Investment
Credit Crisis
-
Inya Ivkovic
- Normxxx
- Normxxx
- permabear
- permabear
- Normxxx
- permabear
- Normxxx
- Normxxx
- permabear
« Previous 7 8 9 10 11 12 13 14 15 16 17 Next »
»
Inya Ivkovic
- The WSJ - U.K.'s Northern Rock Move Highlights Risk to Taxpayer
http://online.wsj.com/article/SB12033356...
» permabear - A painful fix for the credit crisis- Jim Jubak
http://articles.moneycentral.msn.com/Inv...
-- posted by permabear
» permabear - Corporate balance sheets may not be as pristine as advertized
Doug Nolan of Prudent Bear makes an interesting observation in his weekly commentary. One of the bulls (Kudlow especially) biggest arguments is that corporate balance sheets have never been better. They are supposedly hoarding more cash than ever before. But what Doug Nolan notes below is that much of the supposed "cash" that corporations are holding are instead some of this derivative slime. And instead of being in great financial shape, many corporations are in fact in deep doodoo.
Las couple paragraphs of Doug Nolan's commentary:
I have in past analysis suggested that the perceived soundness of U.S. corporate balance sheets was extending a "hook" for those of the bullish persuasion. It was, after all, egregious Mortgage Finance Bubble excesses - and resulting Household and Financial Sector balance sheets loaded with debt - that were responsible for booming corporate cash-flows and relatively stable balance sheets. Well, these days it is becoming increasingly apparent that a significant portion of corporate America's "cash" hoard is stuck in "auction-rate securities" and various other Credit instruments - today offering little in the way of actual liquidity. This is a major unfolding issue.
Scores of companies, previously believing they enjoyed easy access to new finance, now face the inability to raise new funds at any cost. At the same time, scores of companies that thought they were sitting on piles of safe and liquid financial resources now recognize they may instead be facing big losses. Moreover, the recognition of problems on both the Asset and Liability side of corporate balance sheets comes concurrently with the realization that the so-called sound and resilient U.S. economy is in serious trouble. Simultaneously, confidence in "money" and money-raising is faltering, with negative ramifications for already liquidity-challenged markets and the already weakened real economy.
There is a confluence of factors behind this week's major widening in corporate spreads, especially in the "safest" sectors. Major indices of investment grade Credit spreads blew out to record wide levels. The "CDX" index widened 12 bps to a record 157 bps, increasing its three-week gain to 50 bps. Agency debt spreads widened 2 bps to the widest level since last November. Yet GSE MBS spreads were this week's eye-opener. Fannie Mae benchmark MBS spreads surged 17 bps to 192, the widest spreads in eight years. For perspective, this spread has averaged 76 bps since the end of 2002.
I will take the dramatic widening in investment grade and agency spreads as Confirmation that the unfolding Credit Crisis has made a major leap toward the heart of the Credit system. I have no way of knowing to what degree widening spreads are being dictated by "technical" hedging-related trading dynamics, as opposed to fundamental issues with the faltering U.S. economy; rapidly deteriorating corporate balance sheets; a highly susceptible leveraged speculating community; the vulnerable GSEs; a distressingly illiquid Credit market; and heightened systemic risk more generally. To be sure, a strong case can be made the current backdrop is quite detrimental to a highly leveraged and speculative Credit system. The markets rallied late this afternoon - and perhaps they will rally further next week - on talk of a bailout for troubled Ambac. Unfortunately, there has been ample Confirmation that the Evolving Credit Crisis has quickly spiraled way beyond the "monolines."
-- posted by permabear
» Normxxx - Corporate balance sheets may not be as pristine as advertized
In response to Corporate balance sheets may not be as pristine as advertized posted by permabear:
We are talking something in excess of several trillion dollars of crap spread generously around the world- from Norwegian towns to German Landesbanks, ...
There will be a reckoning that will play out over the next several years. We'll be lucky if we do not end up as a pariah nation for having invented and sold that crap- rated as triple-A, no less. Can you imagine the fix the hedge funds are in, many of whom gambled on the 'toxic' waste 'equity' tranche!?!
The stock market is, at present, divorced from reality- pay attention to what's happening in the credit markets as we go from crisis to crisis and eventually fall between crises...
-- posted by Normxxx
» permabear - Examples of the mess corporate America is in
http://www.bizjournals.com/triangle/stor...Thursday, February 21, 2008 - 3:54 PM EST
Tekelec struggles to sell auction-rate securities
Triangle Business Journal - by Chris Coletta
Telecom equipment maker Tekelec is having trouble selling off some of its auction-rate securities, the company says.
The situation, part of a national trend, is resulting in less access to ready cash for the Morrisville company. Tekelec still has enough money to fund operations, it says, but it might have to reclassify more than $120 million in investments as long-term assets, weakening its cash position.
-- posted by permabear
« Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next »
Please follow the guidelines set forth in the Suite101 Posting Etiquette when adding to the discussion.