed is out of liquidity magic sauce - if it is we'll know soon. Before the election, that's for sure.
This puppy is sick and maybe having the electorate know just how sick prior to the election would be the best thing ever. That DIDN'T happen w/ S&L. Went through the elections on 'autopilot' then woke up afterward to surprise crisis & RTC.
Dems will only pass this bill if they want to go back to 'minority status' - stranger things have happened.
cd-
DeFazio , D. ORE. Thankyou. Let's keep count. Who ARE these 3 honest Dems.?
Kaptur, OH.
DeFazio, ORE
and ????? there's ONE more.
The rest are pigs.
Sen. Feinsteins' office has recieved over 50,0000 anti Bailout calls and faxes as of today.
Today she went on CNBC and said to her constituents, basically, "Screw you, I'm voting with Bush and Wall Street on this one".
watching from my cube...lol
Right. typical American is 90% complacent and 10% in panic-mode. When the ATMs all stop vending cash, and the gas pumps stop pumping, then the ratio might change.
Comrade RayOnTheCollective | 09.26.08 - 3:31 pm | #
Could be. Apparently the gas pumps have been running dry in Charlotte and Atlanta, but the national MSM seems to be ignoring it so no panic yet.
What do all of you folks do for a living that allows you to do to hang out here all of the time?
We know a lot about money, so people leave us alone.
If the market blows up their constituents opinions will change OVERNIGHT no matter what they say this weekend.
80% of folks could care less about ideological wonks on either extreme - they want the system to work and do NOT pay attention to this nonsense until forced to. Wake them up and they will be pissed.
That's the whole problem. Everybody is obsessed with the score board, not what's really going on.
So the the political system has become focused on rigging the score, not creating meaningful economic activity.
People's obsession with the ticker at the bottom of the screen and their belief that it accurately represents whether they're rich or poor is going to be the death of this economy.
"would WaMu still be around if the package had gone through earlier"
No, they couldn't afford the tax on the gift.
last half hour...people are positioning in anticipation of a deal made this weekend. It'll happen. As much as it shouldnt. And McCain will look the hero. And we are screwed.
"What do all of you folks do for a living that allows you to do to hang out here all of the time?"
Arrogant oligarch.
WTF is this???
The Debt Service Reserve Fund (DSRF) has traditionally been invested in a long term treasury security combined with a simultaneous purchase of a par put option to insure liquidity and par value of the treasury. The problem with purchasing the treasury put is that it can be expensive (up to 100 bps), reducing the overall yield of the DSRF. Furthermore, once purchased, a treasury put is relatively illiquid with little resale value. Sometimes, the long term treasury is bought naked, that is, without the put option, which eminently sets up the issuer for a probable underfunded DSRF sometime in the future.
The DSRF Forward Purchase Agreement (FPA) provides essentially the same long term rate as long term treasuries, while eliminating the need for a treasury put option. The DSRF FPA works as follows: A FPA provider would initially deliver a 90 day T-Bill to the trustee. When that T-bill matured the FPA provider would deliver a new 90 day T-Bill in exchange for the cash resulting from the previous maturing T-Bill. This cycle would continue for the term of the agreement. The yield for this type of instrument is fixed for the term of the agreement. The agreement is extremely safe, as the issuer always has either cash or a T-Bill in the trustee possession, and will be approved by most bond counsel.
What I am hearing is that "only banks in trouble" could access the plan and will have to take exec pay cuts....
So GS will use "bad banks" as conduit for all the toxic waste in the world while GS dioes not "use the plan"
This is some plan....
wow 280+ posts on a thread about the TED spread
waitinginPNW, WHERE is the link? Just hot air?
"What do all of you folks do for a living that allows you to do to hang out here all of the time?"
I am CEO of a 'too big to fail bank', I'm just here for kicks
OT but well worth the read my friends
Bailout: The Sucker Punch
Bailout: The Sucker Punch
wally writes:
"What do all of you folks do for a living that allows you to do to hang out here all of the time?"
Juggle.
I just want a shirt with the latest Mortgage Pig installment on it.
While I wish CR and Tanta continued prosperity(I hope) with this blog...I don't want it getting yahoo_message_boarded.
"Sen. Feinsteins' office has recieved over 50,0000 anti Bailout calls and faxes as of today."
I was one of them. Took a few calls to get through. Nice to know I represent 0.002% of something.
With that kind of luck I should try going for one of those free tickets to Jack's Third Show.
Citizen Scotto writes:
wow 280+ posts on a thread about the TED spread
TED is the new black.
Sen. Feinsteins' office has recieved over 50,0000 anti Bailout calls and faxes as of today.
Today she went on CNBC and said to her constituents, basically, "Screw you, I'm voting with Bush and Wall Street on this one".
Like any good whore, Feinstein knows the pimp is the ultimate customer -- not the John.
RhodesianGreenbackinAZ -- Sorry if this is a repost Philly Fed Coincident index --http://www.philadelphiafed.org/research-and-data/regional-economy/indexes/coincident/maps/2008/2008-08.jpg
Credit is the new cash
Calm down, you're already halfway through the recession, everything will be fine. Don't worry.
Dow up 72
The TED tells ya how much lending 'isnt' going o
Full Time Sociopath and Amateur Frisby Golfer
r0m30, you are awesome... really appreciate it. It was driving me mad. Thanks.
CALLABLE SWAP
An interest rate swap in which the fixed-rate payer has the right to terminate the swap after a certain time if rates fall. Often done in conjunction with callable debt issues where an issuer is more concerned with the cost of debt than the maturity. The embedded option is, in effect, a swaption sold by the fixed-rate receiver which enables the fixed-rate payer to receive the same high fixed rate for the remaining years of the swap in the event that interest rates fall. The fixed rate received under the swaption offsets the fixed rate paid under the original swap effectively cancelling the swap. In some definitions of a callable swap, the fixed-rate receiver has the right to terminate the swap. Also known as a cancellable swap.
See also extendible swap
BASIS SWAP
An interest rate basis swap or a cross-currency basis swap is one in which two streams of floating rate payments are exchanged. Examples of interest rate basis swaps include swapping $Libor payments for floating commercial paper, Prime, Treasury bills, or Constant Maturity Treasury rates; this is also known as a floating-floating swap. A typical cross-currency basis swap exchanges a set of Libor payments in one currency for a set of Libor payments in another currency.
I still think of a deviant Ted Kennedy everytime I see "TED Spread." It is revolting. Can we change it to a name of an attractive woman?
Well, hopefully they will remember Ms. Feinstein come election time.
Wackovia is only down 40% today with 20 min to go. Should it shoot for 45%?
Make that 50,001 who called Ms. Feinstein..Oh yes who really only made into power because of a murder..
Staffer said she is opposed to legislation as it currently stands and wants Paulson to rework mortgages with more oversite, transparency...
Her office is pretty close to GS and MS plus fed in financial district...
Credit is the new cash
Coming soon: sacks of rice are the new cash.
I still think of a deviant Ted Kennedy everytime I see "TED Spread." It is revolting. Can we change it to a name of an attractive woman?
Elvis | 09.26.08 - 3:45 pm | #
The ERIN spread
Comrade Bagholders,
Hmmm...
Markets up....
Hmmmm....
Biggest bank failure in history...
Hmmm...
Treasury and Fed ask for $700B bailout....
Hmmm....
TED spread blowout....
Hmmm....
Market up....
Hmmm...
Well, that's completely logical.
Nostrovia,
Does Sheila Bair order pizzas for Congress, too?
Lots of buying going o
The ERIN spread
Citizen Scotto
I prefer Poppy Harlow. How about the POPPY Spread?
DerivActiv, LLC - MuniMarket PulseT Podcasts - Interviews with Municipal Finance Professionals
Fabian says "Front of the Yield Curve Still Remains the Strongest Spot"
Sep. 24 (Municipal Market Outlook) Matt Fabian, Managing Director at Municipal Market Advisors discusses how new money infrastructure volumes are down despite market expansion. Also; effects of the banking crisis on muni markets, the role of individual investors, and new legislation aimed at increasing underwriter participation. (13:41
Read that WaMU latest chief, just 3 months on the job, could get a severance pay out of $18M! What a crock!
