WSJ: Some Signs of Credit Thaw

Submitted by
CalculatedRisk on Tue, 10/14/2008 - 6:18pm (36 comments)
in
jkinthewoods wrote on Tue, 10/14/2008 - 6:37 pm

Nemo?!

dk wrote on Tue, 10/14/2008 - 6:38 pm

It would be great to build out a dashboard that tracks all the credit indicators on one page.... Any volunteers?

Cynical Yes wrote on Tue, 10/14/2008 - 6:39 pm

Traders know this bailout is at best a 60-90 day fix. Or at least they know that it possible the Credit Default Swap s hidden on the books of banks, insurance companies and hedge funds pretty much have to blow up soon. If they don't fix the CDS mess, all this other stuff is just band aids on mortal wound.

Currently Smoking Cannabis wrote on Tue, 10/14/2008 - 6:40 pm

Something mellow for this thread...from me to everyone except lars.

YouTube - Manu Chao - Minha Galera

oh my marijuana
my fellow football fans
my darling
my people
...
oh my shack
my hunger
my rum
my jail
my tramp
oh my life

thoreau devotee wrote on Tue, 10/14/2008 - 6:40 pm

interestingly enough, there are a lot more credit default swap quotes on US Government. It costs roughly a quarter of a percent per year to hedge against the US Govt defaulting. Clearly you don't want to be paid in dollars when you go to collect if you had bought protection..

Longtime Reader wrote on Tue, 10/14/2008 - 6:40 pm

Chris Rock is on Comedy Central.
I see the big "CR" sign n the stage and think: "Wonder how the DOW closed?"

Uncle Kenny wrote on Tue, 10/14/2008 - 6:43 pm

TLT - shorting treasuries might be a way to go here.

monta\'s ankle wrote on Tue, 10/14/2008 - 6:44 pm

context is everything
These rates would have seemed absurdly high two years ago

Going seventy five feels slow if you usually drive at ninety

Uncle Kenny wrote on Tue, 10/14/2008 - 6:44 pm

actually TBT shorts treasuries, my bad.

friardaddy wrote on Tue, 10/14/2008 - 6:45 pm

I'd be curious to know what Bernanke, et al think is a good series of rates.

That would give us some kind of indication of how much more manipulation, I mean intervention, would be required.

Proletariat Geoff wrote on Tue, 10/14/2008 - 6:48 pm

WSJ : "Credit Shows Signs of Easing on Bank Rescue "

Anyone else get a strange sense of deja vu when you read this?

Here's a hint, think new home sales and bottoms.

dryfly wrote on Tue, 10/14/2008 - 6:49 pm
Y.T. wrote on Tue, 10/14/2008 - 6:50 pm

CR, does "I'm looking for" mean you expect those things to happen or that those things occurring would indicate that this wave of the crisis is over?

bob wrote on Tue, 10/14/2008 - 6:53 pm

This is the cost of risk. Why should the government have to bring the cost down by taken on a protion of the risk?

thoreau devotee wrote on Tue, 10/14/2008 - 6:54 pm

Uncle Kenny writes:
actually TBT shorts treasuries, my bad.

Makes sense.. Thanks.

Separately, is there a retail way to short the VIX? Other than sell straddles?

fallonpdx wrote on Tue, 10/14/2008 - 6:54 pm

1 YR ARM is 7.34

Last month : 5.96

I suspect the 250 Billion
that went today stays in the
bank. Why loan it when you know
you need it for back-stopping more
losses.

Nothing is moving. Deals stalled
are dead. Bankruptcy is the new black.

CalculatedRisk wrote on Tue, 10/14/2008 - 6:57 pm

Y.T., meaning the situation has improved. I think this will help, but who knows - I'll definitely be watching all these indicators.

Best Wishes.

pcp wrote on Tue, 10/14/2008 - 6:58 pm

Since banks are not lending to each other anyway, what use is it to have LIBOR? I think it's just a rate they have to report and since it is used as a basis for many loans they have written, they have every incentive to report it as high. This means higher payment from borrowers to the banks.

Pavel Chichikov wrote on Tue, 10/14/2008 - 6:59 pm

CBS-NYTimes poll shows Obama with a 14 point national lead, big spread among independents, substantial acceleration.

