central banks explains spiking commodity prices (1); Commodities Spike (1); dollar spike (1); Driving Pump Price Spike (1); Oil Super Spike (1); ratings spiked (2); see short term rates spike (1); spike broadly (1); sudden spikes (1).
Mon 2010-09-20 18:49 EDT
Many commentators have argued that interbank lending froze following the collapse of Lehman Brothers. This column presents evidence from the fed funds market that, while rates spiked and loan terms became more sensitive to borrower risk, mean borrowing amounts remained stable on aggregate. It seems likely that the market did not expand to meet additional demand for funds.
Sat 2010-05-22 19:56 EDT
Credit agency Dun & Bradstreet has delivered a blunt warning to SMEs about the patchy state of the economic recovery, warning it downgraded the risk profiles of a staggering 80,000 firms during the March quarter -- a greater number of firms than were downgraded during the first quarter of 2009. D&B now has 36,000 firms rated as being at "high risk" failure over the next 12 months, with the majority of those being smaller and young firms (less than four years of operation). D&B's director of corporate affairs Damian Karmelich, says the spike in risk downgrades is particularly worrying when compared to last year, when the economy was performing much worse...
000 firms; 36; Australian SMEs; Bradstreet; business advice; Business news; Collapse; dun; high-risk; inform; SmartCompany.
zero hedge Mon 2009-12-21 19:54 EST
...In essence the entire S&P is one big High Yield credit, and would likely be rated in the B2/B area by the rating agencies (assuming these had any credibility). As such, the cost of debt of the combined S&P if it were a standalone company would be around 7.5-8.5%. That it is currently much lower due to the Fed's intervention in the interest rate market is an aberration: look for cost of debt (and, by implication, overall capital) to spike broadly over the next several years, as normalcy (hopefully) returns. ...Both the return on assets (EBITDA/total assets) and return on equity (EBITDA/Shareholders' Equity) has plunged...companies are scrambling to beef up the asset side of their balance sheets even as debt continues to be a major threat. The problem, however, as this brief exercise has shown, is that incremental assets are of lesser and lesser quality (even assuming no major goodwill impairments in the future), and the actual cash they generate continues eroding.
Cautionary Observations; Chronological Analysis; P 500 Balance Sheet; s; Zero Hedge.
zero hedge Thu 2009-12-17 10:37 EST
There has been much conjecture on whether using CDS is an effective way to hedge against US default risk. Many theoreticians, especially those of the post-March lows variety, have sprung up and are speculating that buying Credit Default Swaps on the US is ultimately a futile and pointless endeavor. The main argument: a US default would likely mean that interconnected dealers won't recognize contracts on a US default event, as they themselves will be out of business. Even if they continued to exist, like cockroaches in a postapocalyptic world, the collateral which backs derivatives is mostly US Treasurys: the same obligations that would end up being massively impaired...the US CDS seller syndicate could easily be one of the key sources of dollar short funding: with sellers pocketing euros and immediately going to market and selling dollars...a dollar-short unwind would probably have repercussions in the US CDS market. Not only would the dollar spike, but paradoxically US credit risk would probably widen dramatically...any unwind at the heart of the prevalent risk trade now: the massive dollar carry, would impact virtually every investment product, quite possibly in self-referential feedback loops. If correct, it merely shows how much more the Fed has at stake in keeping the dollar depressed than merely getting mom and pop to buy Amazon at $130/share. Losing control of the carry trade will be the systemic equivalent of allowing Lehman's book to be marked-to-market: a potentially complete collapse in systemic confidence, which would have such far ranging implications as the $300 trillion interest rate derivative market. And when sudden volatility reaches this product universe which is 6 times bigger than world GDP, the events from last year will seem like a dress rehearsal.
CDS; Dollar; Risk-Free Way; sell; short; Zero Hedge.
naked capitalism Sun 2009-11-29 12:53 EST
Barack Obama has now come clean about his thinking on why his administration has decided to focus first on reducing the deficit and next on jobs. He fears a double-dip recession will occur if foreigners lose confidence in the U.S. dollar, causing interest rates to spike. This is nonsense and it demonstrates how much at odds Obama's economic thinking is with reality. This is the clearest indication that the Obama Administration doesn't understand how modern money works. In fact, by focusing on deficit reduction, he has increased the chances of a double dip instead of decreasing them.
caused; debt; double-dip recession; naked capitalism; Obama.
ClubOrlov Wed 2009-08-26 14:22 EDT
Over the past few months the American mainstream chatter has experienced a sudden spike in the gratuitous use of the term "Socialist." It was prompted by the attempts of the federal government to resuscitate insolvent financial institutions. These attempts included offers of guarantees to their clients, injections of large sums of borrowed public money, and granting them access to almost-free credit that was magically summoned ex nihilo by the Federal Reserve. To some observers, these attempts looked like an emergency nationalization of the finance sector was underway, prompting them to cry "Socialism!" Their cries were not as strident as one would expect, bereft of the usual disdain that normally accompanies the use of this term. Rather, it was proffered with a wan smile, because the commentators could find nothing... ``Since the end of the Civil War, Americans have become accustomed to thinking of war as something that happens elsewhere, to other people. Thus, the news that the US is bombing this or that land, for no adequate reason, killing and maiming numerous civilians, produces in us neither the normal human reaction of revulsion, nausea and disgust, nor the conviction that we must take the fight to our own monstrous leaders, lest we too become monsters. Life under domestic military occupation might bring home some welcome realizations, and start Americans down the long road of atoning for the sins of their forefathers, who have run roughshod over much of the rest of the planet for far too long.''
American social; bastion; ClubOrlov; United States military.
Tue 2009-02-24 00:00 EST
Jesse's Café Américain: Inflation versus Deflation and the Yield Curve: Jesse's Lifetime Trading Plan; ``we could see short term rates spike up to 15 to 20 percent with much of the longer yield curve at 12+%''
deflation; Inflation; Jesse's Café Américain; Jesse's Lifetime Trading Plan; yield curve.
Sat 2008-05-24 00:00 EDT
Steve Waldman; commodity price run-up due to loss of faith in monetrary authorities? large-scale repudiation of financial assets; "nd of a paradigm: large scale OTC markets, lightly regulated players and instruments, dollar as reserve currency, US as the most important global economic actors"
central bankers; Commodities Spike; Confidence; naked capitalism; voting.
Sat 2008-05-24 00:00 EDT
by Steve Randy Waldman; loss of confidence in central banks explains spiking commodity prices
Wed 2007-05-09 00:00 EDT
The Foundation For Taxpayer & Consumer Rights (FTCR): New Gasoline Study Shows Profits, Not Crude Oil Prices Or Ethanol, Are Driving Pump Price Spike
