nehemiah
March 17th, 2008, 12:57:04 PM
Now here's a chilling moment of convergence. In the same week as the conflict in Iraq passes its fifth anniversary, a big financial beast, the Bear Sterns bank, goes belly up on Wall Street. Nobel laureate Joseph Stiglitz estimates the war has cost $3 trillion and still counting. Nouriel Roubini of NYU's Stern School of Business comes up with a similar $3 trillion price tag for cleaning up the meltdown in global financial markets. As the old joke goes, we'll soon be talking real money here.
Like most such estimates both are still hotly disputed, but no one says that resolving either problem is going to be cheap. Fewer people will die as a result of the overheated loans market, though if it forces a lot of important people to take their minds off the climate change agenda, not even that will be true. Weekend reports suggest that icebergs are now melting almost as fast as the Bears Sterns share price, sold for $2 apiece, 6% of its book value.
http://blogs.guardian.co.uk/politics/2008/03/michael_whites_political_blog_104.html
Stocks got off to a rocky start on Monday as Wall Street weighed a stunning series of weekend developments that confirmed investors’ worst fears about the fragile state of the financial industry.
Shares of financial firms plummeted as one of Wall Street’s most storied banks, Bear Stearns, lay on its deathbed and central bankers scrambled to stave off a devastating crisis of confidence in the investment community.
The broadest measure of the American stock market, the Standard & Poor’s 500-stock index, was down more than 2 percent at 12:30 p.m., as the index edged toward bear-market territory. The Dow was plunged 200 points at the start of trading, then staged a recovery into positive territory before falling back again. At 12:30, it was 0ff 156 points. The Nasdaq composite index was down 2 percent.
While stocks steered clear of a more precipitous drop, the credit market sounded a more alarming note. Investors appeared to shrug off a series of emergency measures taken by the Federal Reserve on Sunday to shore up confidence in banks’ ability to pay back loans. Instead, the cost of overnight borrowing between banks rose by the most in seven years, as a benchmark gauge of the credit market remained elevated far above its normal level.
Investors remain fearful that a panic in the credit markets — which threw Bear Stearns to the brink of bankruptcy and forced a sale to JPMorgan Chase at the humbling price of $2 a share — could spread to other big brokerage firms with extensive exposure to toxic mortgage-backed securities. The concerns drove investors to the safety of government notes, sending the spread between three-month London interbank lending rates and Treasury bills up to 1.9 percentage points.
http://www.nytimes.com/2008/03/17/business/worldbusiness/17cnd-stox.html?_r=2&hp&oref=slogin&oref=slogin
The dollar plunged to record lows against the euro and Swiss franc and its weakest level since 1995 against the yen on Monday as fears over the state of the US financial system sent the currency tumbling.
Analysts said news that Bears Stearns, the US investment bank, had been bought by rival JP Morgan Chase for just $2 a share – far below Friday’s close above $30 a share – had sparked renewed fears over the extent of damage wrought by the credit crisis.
http://www.ft.com/cms/s/b2ebba02-f409-11dc-aaad-0000779fd2ac,Authorised=false.html?_i_location=htt p%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fb2ebba02-f409-11dc-aaad-0000779fd2ac.html%3Fnclick_check%3D1&_i_referer=http%3A%2F%2Fshakespearessister.blogspo t.com%2F&nclick_check=1
As feared, foreign bond holders have begun to exercise a collective vote of no confidence in the devaluation policies of the US government. The Federal Reserve faces a potential veto of its rescue measures.
Asian, Mid East and European investors stood aside at last week's auction of 10-year US Treasury notes. "It was a disaster," said Ray Attrill from 4castweb. "We may be close to the point where the uglier consequences of benign neglect towards the currency are revealed."
The share of foreign buyers ("indirect bidders") plummeted to 5.8pc, from an average 25pc over the last eight weeks. On the Richter Scale of unfolding dramas, this matches the death of Bear Stearns.
Rightly or wrongly, a view has taken hold that Washington is cynically debasing the coinage, hoping to export its day of reckoning through beggar-thy-neighbour policies.