I wonder what situation we'll be in by January, and how much leverage a new president will have over it.

An economy this size must possess a colossal inertia once it starts moving - somewhere.

gabyjan wrote on Tue, 10/14/2008 - 7:01 pm

there are some banks that want to lend.
SunHerald.com 404

Dean wrote on Tue, 10/14/2008 - 7:02 pm

My company's under water on our interest rate swap with a bank. Ironically, it's based on the 3 month LIBOR.

Citizen Clyde wrote on Tue, 10/14/2008 - 7:07 pm

The bond market been closed 3 out of the last 4 calendar days and now it is thawing? I think I am going to let my WSJ/Barrons subscription lapse this year, more than a half a week behind the blog royalty. Not a must read anymore. Buh-bye.

Elvis wrote on Tue, 10/14/2008 - 7:08 pm

When the fulcrum breaks, the load falls on your head and squashes you. Leverage can be good except when the metal bends or the stick breaks.

trader walt wrote on Tue, 10/14/2008 - 7:09 pm

I think they trade vix options somewhere. Probably at the CBOE, but I'm not sure.

Comrade-Dope jg (jg) wrote on Tue, 10/14/2008 - 7:10 pm

Good job, CR, measuring performance of the bailout against objective measures.

Me, I have no faith in the bailout and its addendums, as evidenced by my remaining steadfast in my 2X-plus-margin short of the S&P 500 since March '07.

Billy Hill wrote on Tue, 10/14/2008 - 7:15 pm

I'm not really qualified for a physics nitpick, but I don't know if "reverse leverage" in investing is exactly the fulcrum breaking or the lever bending. That may be a good description of counterparty default, which IMHO is something else.

dashingdwl wrote on Tue, 10/14/2008 - 7:18 pm

dk writes:
It would be great to build out a dashboard that tracks all the credit indicators on one page.... Any volunteers?
dk | 10.14.08 - 10:43 pm | #

Bloomberg's BTMM would be a good start.

Elvis wrote on Tue, 10/14/2008 - 7:18 pm

"Billy Hill writes:
I'm not really qualified for a physics nitpick,"

Good, neither am I. I do know that a body in motion tends to stay in motion until climax, then it snuggles up and sleeps or goes back home.

cracker wrote on Tue, 10/14/2008 - 7:25 pm

awwww.

the war is over, credit lives.

Currently Smoking Cannabis wrote on Tue, 10/14/2008 - 7:26 pm

Does this mean that CR rejects Conjure's conclusions re: LIBOR? Seems so.

Wicked Lad wrote on Tue, 10/14/2008 - 7:31 pm

bob writes, "This is the cost of risk. Why should the government have to bring the cost down by taken on a protion of the risk?"

I'm even more confused than usual. Cost of what risk? Didn't governments already take on a portion of the risk? With governments guaranteeing interbank trading, why is LIBOR more than a few basis points above treasuries? That is, it would seem an interbank loan pretty much is a treasury, isn't it?

dieselm wrote on Tue, 10/14/2008 - 7:35 pm

Can the banks be manipulating LIBOR en masse in order to keep get better returns from their loan assets pegged to LIBOR?

bagholder energyecon wrote on Tue, 10/14/2008 - 8:00 pm

Hey and your answer was even in the form of a question!

Anonymous wrote on Tue, 10/14/2008 - 10:10 pm
weka wrote on Tue, 10/14/2008 - 10:37 pm

thank you

هيمة القلوب
منتدى هيمة القلوب
مدونة هيمة القلوب

skeptonomist wrote on Wed, 10/15/2008 - 10:10 am

Can someone give some actual objective evidence that there is a credit freeze in the non-financial sector? LIBOR of 4.6% indicates nothing, since it was 5.3% in August 2007 and this did not seem to freeze credit.

Krugman goes on about commercial paper and Paulson thinks he needs to buy it up, but volume data

What a surprise

absolutely do not show a freeze. Rates for lower-quality paper are again not ruinous, and AA rate is completely normal with respect to federal funds. Even asset-backed paper is moving at somewhat elevated rates.

Login or register to post comments
Syndicate content