Links
Bernanke’s Exit Strategy: Tighter Reserve Requirements
US mortgage sector braced for end of Fed help
End of TALF Means Bond Spreads Five-Fold Wider
IMF would help Greece if asked -Strauss-Kahn
Plan to cut mortgage principal pitched to Congress
NYSE To Change Regular Session Closing Procedures Feb. 22
Moody’s warns US of credit rating fears
US could save by cutting public sector pay
Record volumes for sovereign CDS
Credit trading bounces back for Deutsche Bank
Scariest Chart EVER: Loss Severity, Subprime First-Lien
This chart shows the loss severity for subprime first-lien mortgage loans in the tri-state area (New York, New Jersey, and Connecticut). Loss severity is defined as the average size of a loss if one occurs. A loss occurs when a foreclosed home sells for less than what the borrower owes to the mortgage lender. The amount of that loss includes the costs to foreclose and liquidate, as well as taxes and declines in property value. This report uses all securitized nonprime mortgage loans from First American CoreLogic’s Loan Performance data set.
Source: Fed U.S. Credit Conditions
Google CDS => AAA
5 year CDS starts life at 19bps (via cmadatavision)
Links
Insurance Market Aims to Build ‘Longevity Swaps’
TARP Inspector Says Rescue to Cost Taxpayers Less Than Expected
SIGTARP Quarterly Report to Congress
White House projects record deficit this year
The Ring of Fire
Zhu Min, a man worth listening to
Bank of England fears new crisis as quantitative easing ends
In Defense of Home Bias
How to trade: butterflies cause cascading margin calls
FSA’s Lord Turner signals crackdown on carry trade
ioinet™ v2: New Advances in the Search for Liquidity in a Fragmented Market
Monkeys, Candy and Cognitive Dissonance
Quotes of the Day
‘There’s a growing recognition the dispersion of credit risk by banks to a broader and more diverse group of investors … has helped make the banking system more resilient”. So said the International Monetary Fund’s Global Stability Report in 2006.
“Improved resilience may be seen in fewer bank failures,” the IMF predicted. “Consequently, the commercial banks may be less vulnerable today to credit or economic shocks”.
“Obviously, if the unwinding of the various imbalances were to signal lower-than-expected growth, markets would react more sharply; but there is little evidence from the above analysis to suggest that the expected or likely market corrections in the period ahead would lead to crises of systemic proportions.”
Zhu Min, a man worth listening to
Global Financial System Resilience in the Face of Cyclical Challenges
The Influence of Credit Derivative and Structured Credit Markets on Financial Stability
Fed’s MBS Program
Q. What happens to the proceeds from maturing securities and prepayments ?
A. The Manager of the System Open Market Account has said that the System’s holdings of securities will tend to decline gradually after the completion of the asset purchase programs, reflecting maturing issues and prepayments on holdings of MBS. The Manager noted that the Committee would likely wish to discuss in detail its policy for reinvesting the proceeds of maturing issues and prepayments; he proposed, as an interim approach, continuing the practice of NOT reinvesting the proceeds of maturing agency securities or MBS prepayments. Meeting participants supported that interim approach pending further discussion at future meetings.
note: answer is excerpt from f.o.m.c. minutes
Related:
US MBS: End To NY Fed’s MBS Program Being Closely Followed
Variability in Nucleus Accumbens Activity Mediates Age-Related Suboptimal Financial Risk Taking
Paper by Gregory R. Samanez-Larkin, Camelia M. Kuhnen, Daniel J. Yoo, and Brian Knutson
As human life expectancy continues to rise, financial decisions of aging investors may have an increasing impact on the global economy. In this study, we examined age differences in financial decisions across the adult life span by combining functional neuroimaging with a dynamic financial investment task. During the task, older adults made more suboptimal choices than younger adults when choosing risky assets. This age-related effect was mediated by a neural measure of temporal variability in nucleus accumbens activity. These findings reveal a novel neural mechanism by which aging may disrupt rational financial choice.