It is not my view. I believe the forces of debt deflation now engulfing America - and soon half the world - are so powerful that nobody will be worrying about inflation a year hence.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/17/ccview117.xml
happy st. patricks day!
:rockon:
Like most such estimates both are still hotly disputed, but no one says that resolving either problem is going to be cheap. Fewer people will die as a result of the overheated loans market, though if it forces a lot of important people to take their minds off the climate change agenda, not even that will be true. Weekend reports suggest that icebergs are now melting almost as fast as the Bears Sterns share price, sold for $2 apiece, 6% of its book value.
http://blogs.guardian.co.uk/politics/2008/03/michael_whites_political_blog_104.html
Stocks got off to a rocky start on Monday as Wall Street weighed a stunning series of weekend developments that confirmed investors’ worst fears about the fragile state of the financial industry.
Shares of financial firms plummeted as one of Wall Street’s most storied banks, Bear Stearns, lay on its deathbed and central bankers scrambled to stave off a devastating crisis of confidence in the investment community.
The broadest measure of the American stock market, the Standard & Poor’s 500-stock index, was down more than 2 percent at 12:30 p.m., as the index edged toward bear-market territory. The Dow was plunged 200 points at the start of trading, then staged a recovery into positive territory before falling back again. At 12:30, it was 0ff 156 points. The Nasdaq composite index was down 2 percent.
While stocks steered clear of a more precipitous drop, the credit market sounded a more alarming note. Investors appeared to shrug off a series of emergency measures taken by the Federal Reserve on Sunday to shore up confidence in banks’ ability to pay back loans. Instead, the cost of overnight borrowing between banks rose by the most in seven years, as a benchmark gauge of the credit market remained elevated far above its normal level.
Investors remain fearful that a panic in the credit markets — which threw Bear Stearns to the brink of bankruptcy and forced a sale to JPMorgan Chase at the humbling price of $2 a share — could spread to other big brokerage firms with extensive exposure to toxic mortgage-backed securities. The concerns drove investors to the safety of government notes, sending the spread between three-month London interbank lending rates and Treasury bills up to 1.9 percentage points.
http://www.nytimes.com/2008/03/17/business/worldbusiness/17cnd-stox.html?_r=2&hp&oref=slogin&oref=slogin
The dollar plunged to record lows against the euro and Swiss franc and its weakest level since 1995 against the yen on Monday as fears over the state of the US financial system sent the currency tumbling.
Analysts said news that Bears Stearns, the US investment bank, had been bought by rival JP Morgan Chase for just $2 a share – far below Friday’s close above $30 a share – had sparked renewed fears over the extent of damage wrought by the credit crisis.
http://www.ft.com/cms/s/b2ebba02-f409-11dc-aaad-0000779fd2ac,Authorised=false.html?_i_location=htt p%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fb2ebba02-f409-11dc-aaad-0000779fd2ac.html%3Fnclick_check%3D1&_i_referer=http%3A%2F%2Fshakespearessister.blogspo t.com%2F&nclick_check=1
As feared, foreign bond holders have begun to exercise a collective vote of no confidence in the devaluation policies of the US government. The Federal Reserve faces a potential veto of its rescue measures.
Asian, Mid East and European investors stood aside at last week's auction of 10-year US Treasury notes. "It was a disaster," said Ray Attrill from 4castweb. "We may be close to the point where the uglier consequences of benign neglect towards the currency are revealed."
The share of foreign buyers ("indirect bidders") plummeted to 5.8pc, from an average 25pc over the last eight weeks. On the Richter Scale of unfolding dramas, this matches the death of Bear Stearns.
Rightly or wrongly, a view has taken hold that Washington is cynically debasing the coinage, hoping to export its day of reckoning through beggar-thy-neighbour policies.
It is not my view. I believe the forces of debt deflation now engulfing America - and soon half the world - are so powerful that nobody will be worrying about inflation a year hence.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/17/ccview117.xml
happy st. patricks day!
:rockon: