|Chart source: Tesoro.es|
FYI: Letras del Tesoro = 3-18 months; Bonos del Estado = 3-5 years; Obligaciones del Estado = 10-30 years. More info here: http://www.tesoro.es/en/deuda/index_deuda.asp.
|Chart source: Tesoro.es|
|Kim Jong-Un, Flickr/PetersSnoopy|
|Total Credit Market Debt % of U.S. GDP 1915-2011 (3Q) - Elliott Wave|
Home prices dropped for the fifth consecutive month in January, reaching their lowest point since the end of 2002.
-- CNNMoney, March 27
|Natural Gas from 1999|
(DoubleLine Capital via BI)
"The paper highlights key issues for investors in synthetic CDO tranches as well as for dealers who structure synthetic CDOs for clients. Investors in mezzanine CDO tranches are taking on leveraged exposures to the underlying credit risk of the reference portfolio. A tranche's credit rating does not convey all aspects of the tranche's risk. If investors disclose the notional amounts of their portfolio, broken down by credit rating, the leveraged nature of a mezzanine tranche's risk exposure would not be obvious.
The paper also touches on some of the risks to dealers who structure and make markets in synthetic CDO tranches for clients. A complete set of synthetic CDO tranches may not be fully hedged by selling single-name credit default swap protection on the CDO's reference portfolio if the CDO tranches are structured as swaps whose payouts do not depend on the ﬂow of income from the reference portfolio. Dealers in CDO tranches, including those who structure single-tranche CDOs, are exposed to model risk and, because of the dynamic hedging required, liquidity risk that are not present in traditional cash CDOs."
"I don't think it's over. I still think that we're probably more headed for deflation than inflation. That the world is going to see a lot slower economy, if not recessions, and Treasuries will be their usual safe haven. So I'm holding out for 2.5% on the 30-year, and probably 1.5% on the 10-year. The 2.5 is where they got at the end of 2008 after Lehman collapsed."
"The truly troublesome feature, though, has to do with the “empty creditor” problem. Empty creditors are lenders (to a corporation or government) that cease to be concerned about whether the borrower fares well or poorly." (Another troublesome feature of CDS usage - Financial Times).
|source: Adamt4 (flickr)|
|From the movie 'Margin Call'|
|Lehman Brothers, Merrill Lynch, Morgan Stanley, Goldman, |
Citi, JP Morgan CDS in 2008 (Bloomberg chart via Mish)
"New York, NY & Woburn, MA – (April 2, 2012):
The Transition® Street-Legal Airplane is now a significant step closer to being a commercial reality. The production prototype of the Transition® Street-Legal Airplane completed its successful first flight at Plattsburgh International Airport in Plattsburgh, NY on March 23, 2012. The same vehicle has also successfully conducted initial drive and conversion testing, demonstrating the Transition’s capability to provide unmatched freedom, flexibility and fun in personal aviation. Developed by Terrafugia, Inc., the Transition® is a two seat personal aircraft capable of driving on roads and highways, parking in a single car garage, and flying with unleaded automotive fuel. (Terrafugia)
"Well, basically I think that the whole bailout and the money printing will not create long-lasting wealth, nor will it create healthy economic growth. And if I look at the world, then i see essentially well-to-do people that have done unbelievably well and I see the middle class and working class that hasn't done well. And I think somewhere down the line we will have a massive wealth destruction that usually happens either through very high inflation, or through social unrest, or through war, or a credit market collapse. Maybe all of it will happen but at different times."
"I would say that well-to-do people may lose up to 50% of their total wealth. They'll still be well-to-do; instead of a billion, they'll have say 500 million. But, I think there is a massive wealth destruction coming down the line. I'm not saying it's coming tomorrow, but looking at the bailouts and the money printing, they have postponed the problems and actually made them larger in the sense that the government debt has increased dramatically, and somewhere a solution will have to be found for this government debt."
|S&P/Case-Shiller Home Price Index (pdf)|
"S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed annual declines of 3.9% and 3.8% for the 10- and 20-City Composites, respectively. Both composites saw price declines of 0.8% in the month of January."
"Goldman Sachs Group Inc. (GS) and American International Group Inc. (AIG) have also emerged as buyers this year as trading more than doubled for non-agency mortgage notes." (Bloomberg)
|Source: Lillian Cameron (Flickr)|
"The return of the drachma would trigger high inflation, exchange instability and a fall in the real value of bank deposits," he said."Something to keep in mind if the sovereign debt crisis in Greece flares up again. The head of European economics at Roubini Economics believes "Greece will restructure its debt and leave the euro zone by the end of 2014" and then Portugal in 2015. Spain has issues as well: Analysis: Spain's banks may need more public cash. The euro-zone crisis is not over yet.
"In this episode, both the median and average durations of unemployment have reached levels far outside the range of experience since World War II (figure 11). And the share of unemployment that represents spells lasting more than six months has been higher than 40 percent since December 2009 (figure 12). By way of comparison, the share of unemployment that was long term in nature never exceeded 25 percent or so in the severe 1981-82 recession."
"Net orders totaled 1,197 in the first quarter of 2012, down 8% from 1,302 net orders in the year-earlier quarter, as a 22% increase in the Company's Central region was more than offset by decreases in each of the Company's three other regions. Though gross orders were up 3%, an increase in the cancellation rate to 36% from 29% in the year-earlier quarter led to the year-over-year decrease in net orders."
"Our initial findings on the size of the private student loan market are sobering. When we add in the outstanding debt in the federal student loan program, it appears that outstanding student loan debt hit the trillion dollar mark several months ago – much larger than estimates from other recent reports. It seems that this market is too big to fail.
Unlike other consumer credit products, student debt keeps growing at a steady clip. Students borrowed $117 billion in just federal student loans last year. And students continue to borrow private student loans, which lack the income-based repayment and deferment options of federal student loans. If current trends continue, there will be consequences not just for young people, but for all of us."