Credit Crisis: Watching for Signs of Progress
Submitted by
CalculatedRisk on Mon, 10/13/2008 - 5:30am (103 comments)
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look Mom, no bots.
You will see massive relief tommorrow.
I can hardly wait for this part of the crisis to blow over.
Um, how many people were calling for a massive drop today?
Someday this war's gonna end...
What happens when Treasuries can't be trusted?
As much as we are all paying attention to TED, we should remember that it is an un-reliable derivative from a LIBOR number which is un-reliable.
AllenM:
agreed. (not sure about "relief" but we may see an uneasy truce in the market for the short term here)
of course the uberbears will all claim it's all the PPT.
on the one hand they talk about how govt is just pissing in the wind and incompetent to stop financial armageddon. on the other hand they talk about the ability for the PPT to prop up the entire equities market.
all the while ignoring that many people are waiting... no begging for a pop.
dead cat bounce? you betcha. but not a surprise is it?
The T-Bill rates will probably take time to settle down. This means that the TED spread will probably be volatile for awhile.
I'd argue that a better indicator will be the 2-year swap spread (spread between 2-year swap rate and 2-year Treasury). If that can come down to 50 bps or so (from over 150), that would mean that the markets would be discounting spread normalization over the coming years.
The Fed publishes swap rates in the H.15 report.
Darth Paulson, I understand. That is why we also need to look at the other indicators ... also, I think when the SFP stops, the LIBOR might become more reliable (although there are still questions about how it is calculated).
Best Wishes.,
bond guy, thanks. I'll add that to the list.
Best Wishes.
Duck Soup (1933)
I'll give you my personal note for 90 days. If it isn't paid by then, you can keep the note.
I notice SRS holding steady despite this surge. Is it set to explode?
I know I'm relieved that all it took to calm down the worldwide markets was for every government in every nation to guarantee everything.
The long march to a one-world government continues while being cheered by so-called capitalists.
AllenM - It wil be a function of what you hear from Treasury in the AM tomorrow. I suspect you will see relief - "massive" will be in the eye of the beholder. I'm expecting something, but I'm not expecting "massive" moves - although all of this is positive and stablization is setting in. Fundamentals will start to take over and they are awful....
CR, Thanks for the insight.
Glad to see another comprehensive stick save just before options Ex and involving the entire globe. Clearly it was more than the USA PTB could handle. Finally a true save, a complete reversal of all the corruption and excess. We can save a swiss-cheesed dam just by firehosing high velocity water from the dry side. Eureka. Must rally from here. Whaaaa?...the tiller's not responding.
When the bond market opens money will flow out of the extreme fear holding of bonds.
I still think this part of the crisis is pretty much solved.
The structural problems will, of course, be left for the next administration.
That will be the part of hard choices.
Someday this war's gonna end...
Libor is akin to the ADP job #'s...IMO it's just another survey that can be gamed to reflect whatever the participants wants or needs are.
When the TED drops it will be hailed as the salve that soothes all (by the MSM) but it will not have changed any of the fundamentals. Banks don't trust each other?? Because they don't know what they hold on balance sheets?
Ha!!! Really funny....they all have virtually the same crap. You can shine a turd only so much.
Ciao
MS
I agree with Ted, but I hear what AllenM is claiming.
I'm a big fan of the "financial crisis is ending, economic crisis is beginning" meme.
Even as the crisis abates, it seems unlikely that the stock market will vault ahead to assume the ridiculous P/E valuations seen just one month ago. Economically, we are facing higher taxes, (probably) higher inflation, higher interest rates, and no obvious driver of growth.
We may see some stabilization, but I can't believe will see many short-term gains in the broader markets.
TWM supposed to be 2X inverse IWM. TOday 3X. WTF ?
Another indicator will be when the number of visitors on a CR comment board is less than 20.
This will mean that nobody can afford their internet connection, or can't log in at work because they are unemployed, or the libraries, Starbucks, etc. have all closed.
Then, I'm calling bottom.
SSO is moving up nicely, I don't think the crisis is over, however, short-term some upside dollars are there...