Here was a juicy paragraph from the Money article:
"Fishman's sign-on cash bonus was $7.5 million as well as 612,500 shares of WaMu, which are now virtually worthless. Shares of WaMu plunged more than 90% to 16 cents a share on Friday."
If he actually keeps those 612,500 bonus shares (they say he might have to give them back), at 16 cents they are a worthless $98,000! Sure for people who purchased stock in WaMu their stock is worthless compared to what they paid, but to those of us who live in the real world $98,000 ain't something to sniff at. I guess $98,000 is worthless to the writer of the article and to Mr. Fishman who was slated to make $1M this year and got those shares just for signing on the dotted line of the golden parachute-equipped contract.
Mint suspending sales of gold coin...
Mint suspends sales of gold coin on inventories depletion - MarketWatch
Wachovia has paid out $8.6bn since 2006Q4.
If only they could have seen the credit rating downgrades coming as they became insolvent...
No one saw this coming, no one could have know
Market should not be up. Somebody knows something. I don't like it!
Uncle Wiki comes through again:
"In the late 19th century, Brooks Brothers tailored many distinctive uniforms for elite regiments of the New York National Guard. The Golden Fleece symbol was adopted as the company's trademark in 1870. A sheep suspended in a ribbon had long been a symbol of British woolen merchants. Dating from the 15th century, it had been the emblem of the Knights of the Golden Fleece, founded by Philip the Good, Duke of Burgundy"
I do like hung swine though.
Another tidbit: "Ralph Lauren, when his name was still Ralph Lifschitz, started out as a salesman at Brooks's Madison Avenue store. He was granted the right to use the Polo trademark from Brooks Brothers, which retained its rights to the iconic "original polo button-down collar" shirt still produced today"
Everyone still think that Congress passes something by/on Monday?
Markets say so, but I'll go on record stating that nothing happens until we see the "mushroom cloud"
In normal times, this would have gotten a thread on CR:
KB Home 3Q loss widens as housing slump drags on
LOS ANGELES (AP) -- KB Home, one of the nation's largest home builders, said Friday its third-quarter loss quadrupled from the year-ago period, missing Wall Street's expectations as revenue plunged by 56 percent amid falling sales and home prices.
you forgot,,,the VIX is still playing around the 35 level...lol
Make that 50,001 who called Ms. Feinstein..Oh yes who really only made into power because of a murder..
That's a silly comment. Moscone was killed quite some time ago (1978) and was reelected as major and then senator quite a few times since. I am not fan of her but this is as silly as it gets.
Apparently someone is leaking good news out - Dow up 112 now.
This stock market is an absolute joke.
JimPortlandOR writes:
Wackovia is only down 40% today with 20 min to go. Should it shoot for 45%?
From Hank:
It's those damn shorts, they just won't go away.
Where's my bazooka, shit too small. Never mind, where is the Abrams? What, Chinese holding it for collateral? WTF!
Did Gasparino's cellphone just magically light up?
UB,
Fashion? You come to me with fashion tips, WTF did you have for lunch, a few shots?
Marc Faber Says U.S. Credit Losses May Total $5 Trillion: Video - Bloomberg.com
Those asses will pass the bailout this week, while J6P watches college football, NASCAR and the NFL.
Muni traders are waiting to see what happens. It would be crazy for anyone to do a new issue in this market as well. Plus 4 out of the top 8 underwriters of muni debt are sidelined.
They will be an interesting bet in the future as people realize what all this means and start looking for tax-exempt income.
which sector is getting the juice?
Credit is the new cash
Cash is a form of credit issued by the government.
It has no maturity and pays no interest.
People accept the lack of interest because of its liquidity.
Not exactly a broad market move: Dow +108, S&P +1, NASDAQ -6.
