ALL MAJOR USA investment banks...INSOLVENT RISK VERY HIGH
- Thread starter Digs
- Start date
One item to mention is that ...the people around today....were not the people around yesterday...
Thus how can one extrapolate the past to the current or future...in relation to a different group of people...
This simply is not logical...
Also ...one can be going through their own personal financial depressions or successes...no matter what the conditions are around them..
Thus it is also illogical to paint everyone with a brush with the same color paint...
It is the team on the playing field...that is actually playing the game...not the crowd in the stands...
Thus how can one extrapolate the past to the current or future...in relation to a different group of people...
This simply is not logical...
Also ...one can be going through their own personal financial depressions or successes...no matter what the conditions are around them..
Thus it is also illogical to paint everyone with a brush with the same color paint...
It is the team on the playing field...that is actually playing the game...not the crowd in the stands...
Sold my So Cal home in June of 05 and have been renting in SD since. Best trade I ever made.
No hurry to buy back to pay taxes and maint. on a house.
In EUR terms very cheap stocks by the way :
Menue a la carte
GS 223.16 = just 153.90 EUR
MS 54.51 = lousy 37.59 EUR
BSC 102.00 = only 70.34 EUR
MER 56.37 = bargain 38.88 EUR
JPM 44.11 = 30.42
WB 43.20 = 29.79
LEH 59.37 = 40.94
We are fucked and I wish I took more steps last year and year before to have an exit plan. Good thing you can trade from any location with low latency and live on a dollars a day in SE Asia.
We can all go live in Aspen or Vail where the mega rich do not even know about the current condition and have no issue with dollar risk. Their cash just sits and spins off interest.
How bad and low will our dollar get before all the foreign debtors take their money back because the currency risk is eating their yields to a negative return?
We can all go live in Aspen or Vail where the mega rich do not even know about the current condition and have no issue with dollar risk. Their cash just sits and spins off interest.
How bad and low will our dollar get before all the foreign debtors take their money back because the currency risk is eating their yields to a negative return?
I wonder if someone has GS / MER spread on and now putting out this info how mispriced they are. Roubini and huffington are good places to do it, both naive and give interviews to the mainstream press. Try to get some momentum convergence between these pairs. Who knows about the fundamentals, maybe GS was smart enough to hedge or to hold good assets, the numbers presented in the blogs were estimates anyway (they admit it)
There was an interesting little tidbit in a WSJ article I read. Basically it said that the losses in some of these CDO's could exceed the entire value of the portfolio due to derivatives. Think about that......a CDO with a face value of say, 100 million in mortgages could suffer a loss that is greater than that.
Now thats some scary shit!!
Now thats some scary shit!!
Here's the article......................
Risky Debt's Recovery Hits a Wall
Fresh Jitters Resurface
Over Corporate Bonds,
Other Market Segments
By SERENA NG and DANA CIMILLUCA
November 9, 2007; Page C1
In a replay of the summer turmoil that dried up investor demand for all sorts of risky debt, pockets of the credit markets that just weeks ago seemed on the road to recovery are weakening again.
The market for junk corporate debt, which rebounded in September and October, has softened, while the investment-grade bonds of some banks and financial companies have dived to levels that make them look as risky as junk bonds.
Demand for asset-backed commercial paper, which plunged in the summer but showed signs of stabilizing in recent weeks, dropped sharply again on renewed worries over subprime-mortgage securities to which this paper is often tied.
Even the municipal-bond market is starting to show some signs of stress due to concerns over the health of financial-guaranty companies that insured many municipal bonds. Two large municipal-debt offerings by authorities in Miami and Puerto Rico were delayed because of drying-up demand.
"There was a feeling that we were out of the woods, and that's beginning to dissipate a little," said Eric Tutterow, a managing director overseeing high-yield, or junk-rated, debt at Fitch Ratings.
The concerns in credit markets drove many investors yesterday into Treasury bonds, sending their yields falling. The price of the benchmark 10-year note rose, to push down its yield to 4.273%. The yield on the two-year note dropped to 3.460%, its lowest level in more than two years.