WEEKEND NEWS FROM THE FRONT
"WE UNIFY WITH FRANCE"
by Liesel Winkelried, embedded reporter, Berliner Morgenpost
Montag Edition
An Historic Weekend in the New Financial Order!
With great affection, the people of France welcomed the forces of Deltland into their country three days ago.
The sun shone brightly on Paris as the leaders of the liberating army,
commanded by General Paulus Bernankus Fulda met at the Eiffel tower for the formal reunification ceremony.
Thousand of Parisians lined the streets, cheering parade units of the AIG, Lehman and Bear-Stears Panzer Divisions. Smartly dressed school girls scattered baskets of rose petals before the marching troops,
who assembled at attention before the dais on which stood General Fulda and President of France, Jean Vichyssoise.
Official papers of reunification were signed quickly and President Vichyssoise raised both hands to the ecstatic crowd in a victory gesture.
At that moment, low flying helicopters appeared over the tree-lined avenues surrounding the ceremony,
dropping hundreds of thousands of bills of the newly adopted currency of France, the Deltmark. School children ran to catch as many of the newly minted, RFID-active notes as possible, filling small buckets provided for the occasion.
After a rousing rendition of "La Marseillaise", performed by the Paris Philharmonic, the crowd took up the chant of "sur tous les produits dérivés", ending what had to be one of the most emotional expressions of brotherly love between nations I have ever witnessed.
Meanwhile, the effort to reunify with the United Kingdom is gaining steam.
Reunification with Italy, Spain, and Greece will be sure to follow.
The Deltfuhrer is expected to make a major policy speech this week on the subject of reunification.
I really hope that I am wrong, but I suspect we will see credit stress worsen (not in a straight line of course) until such time as there is clarity on what parameters will be used to determine which banks are going to be saved, and which will be put down.
Unfortunately, there is not much news yet on this front from any country (nor would I expect for there to be until just prior to action for obvious reasons), but there aren't many rumours either which I find a bit troubling.
I do hope that reason has taken hold, and that everyone who needs to buy into the Swedish solution (including shuttering banks that are walking dead) has done so, but we are not out of the woods yet, and could easily just have each country do "a Japan".
From the Treasury announcement in Sept:
To manage the balance sheet impact of these efforts, the Federal Reserve has taken a number of actions, including redeeming and selling securities from the System Open Market Account portfolio.
Can someone take a moment and tell me what this means?
the markets are going up because the canadians are celebrating thanksgiving. Just wait until they come back to the markets, they'll destroy everything.
--BLAME CANADA!
Cerberus Scared Shitless:
"Nardelli warns of industry collapse
Bob Nardelli, just 14 months into his tenure as CEO of Chrysler LLC, now fears the collapse of an "extremely fragile" auto industry amid the credit crisis and Wall Street meltdown. Nardelli said federal officials, preoccupied with trying to unfreeze credit, don't appreciate the importance of the auto industry."
--
What sort of people are looking for Signs of Progress, bottom in the Scam Market, and even claiming "once in a lifetime opportunity to buy stocks?"
Myopic, with very limited time horizon and knowledge of history and think that this will not even be a severe recession, let alone depression. This movie will keep playing all the way into the Greater Depression and then the gloom will set among Americas I am an optimist.
Jas
They are not dealing with the solvency issue.
Government can force all lending to be kept at less than 2%. They could also legally limit credit spreads at 2%.
But as long as government forces artificially low rates, investors will retreat and this implies even more government intervention.
sounds like the FED is doing a little selling of it's notes in order to provide this "unlimited liquidity"
Ciao
MS
They rang a bell already. We can all get back together in 3 to 5 years and throw another Virgin in the volcano...
Hysteresis rends the shorts to pieces.
Crisis will have subsided when real headlines stop reading like pieces in The Onion.
"Treasury to Invest in `Healthy' Banks, Kashkari Says", by Rebecca Christie and Robert Schmidt, Bloomberg, October 13, 2008.
