Monthly Archives: October 2008

Money Market Rates Still Improving, Albeit Slowly

Bloomberg gives today’s sighting on money market conditions. Rates continue to improve but remain at elevated levels: Money-market rates in London dropped as cash injections by central banks and the prospect of deeper reductions in borrowing costs worldwide showed signs of revitalizing confidence in lending. The London interbank offered rate, or Libor, that banks charge […]

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Links 10/29/08

Hold the caviar darling Times Online Tennis call ‘brain bias’ found BBC World is facing a natural resources crisis worse than financial crunch Guardian ‘Digital Dark Age’ may doom some data University of Illinois News Appeals Courts Pushed to Right by Bush Choices New York Times Volkswagen Overtakes Exxon as Most Valuable Company Bloomberg Repossessions […]

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How Credit Default Swap Settlements Are Draining Liquidity From Interbank Market

This informative discussion that sheds further light on the stresses created by credit default swap settlements comes in the current issue of the Institutional Risk Analytics weekly, “In the Fog of Volatility, the Notional Becomes Payable“: Another example of the ongoing discontinuity in the markets comes in the linkage between the unwind of credit default […]

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Treasury Handouts Focus on Strongest Banks, Forcing Weaker to Fail or Sell

This Bloomberg article treats as a news item the fact that the Treasury is focusing its equity infusion efforts on strong banks, leaving the rest to find their own exit strategy. But this approach is not surprise; in fact, it is exactly what Treasury said it would do in a conference call to analysts exactly […]

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Dow Up 890 After Ten-Times Increase in Commercial Paper Sales

US equity markers were already having a very good day, even by the standards of recent high market volatility, where big snapbacks have become normal after sharps declines. But the very good day turned into a stunner after the announcement today of record commercial paper sales yesterday. The Dow rose 890 points, with a near […]

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More on Trade Woes: "Firefighters better scramble to save letters of credit"

In a bit of synchronicity, it seems that some mainstream commentators are starting to to take interest in a topic we’ve commented on in recent weeks, namely, how the difficulty in getting letters of credit is playing a significant role in the contraction in international trade (see our related post earlier today). John Dizard in […]

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More Improvement in Money Market Conditions

While none of the changes in interest rates were dramatic, and both interbank rates and stress levels remain elevated, improvement continues and all the metrics moved in the right direction. From Bloomberg: Money-market rates in London declined as cash injections by European central banks showed signs of easing the paralysis among lenders. The London interbank […]

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Links 10/28/07

Arctic ice thickness ‘plummets’ BBC Seven of the greatest scientific hoaxes New Scientist The New Infidelity New York Times Insight: Volatility returns with a vengeance Gillian Tett, Financial Times Worse this Time Michael Panzner Free at last: female slave who dared to take Niger to court Times Online Some Russia/China sightings from reader Chris: China […]

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Emerging Markets Capital Flight Exacerbated By Goldman and Morgan Stanley Becoming Banks

I somehow managed to fail to connect the dots on this one. When Morgan Stanley and Goldman, the far and away two biggest prime brokers (as in lenders to hedge funds) became banks, tougher regulatory requirements forced them to curtail hedge fund lending significantly. To give you an idea of the concentration in this business, […]

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Confirmation of the Role of Financing Difficulties in Collapsing Trade Volumes

One of our pet themes in recent weeks is that the fall in trade traffic, indicated and possibly overstated by a dramatic fall in the Baltic Dry Index, is due at least in part to difficulties in arranging and getting other banks to accept buyers’ letters of credit. For those new to this topic, international […]

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Euro Area May Suffer as Emerging Markets Tank

We discussed that EU financial institutions may be at risk if capital flight from emerging economies continues. Europe will also suffer along with developing markets for another reason: they also have strong trade links. From Bloomberg: The European economy’s close ties to emerging markets are turning from a blessing to a curse. Already skirting recession, […]

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