This week, Wall Street underwriters made a second attempt at selling roughly $4 billion in loans tied to Chrysler LLC's automotive business, in which a majority stake was acquired by Cerberus Capital Management LP in August. It looked like a sign of the market's improvement, then rough conditions in the junk-bond market forced bankers to call off a $750 million bond sale to finance the leveraged buyout of Guitar Center Inc., a retailer of musical instruments.
The Guitar Center postponement was the first since August, bringing back memories of the disorder in the corporate-debt markets during the summer, when dozens of buyout-debt offerings were pulled. A separate $650 million sale of loans by Guitar Center went through this week, as did some other junk-bond sales, but values of many leveraged loans and junk bonds fell sharply.
In September, the difference between yields on junk bonds and yields on Treasury bonds jumped to nearly five percentage points, the highest spread in over three years. It was a sign of the higher returns investors were demanding for holding risky assets. Those spreads had been narrowing until mid-October. Now they are back near five percentage points.
Investors had been returning, too, buying into the large debt offerings of First Data Corp. and Energy Future Holdings, formerly known as TXU Corp. This week, money managers said that there were fresh jitters about the large amount of new debt being sold, which includes Chrysler's loan and another $6 billion in loans for the buyout of Alltel Corp.
In some respects, the credit-market troubles are worse than the summer's liquidity crunch, which was triggered by fears of large subprime-related losses by hedge funds, banks, brokerages and other financial firms. In recent weeks, large-scale credit-rating downgrades of subprime securities, heavy write-downs and massive losses reported by Wall Street firms have borne out much of those fears.
"In the summer we didn't quite know how bad it would be, but we have now put some of those lower earnings in the record books," said Joe Balestrino, a portfolio manager at Federated Investors. "The financials have been crushed."
Losses on securities tied to subprime loans could actually exceed the volumes of actual mortgages in the loan pools behind them. Some firms made big side bets on these securities through derivative contracts. Such derivative trades "have the effect of multiplying the exposures," said Jon Thompson, vice president of structured finance at Advantus Capital Management Inc.
"This is like a vicious circle that continues to play out," he said. "As investors hear more bad news and see the magnitude of the losses that are being reported, they are throwing up their arms and questioning what else is there and where is it."
The market for asset-backed commercial paper also is looking shaky again. These are short-term loans backed by assets such as auto loans, mortgages and securities such as collateralized debt obligations.
Data from the Federal Reserve yesterday showed that the volume of this sort of short-term debt outstanding dived $29.5 billion in the past week, its largest drop since late August. Volumes in this market had fallen off a cliff in August, but the rate of decline slowed in September and October.
This week, Moody's Investors Service downgraded or said it would cut ratings of 16 structured investment vehicles that issue such short-term debt and hold around $33 billion in assets. Some of these vehicles may soon start selling off their assets at depressed prices.
Meanwhile, the two municipal-bond offerings that were delayed this week show how credit-markets troubles are washing into this $2.5 trillion sector.
Uncertain market conditions were blamed for the delay of a $900 million Puerto Rico Public Buildings Authority sale of commonwealth-guaranteed bonds and for the sale of $600 million of aviation revenue bonds for Miami International Airport by Florida's Miami-Dade County.
A spokeswoman for the Government Development Bank for Puerto Rico, the island's fiscal agent, said the building authority "hopes" to bring the bonds by late November. The issue holds the same low rankings as the commonwealth -- Baa3 by Moody's and BBB-minus by S&P.
Risky Debt's Recovery Hits a Wall
Fresh Jitters Resurface
Over Corporate Bonds,
Other Market Segments
By SERENA NG and DANA CIMILLUCA
November 9, 2007; Page C1
In a replay of the summer turmoil that dried up investor demand for all sorts of risky debt, pockets of the credit markets that just weeks ago seemed on the road to recovery are weakening again.
The market for junk corporate debt, which rebounded in September and October, has softened, while the investment-grade bonds of some banks and financial companies have dived to levels that make them look as risky as junk bonds.
Demand for asset-backed commercial paper, which plunged in the summer but showed signs of stabilizing in recent weeks, dropped sharply again on renewed worries over subprime-mortgage securities to which this paper is often tied.