OT: Icelandic Shoppers Splurge as Currency Woes Reduce Food Imports
Icelandic Shoppers Splurge as Currency Woes Reduce Food Imports - Bloomberg.com
Bonus, a nationwide chain, has stock at its warehouse for about two weeks. After that, the shelves will start emptying unless it can get access to foreign currency, the 22-year-old manager said, standing in a walk-in fridge filled with meat products, among the few goods on sale produced locally.
I am sure this is ot the only country to go down this road. Countries insuring everything when they do not have the money does not make for stability.
If you want to know about the market going forward, I would strongly suggest one look at the period of 2001-2002. The bottom won't come until next fall. My view is that the present crisis is like 9/11. The final shakeout, however, will come over the next year.
For the moment, the governments of the world have covered up the steaming pile of dogshit with more dog....er.. paper so that we won't notice, but the deep recession is still in front of us, not behind.
crispy& cole writes:
Cerberus Scared Shitless:
"Nardelli warns of industry collapse
Bob Nardelli, just 14 months into his tenure as CEO of Chrysler LLC, now fears the collapse of an "extremely fragile" auto industry amid the credit crisis and Wall Street meltdown. Nardelli said federal officials, preoccupied with trying to unfreeze credit, don't appreciate the importance of the auto industry."
I actually think that there is some truth to this claim. I'm no friend of the auto sector by any stretch of the imagination, but the idea that the world is myopically fixated on unplugging the credit freeze (which needs to be done of course) at the expense of future economic stimulus for the 'real economy', or actual job producing industries, is probably quite true. The governments around the world are spending untold amounts of money to prop up a rotting framework, and will have nothing left to actually stimulate job creation.
But I'm an Austrian, so out with the lot of them and good riddance to bad rubbish.
crispy& cole writes:
Cerberus Scared Shitless:
"Nardelli warns of industry collapse
Bob Nardelli, just 14 months into his tenure as CEO of Chrysler LLC, now fears the collapse of an "extremely fragile" auto industry amid the credit crisis and Wall Street meltdown. Nardelli said federal officials, preoccupied with trying to unfreeze credit, don't appreciate the importance of the auto industry."
What about that 25 billion the automakers were just lent?
--
"If you want to know about the market going forward, I would strongly suggest one look at the period of 2001-2002."
Yancey Ward,
That would be more optimistic of outcomes. The American economy is headed into a deep hole.
Jas
Going long here is like shaking hands with leprotic hemophilic HIV-positive consumptives. Go ahead, you might get lucky; you may avoid infection AND make friends.
Just a reminder.... DNA reports tomorrow .... ABT reports Wed.
No economist can answer even simple questions with any degree of validity. The rules are in a constant state of flux. We have no idea from which direction the next risk(real or perceived)will come flying at us. We cannot conceive of the solution that will be put forth by our new multi government econo committee.
How do bail out dollars reverse a shrinking tax base? How do bail out dollars make a chicken wire and stucco bungalow in in the inland empire worth $400,000; or 300 or 200!?
I see no moves in the spreads as yet.
Everything is still to filled with real risk.
hmmm writes:
the markets are going up because the canadians are celebrating thanksgiving. Just wait until they come back to the markets, they'll destroy everything.
--BLAME CANADA!
Nah, we have to vote on Tuesday. In Canada, we sacrifice personal gain for the sake of the public good. Just like North Korea, actually.
And we'll probably elect Kim Jung Harper as well.
OPERATIONS STATUS REPORT
URGENT
GEN PAULUS FULDA TO CENTRAL COMMAND
EFFORTS IN THE CHUNNEL HAVE STALLED
NERVE GAS ENCOUNTERED AT 37 KILOMETERS
BARRICADE CLEARING EXTREMELY DIFFICULT UNDER SAID CONDITIONS.
NEUE FINANZ AMPHIBIOUS LANDING FORCES
THAT WERE DEVERTED FROM UK LANDING TWO DAYS AGO HAVE BEEN ATTACKED IN
BOULOGNE-SUR-MER BY ÉQUIPE DE PROTECTION DE PLONGER.
Z-DEVICE TEST IN NORTH ATLANTIC ON SCHEDULE...