Is anything really up besides big bnnks? JPM, BAC, COF are up 8-9%, homebuilders are up a bit, everything else looks flat to down.
JS | 09.26.08 - 3:50 pm
But Lennar said a week ago that housing had bottomed. The realtor's association have said the same thing. Paulson says the mortgage paper, and implicitly the underlying asset -- housing, are undervalued at fire sale prices.
I don't know where you bears get your silly ideas
Did Russia's market ever open back up?
WB tanking
intrade says 79% for TARP
Obama at 56%, McCain 42%
RE-Silly maybe..
but she was installed as mayor after the murder...
how far would she have gotten without it..
Plus silly is the new cool now...
I will buy a CR t-shirt.
If it's cool.
How does interbank lending work? If I attract deposits for my cd's at 5% why should i lend it out at the 3 month t bill rate
I called my pig retard moron idiot, i.e, Norm Dicks and spoke my mind and then felt like it didnt matter...
Anon: It's really the only way to short circuit the doomcasting.
America forms it's political opinions on the 10 minutes of "news" it watches a day.
If this is true, why isn't J6P rabidly in favor of the bailout? The news media is totally and completely in the tank for it.
What's astonishing (and heartening) about all of this is that people are by and large rejecting outright what the media is trying to force-feed them. And it's remained that way even as the major indices have fluctuated wildly.
Being an ass, and thinking like an ass, if I pull my tail up HARD, how long can I levitate?
If I strip milk to cream, 2%, and skim, I can charge more for all three and prove no such thing as zero sum gaming.
Those asses will pass the bailout this week, while J6P watches college football, NASCAR and the NFL.
Thats Ballgame Comrades
Please don't ever associate NASCAR with football again.
Moscone was killed quite some time ago (1978) and was reelected as major and then senator quite a few times since.
That's quite an accomplishment for someone who has been dead 30 years.
markets frequently trade on hope... especially when a major source of players have taken a ten-day spontaneus vacation.
Apparently someone is leaking good news out - Dow up 112 now.
This stock market is an absolute joke.
MS | 09.26.08 - 3:51 pm | #
Faith that a bailout bill will pass over the weekend?
Muni traders are still sitting with CDOs and out to lunch, as always, as they wait for Jeb Bush to come back to life at another bank, other than LEH!
--
Markets...
Over the past 14 years Crooks (VCs, CCA, BFNYC) were able to transfer most of the risk to dopes and their custodians (pension fraud and mutual fraud) via the Scam Market.
THEY HAVE NETTED $10Tr during the period!
The Scam Market exists to scam the dopes and their custodians. What a system!
The dopes can't figure it out yet? Amazing.
Jas
Gov't fears the high spread. Why? Market's simply saying that interest rates should be higher -- that's all it is. But the Fed's don't want to pay a higher rate on their bills, notes & bonds! That's their "armageddon." They are struggling mightily to beat the market, but, in the end, the market will win and rates will go up.
Moscone was killed quite some time ago (1978) and was reelected as major and then senator quite a few times since.
That's quite an accomplishment for someone who has been dead 30 years.
Citizen Scotto
First time in Chicago?
I call bullshit on this whole f**cking business. Let the goddam ship burn the ground if it's going to. Is it? UNLIKELY.
"Markets say so, but I'll go on record stating that nothing happens until we see the "mushroom cloud"
Well you'd have thought the WAMU thing was it......That is why they do not need a bailout. The sun came out today even with the largest bank failure in HISTORY.
No bailout needed...it's all about L3 write-ups Baby.
Ciao
MS
Muni traders are waiting to see what happens. It would be crazy for anyone to do a new issue in this market as well. Plus 4 out of the top 8 underwriters of muni debt are sidelined.
They will be an interesting bet in the future as people realize what all this means and start looking for tax-exempt income.
Bond Girl | 09.26.08 - 3:52 pm |
Is the market signaling any more Jefferson County Alabama's out there?
The real test for municipal/country/state borrowing won't be the credit rating, it will be when they see draw downs on their pension plans