Even the municipal-bond market is starting to show some signs of stress due to concerns over the health of financial-guaranty companies that insured many municipal bonds. Two large municipal-debt offerings by authorities in Miami and Puerto Rico were delayed because of drying-up demand.
"There was a feeling that we were out of the woods, and that's beginning to dissipate a little," said Eric Tutterow, a managing director overseeing high-yield, or junk-rated, debt at Fitch Ratings.
The concerns in credit markets drove many investors yesterday into Treasury bonds, sending their yields falling. The price of the benchmark 10-year note rose, to push down its yield to 4.273%. The yield on the two-year note dropped to 3.460%, its lowest level in more than two years.
This week, Wall Street underwriters made a second attempt at selling roughly $4 billion in loans tied to Chrysler LLC's automotive business, in which a majority stake was acquired by Cerberus Capital Management LP in August. It looked like a sign of the market's improvement, then rough conditions in the junk-bond market forced bankers to call off a $750 million bond sale to finance the leveraged buyout of Guitar Center Inc., a retailer of musical instruments.
The Guitar Center postponement was the first since August, bringing back memories of the disorder in the corporate-debt markets during the summer, when dozens of buyout-debt offerings were pulled. A separate $650 million sale of loans by Guitar Center went through this week, as did some other junk-bond sales, but values of many leveraged loans and junk bonds fell sharply.
In September, the difference between yields on junk bonds and yields on Treasury bonds jumped to nearly five percentage points, the highest spread in over three years. It was a sign of the higher returns investors were demanding for holding risky assets. Those spreads had been narrowing until mid-October. Now they are back near five percentage points.
Investors had been returning, too, buying into the large debt offerings of First Data Corp. and Energy Future Holdings, formerly known as TXU Corp. This week, money managers said that there were fresh jitters about the large amount of new debt being sold, which includes Chrysler's loan and another $6 billion in loans for the buyout of Alltel Corp.
In some respects, the credit-market troubles are worse than the summer's liquidity crunch, which was triggered by fears of large subprime-related losses by hedge funds, banks, brokerages and other financial firms. In recent weeks, large-scale credit-rating downgrades of subprime securities, heavy write-downs and massive losses reported by Wall Street firms have borne out much of those fears.
"In the summer we didn't quite know how bad it would be, but we have now put some of those lower earnings in the record books," said Joe Balestrino, a portfolio manager at Federated Investors. "The financials have been crushed."
Losses on securities tied to subprime loans could actually exceed the volumes of actual mortgages in the loan pools behind them. Some firms made big side bets on these securities through derivative contracts. Such derivative trades "have the effect of multiplying the exposures," said Jon Thompson, vice president of structured finance at Advantus Capital Management Inc.
"This is like a vicious circle that continues to play out," he said. "As investors hear more bad news and see the magnitude of the losses that are being reported, they are throwing up their arms and questioning what else is there and where is it."
The market for asset-backed commercial paper also is looking shaky again. These are short-term loans backed by assets such as auto loans, mortgages and securities such as collateralized debt obligations.
Data from the Federal Reserve yesterday showed that the volume of this sort of short-term debt outstanding dived $29.5 billion in the past week, its largest drop since late August. Volumes in this market had fallen off a cliff in August, but the rate of decline slowed in September and October.
This week, Moody's Investors Service downgraded or said it would cut ratings of 16 structured investment vehicles that issue such short-term debt and hold around $33 billion in assets. Some of these vehicles may soon start selling off their assets at depressed prices.
Meanwhile, the two municipal-bond offerings that were delayed this week show how credit-markets troubles are washing into this $2.5 trillion sector.
Uncertain market conditions were blamed for the delay of a $900 million Puerto Rico Public Buildings Authority sale of commonwealth-guaranteed bonds and for the sale of $600 million of aviation revenue bonds for Miami International Airport by Florida's Miami-Dade County.
A spokeswoman for the Government Development Bank for Puerto Rico, the island's fiscal agent, said the building authority "hopes" to bring the bonds by late November. The issue holds the same low rankings as the commonwealth -- Baa3 by Moody's and BBB-minus by S&P.