FULDA.
Bush is playing president on my radio again. Does Paulson know?
And the rally? Let me know when we un-lose a decade.
But, if you get a massive global central bank intervention assuring bank loans to each other, equity buy-ins etc., won't these charts be artificially enhanced?
I like how there's hardly any mention of the rally today, but when we're down 300 points, the CRVIX is closer to the 700-1000 range.
Let's see how long this lasts. I suspect we'll have a decent couple of days, barring any further bad news.
Paulson calls for 3pm EDT meeting of top banking heads to discuss plan to take stakes in financial firms: WSJ
AIG's toes writes:
OPERATIONS STATUS REPORT
URGENT
GEN PAULUS FULDA TO CENTRAL COMMAND
Tell Gen. Fulda the center must hold. Today, we are all Parisians
and now the walkdown of the Financial stocks can commence. Treasury needs "cheap" shares. Once they do that the next bottom call can be made.
Meeting at 3pm......how many meetings can they have and still say the same thing??
Ciao
MS
So we now have taxpayers backstopping 33T dollars of risky bets made by investment professionals...
Interesting story:
Walking through a mall with a good friend on our way to get a quick lunch.
My friend was wearing a bank logo pin which represented years of service.
A lady walked up to us and noted the pin and said: "You bastards are nothing but crooks - may you rot in hell". By all accounts she was nicely dressed, sober, and lucid.
It was wierd!
CR imho, you may be waiting some time looking for progress. Yes, the stains might ease but I sense a whole lot of nervous people who have been told to be scared about the crisis. Until a souring mood eases, the US may well follow a path of sub-optimal growth. All of that money to backstop the banks has to be paid back and this is the taxpayer.
Going long here is like shaking hands with leprotic hemophilic HIV-positive consumptives
no need for that. we have enough problems, honestly. one could do worse than to interact with ill folk.
on a lighter note:
YTL is still an active counterparty to Lehman across all trades.
--
The goal is to pump up Fraudentials so that born-and-bred American Dopes will pay more for them when their govt buys these Scams on their behalf. Pump and Dump! What s syetm!!
Jas
Some market sounding data:
Working on a deal here with a global conglomerate as the lender and a US airline (crap credit) as the borrower. Fully secured by good collateral (i.e. physical real assets), advance rate in the mid-70s.
Now we've all heard about LIBOR alternatives and cost of funding etc. However, in the term sheet they gave us, the margin is now flexible between now and closing. I've never seen it before. It's tied to a spread between the Lehman AA Index and swap spreads. Over the last 2 weeks, it's gone up about 130 bps.
Anyone notice that the A2P2 graph looks a lot like Conjure's graph of the spread between highest and lowest bank reported LIBOR rates? Not a perfect match, but awfully close.
So is LIBOR a totally cooked rate that is the product of nothing but bankers' fancy? Or is there a logic that makes the spread in participating banks' reported rates go roughly in synch with A2P2 spread?
My technical knowledge is no match for Conjure, but let propose a gut-level hunch that you who are more knowledgable will please, I hope, assess on more proper technical grounds:
The spread in reported LIBOR rates mimics A2P2 because in a financial crisis some banks become less solvent or insolvent and cease to merit the trust accorded to regulated financial institutions in normal times.
Hence, those less solvent or incipiently insolvent banks come to be much like commercial non-financial firms when it comes to their ability to borrow, and must estimate that they would need to pay higher rates if they borrowed (kind of like Morgan Stanley with Mitsubishi? kind of like Goldman with Buffett?).
Consequently, one should expect the spread between highest and lowest reported LIBOR rates to widen and go haywire.
Corrections needed?
Thanks for that good info, CR.
oob goldberg: And we'll probably elect Kim Jung Harper as well.
More like Kim Campbell Harper
(there's a legend at UBC her ex once sported a bumper sticker ... oh never mind)
After the Steve Murphy debacle and arts cuts Quebec is going to cut the Tories off at the knees. A weakened CRAP minority is probably the best we can hope for. What keeps me awake at night is Ignatieff. George Parkin Grant's cute little nephew really is The Manchurian Candidate.
