LIBOR Changes
TBA May 30th, according to Angela Knight, CEO of the BBA.
TBA May 30th, according to Angela Knight, CEO of the BBA.
I would vote for that but will be difficult. For a spread, there is more than one price and for a price there is more than one spread.
The price of a CDS is always uncertain. There is no single answer, CDS trade on “spreads” but the price depends on models and inputs. To quote a famous textbook exemple, suppose that you bought protection on Marconi at 250 bp sometimes in the late 90s, in 2001 the spread had widened to 4000 bp. You are rich or so you think. The unwind price depends entirely on recovery assumptions, at 30% recovery you would get 51% of par, at 99% you would get 1% of par, that is you would “lose” even though you got the scenario right.
Felix Salmon: Moving Towards Exchange-Traded Credit Default Swaps
A Wish List for Fixing Wall Street
Ultimately, market participants themselves must address the fundamental sources of financial strains–through deleveraging, raising new capital, and improving risk management–and this process is likely to take some time. The Federal Reserve’s various liquidity measures should help facilitate that process indirectly by boosting investor confidence and by reducing the risks of severe disruption during the period of adjustment. Once financial conditions become more normal, the extraordinary provision of liquidity by the Federal Reserve will no longer be needed. As Bagehot would surely advise, under normal conditions financial institutions should look to private counterparties and not central banks as a source of ongoing funding.
Our foreclosure bus tours are every saturday and bus leaves at 11:30a.m. Your just a bus tour away from buying your home . Equity awaits!
The Federal Reserve is planning to ask Congress for authority - starting this year - to pay interest on commercial-bank reserves, in an effort to gain better control over interest rates and more leverage to battle the credit crunch.
The ECB has done so from day one. Time will if it will work, I am skeptical.
The big difference between the Fed and the ECB is that the ECB is the ultimate top credit within Euroland something that the Fed is not and in a flight to quality the ECB minimum deposit rate acts as a floor for interest rates, something that may not work for the Fed. I have mentionned somewhere that in Euroland it is not possible to have negative repos rates or government t-bills trading below the minimum deposit rate.
The European Central Bank and The Federal Reserve: paper by Stephen G. Cecchetti and Róisín O’Sullivan
Fed seeks approval to pay interest on reserves: report
By my calculation, the Fed has only about $55 bn in T-Bills left in stocks, down from $275 bn one year ago.
Kathy G makes an heroic effort to attack economic fundamentalists’ opposition to the minimum wage. I fear, however, that this is the wrong ground for left economists to fight on, for two reasons. First, rises in the minimum wage are...
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Richard Florida thinks the Hamptons property market is about to crash: It's clear as a bell that the tremendous run-up in housing prices in places like the Hamptons, Miami, Naples, Florida, or other similar high-end vacation spots had little to do with demand. We're talking speculation pure and simple. My research on real estate prices ...
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On our blog agenda there is a discussion of the "alternate data universe." There is a rich and thriving discussion of economic data among economists -- that would be the "real economists". We are talking about those who are (preferably) in the academic world or working on Wall Street. There is another discussion. It occurs ...
Last week, the Fed decided to ask Congress for the right to pay interest on bank reserves. (Hat tip Barry Ritholtz, see also William Polley, Mark Thoma,...
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