Anyway, I'm in Alexa's old riding, and I'm voting Green!
joe shmoe
It was obvious that LIBOR was cooked when UBS and Lloyds were only 2 bps apart after the sub-prime debacle started and UBS had written down tons of toxic paper.
"Last week Domino's confirmed to Ad Age that some of its outlets have been shuttered as a result of the financial meltdown. "It is true that there have been some franchisees that have closed due to lost business and because of difficulty getting credit to see them through"
http://adage.com/article?article_id=131671
I know of three KFC units closed last week because of credit that was pulled!
So all those part time jobs might just disappear creating more stress
noob goldberg writes:
I'm no friend of the auto sector by any stretch of the imagination, but the idea that the world is myopically fixated on unplugging the credit freeze (which needs to be done of course) at the expense of future economic stimulus for the 'real economy', or actual job producing industries, is probably quite true.
The American auto industry relied for years on cheap credit, cheap fuel, profligate consumers, and easy access to capital on Wall Street. Once these things disappeared, their businesses duly collapsed. During the good times they should have been focused on building solid businesses and preparing for the bad times (ie., the inevitable downturn in the cycle). Instead, they built large financing arms and leasing operations, and all played Big Dealmakers on Wall Street (takeover this, spin-off that, etc.) because that's easier and more fun than actually running a business. Let them burn.
Dominoes and KFC products both suck, a shell of what they once were. They can blame it on credit, etc. but, they need to look at themselves. Hopefully half of these fast food, pizza joints, strip malls will get thinned out. In the long run we'll all be better
Is TED and LIBOR data shown on Bloomberg updated? Seem to be showing Friday numbers. Due to Columbus Day?
The plane has dived nose first into the ocean from 1100.......search boats are on the location...... in the water pools of sharks are feasting on the scattered body parts and wreckage floats over a wide area......... bodies are still floating to the surface as pieces of the plane continues there decent into the murky depths....... off in the distance a huge wave..................
I'm sure this has already been noted, but... Ruby Tuesday's profits declining almost 100% in Q1?
"GOODBYE, Ruby Tuesday..."
Hey they were asking for it by picking that name.
Great tension here. I'm focused on the hourly charts looking for immediate pressure on shorts, and you guys are focused on the big picture. Perspective.
Just a reminder.... DNA reports tomorrow .... ABT reports Wed.
popeye | 10.13.08 - 11:16 am
Is the DNA report going to confirm that Kashkari is Hank and Ben's illegitimate love child?
Can someone tell me what it means that Countrywide is sending out notices to folks that their mortgages are going into "repayment mode" sooner than anticipated?
I'm just a poor ignorant homeowner without a mortgage so it's all Greek to me.
OT: Icelandic Shoppers Splurge as Currency Woes Reduce Food Imports
How long before they start shopping that shuttered US AFB to the Russians, I wonder.
Can someone tell me what it means that Countrywide is sending out notices to folks that their mortgages are going into "repayment mode" sooner than anticipated?
Homeowners are going to have to start repaying the principal.
Alybaba
Thanks for your response.
However:
1) Your argument that LIBOR is cooked as evidenced by the UBS/Lloyd's comparison is not mutually exclusive of the theory I was testing because I was not challenging whether LIBOR is cooked, but asking about the heightened spread between high and low LIBOR rates, which might not be evidence of the cooking.
2) if LIBOR is cooked, and I am fully ready to believe that it is, then it seems to me that LIBOR is cooked to be low, not high. Last night I posted an argument to this effect and did not see a response that succeeded in arguing the other way (though I'm still open to being persuaded).
The cooked to the low side argument is this: In a total credit freeze, the cost of borrowing should be infinite or be set at zero to reflect the absence of a market. There is some lending, of course, and so the rate should soar. But it didn't soar. And the motive for keeping LIBOR artificially low is to prevent an instant core meltdown.
Like I said, I'm far from the most technically proficient on this blog, so I welcome corrections and explanations.
So what were they paying before?
sorry, I am shockingly ignorant on mortgages (which is why i come to CR to learn...)
Jas Jain,
Actually, I was only trying to outline the course of the stockmarket, not trying to make predictions about the depth of the coming decline. I can certainly see your scenario playing out given what has and is occurring as we write.
mal writes:
I'm sure this has already been noted, but... Ruby Tuesday's profits declining almost 100% in Q1?
"GOODBYE, Ruby Tuesday..."
Hey they were asking for it by picking that name.
Come on, who has ever eaten at a Ruby Tuesday? $10 for a hamburger, come on now.
So what were they paying before?
sorry, I am shockingly ignorant on mortgages (which is why i come to CR to learn...)
"Interest only loans" ring a bell?
mal writes:
So what were they paying before?
Many are paying interest only. Some aren't even paying that (see: "neg am loan").
Yep, thank you.
--
The Scam Market exists to allow all manners of manipulation by the ruling elite. I am amazed daily that born-and-bred American dopes have not caught up to the scam, or the scheme. They are addicted to Scams and they like to play the losing hand.
Jas
If Bloom is showing Friday's TED, what's the number today?
Lower Mid Class & Mal
yes, interest only loans, but also Option ARMs
LowerMiddleClass writes:
Can someone tell me what it means that Countrywide is sending out notices to folks that their mortgages are going into "repayment mode" sooner than anticipated?
cram-up before cram-dow
TED is asleep today because the bond market is closed for the holiday. Stocks are open, of course.
ew thread on more hanky panky.....
Open a position in SDS right now? Hmm, I'm tempted.
"I am amazed daily that born-and-bred American dopes have not caught up to the scam, or the scheme. They are addicted to Scams and they like to play the losing hand."
Jaswant,
How can you be amazed? Are you also amazed daily that day follows night? They are addicted to the stock market just like you are addicted to calling them born-and-bred dopes. You both have addictions. Why should they stop, if you don't?
TED is asleep today because the bond market is closed for the holiday. Stocks are open, of course.
joe shmoe
Yes he is tired of spreading!
I too am crazy-mortgage ignorant.
I know many folks out here with 30 year fixed/10 year interest only loans. Will they have to start paying princ down earlier based on values going down?
AIG's toes, well done.
mal-
It's helpful to know what type of loan the notice was rec'd on.
They may be lowering maximum negative amount out (balance of loan) but this would only apply to neg. ams.
or they may be lowering the assessed values on interest only loans.
This also might be the same approach they have taken with the bondholder's...as to say screw you we're making up the rules again.
Ciao
MS
AIG TOES - keep it up - I am a bit saddened with all of the excitement regarding the suspension of risk by governments. Who knew you could solve the debt problem with more debt and guarantees. I guess they should have done this years ago.
Oh well next up suspension of reality, physics, and gravity.
And we'll probably elect Kim Jung Harper as well.
noob goldberg | 10.13.08 - 11:19 am | #
Too funny...
"Can someone tell me what it means that Countrywide is sending out notices to folks that their mortgages are going into "repayment mode" sooner than anticipated?"
They must be Option ARM mortgages, which give borrowers a choice as to what payment they make each month(interest only, P&I, or a portion of the interest, whatever). Typically, a borrower has this "option" for a predetermined number of months (36, 60, whatever), before resetting to a full P&I payment each month. However, if the LTV reaches a certain level (110%, 115%, whatever the trigger is for that particular loan), the option to pay less-than-full P&I goes away. Full P&I payment is then required.
These resets have been accelerated by dropping home values.
As has been discussed, many of these option ARMs were taken out by formerly Prime borrowers, and are a time-bomb waiting to explode. Expect massive defaults.
--
Elvis,
Using descriptive language to state the important facts is an addiction?
90%+ of what is discussed on this blog wouldnt be there but for one simple fact:
College degreed Americans have been systematically bred to be dopes to serve the interests of the ruling elite to their own detriment. BTW, economists are part of the propaganda machine used for doping. Americans are taught to rely on experts.
Can you, or do you, understand that?
Jas
PS: I have been warning people about the Scam Market since July 1998. I saw the scam, or the fraud (Scam Options), firsthand working for a leading tech company in Silly.con Valley.
Bond Guy:
Why are you predicting further selloffs in bond market? If credit markets are stabilized, why wouldnt buyers return rather than flee at least for short term notes?
--
Q: What role the Scam Market has played in this crisis?
Thanks.
Jas
Jas Jain, is English your native language?
I don't know if it was a neg-am loan. I'll have to ask my sister what she has. She just mentioned it in passing.
.
MsIndy writes:
From the Treasury announcement in Sept:
To manage the balance sheet impact of these efforts, the Federal Reserve has taken a number of actions, including redeeming and selling securities from the System Open Market Account portfolio.
Can someone take a moment and tell me what this means?
MsIndy | 10.13.08 - 11:06 am
It means we are all on SOMA now!
"These resets have been accelerated by dropping home values."
theotherdeb | 10.13.08 - 11:58 am |
Dropping values do not affect resets.
Chris
Jas Jain, please remove your vacuous crap from this blog commentary. You come up with radical bullshit that is rarely EVER supported with facts, research, or theory. You just blabber in a patronizing fashion and its getting annoying. So keep your "i know it all" radical statements..
AIG's toes, well done.
Agreed, I never remember to respond after I smile, but I truly enjoy AIG's war-reporter point of view on this. It wouldn't be CR without it.
"Using descriptive language to state the important facts is an addiction?" Jaswant R. Jain
Just try to stop using "born-and-bred dopes." I bet you cannot. It is an addiction.
Two more suggestions:
Corporate bond spread (Baa - AAA or even AAA-Treasuries) appear to be very good leading indicators of cycles.
Seems like we should be paying close attention to house price indices as well...
Comrade Vistulian writes:
"Bond Guy:
Why are you predicting further selloffs in bond market? If credit markets are stabilized, why wouldnt buyers return rather than flee at least for short term notes?"
I'm not predicting anything about the levels of rates - just that if the markets normalize, the spread between 2-year swap rates and 2-year Treasury rates would be lower.
If, for example, the swap spread goes to 50 basis points (that level is somewhat arbitrary), it could be either (a) 2-year UST at 1% and the swap at 1.5%, or (b) 2-year UST at 9% and the 2-year swap at 9.5%.
"Nardelli warns of industry collapse
Bob Nardelli, just 14 months into his tenure as CEO of Chrysler LLC, now fears the collapse of an "extremely fragile" auto industry amid the credit crisis and Wall Street meltdown. Nardelli said federal officials, preoccupied with trying to unfreeze credit, don't appreciate the importance of the auto industry."
After reading the announcement of Krugman's award, perhaps the best thing to happen to the US auto industry is for two of the big three to disappear. The remaining one will then be able to concentrate on quality products that will compete well with Toyota. I may once again be able to buy a quality domestic work truck (Ford I hope) which I have not been able to do since 1976. Although the 1964 F100 was a good hauler as well.
So how does all this invisible money prevent this kind of thing from happening all over? If it's a trust issue, how can anyone trust anyone anywhere to actually have real live cash when the music stops?
Has anyone found new info regarding cargo ships piling up at the docks due to LOC problems?
Icelandic Shoppers Splurge as Currency Woes Reduce Food Imports
"Many of them ask us to pay cash before they send the goods to Iceland,'' Signarsson said.Because of the situation, Iceland has become a country that no one trusts any longer.'' "
buy dec gold futures contract $ 839---- take delivery of same in dec --- cant find gold on the street for less than $1000 per ounce--- can get mini contract @comex---- check GATA WEBSITE FOR DETAILS== BEAT THEM @ THIER OWN GAME!!!
Can CR permanently ban this Jas Jain guy? I've just done some quick background checking on the name and he claims to have a PhD, yet I cannot find him linked to any educational institutions anywhere on the planet, including various internal scholarly databases (there are mention of him, that is for sure, but only of this Internet persona we know as Jas Jain).
I don't know about you, but that sets off alarm bells (especially so that the guy is giving out financial advice).