Red Flags in Credit Markets (Capitalism DeathWatch™)

WSJ ^ | WSJ

[quesney]

Red lights are flashing in the credit market again.

The revival in risk appetite seen at the start of the year is fading as long-awaited government bailout plans have failed to materialise. The common thread is renewed pressure in a banking system already severely weakened by 18 months of financial markets turmoil. Governments are running out of time to stop the rot before the credit crisis takes another lurch for the worse.

First, consider the spread between U.S. dollar Libor, the rate for interbank lending, and the overnight indexed swap rate, which captures expectations for official interest rates. The spread narrowed sharply from October's peak of 366 basis points to a low of around 90 basis points in January. But now the spread has risen again to back over 100 basis points, amid renewed fears over bank funding and a further loss of trust in the system. Pre-crisis the typical spread was under 10 basis points.

Second, look at the Markit LCDX index of default swaps on 100 U.S. leveraged loans. The index rallied in January, but has now returned to 72.5% of face value, close to the record low seen in December. Auctions to determine swap payouts are producing very low indicative recovery rates: 40% versus an average recovery rate over the past 20 years for bank loans of around 81%. Low recoveries will hit loss reserves hard.

Third, spreads on nearly all tranches of the CMBX index, which tracks default swaps on 25 U.S. commercial mortgage-backed securities, have reached new record wide levels in February after a January rally. Moody's on Feb. 5 said it was considering cutting ratings on $302 billion of CMBS due to falling commercial property values and rising delinquencies.

[LomanBill]

Everything we need to know about the causation of the present lawless state can be discerned from the forewarning of this nation's first President:

"Of all the dispositions and habits which lead to political prosperity, religion and morality are indispensable supports. In vain would that man claim the tribute of patriotism, who should labor to subvert these great pillars of human happiness, these firmest props of the duties of men and citizens. The mere politician, equally with the pious man, ought to respect and to cherish them. A volume could not trace all their connections with private and public felicity. Let it simply be asked: Where is the security for property, for reputation, for life, if the sense of religious obligation desert the oaths which are the instruments of investigation in courts of justice ? And let us with caution indulge the supposition that morality can be maintained without religion. Whatever may be conceded to the influence of refined education on minds of peculiar structure, reason and experience both forbid us to expect that national morality can prevail in exclusion of religious principle."

--President George Washington's farewell address, 1796

 

 

 

[IrishMike]

Market Summary

Currently:
Dow 7,260.78 -104.89 (-1.42%)
S&P 500 757.13 -12.92 (-1.68%)
Nasdaq 1,411.22 -30.01 (-2.08%)

NOVEMBER 4 2008 Dow at 9625

[668 - Neighbor of the Beast]

http://www.marketwatch.com/quotes/

Watching it here. :(

[txnativegop]

Thank you for posting that.

The words of the Father of our Country still ring true.

Pity most people don’t read his words.

[CaliGangsta]

I HOPE my money stops disappearing due to the stock market setting 52 week lows every day. If not Americans will CHANGE their spending habits and buy nothing, thus tanking the economy even further.

HOPE AND CHANGE!!!

[HereInTheHeartland]

The Obama rally continues.
Actually, the Democrat market started 2 years ago, when they took control of Congress.

[Bon mots]

[scooby321]

Harry Reid said the economy os getting better.

[Jeff Head]

Exactly...and add to those the same message from John Adams:

"We have no government armed with power capable of contending with human passions unbridled by morality and religion. Avarice, ambition, revenge, or gallantry, would break the strongest cords of our Constitution as a whale goes through a net. Our Constitution was made only for a moral and religious people. It is wholly inadequate for the government of any other."- John Adams, Oct. 11, 1798 Address

...and Thomas Jefferson.

"God who gave us life gave us liberty. And can the liberties of a nation be thought secure if we have removed their only firm basis: a conviction in the minds of men that these liberties are the gift of God? That they are not to be violated but with His wrath? Indeed, I tremble for my country when I reflect that God is just; that His justice cannot sleep forever."- Thomas Jefferson

...and Patrick Henry

"Bad men cannot make good citizens. It is when a people forget God that tyrants forge their chains. A vitiated state of morals, a corrupted public conscience, is incompatible with freedom. No free government, or the blessings of liberty, can be preserved to any people but by a firm adherence to justice, moderation, temperance, frugality, and virtue; and by a frequent recurrence to fundamental principles." Patrick Henry

...and James Madison.

"We have staked the future of all of our political institutions upon the capacity of mankind for self-government, upon the capacity of each and all of us to govern ourselves, to control ourselves, to sustain ourselves according to the Ten Commandments of God."- James Madison

[Jeff Head]

Obama is not about helping, saving, or supporting the free market. His entire background, his own ideology, everything he has done tells us he is about destroying the free market in favor of a command economy much more akin to the marxist ideology he himself professes.

THE AUDACITY OF TRUTH ABOUT BARACK HUSSEIN OBAMA

BARACK HUSSEIN OBAMA IN HIS OWN WORDS

NOW WE KNOW WHAT A COMMUNITY ORGANIZER DOES

OBAMA, THE STOCK MARKET, AND ENERGY

THE AUDACITY OF TRUTH ABOUT BARACK HUSSEIN OBAMA'S UPBRINGING

IT'S TIME FOR A RETURN TO THE OLD SCHOOL

[shoutingandpointing]

Reid's views on the economy rate right up there with iceberg lettuce's views on electrical engineering.

Reid speaks; Byrd sleeps:

http://www.youtube.com/watch?v=SNWbMGzT20c&feature=PlayList&p=3B16F085B1CA96DB&playnext=1&index=8

God help us.

[Ken H]

Is it true that Madison said "Our future is staked on the 10 commandments?"

"The only problem with the above is, no such quote has ever been found among any of James Madison's writings. None of the biographers of Madison, past or present have ever run across such a quote, and most if not all would love to know where this false quote originated."

--http://candst.tripod.com/misq1.htm

[Hardastarboard]

So when is the bad economy going to put the Lipozene / Relacor / Enzyte natural male enhancement / “turn your debt into wealth system” / “regrow your own hair” / miracle prostate cure, etc. scamsters that advertise on talk radio out of business? Please?

[Lancey Howard]

America is dead and gone. All that’s left is a land mass populated by cretins and parasites who have absolutely no respect for the military and who vote for big government to confiscate money from their neighbors and “redistribute” it to them. It is not an America worth defending anymore. The Democrats have won.

The “grand experiment” had a phenomenal run. I bet the Founders would be astounded it lasted as long as it did. But even they understood that once people realized they could vote themselves other people’s money, the jig was up. All it took was a political party to base its very fortunes on that concept and voila!, decadence and decline.

It will be interesting to see what, if anything worthwhile, emerges from the ashes.

[668 - Neighbor of the Beast]

7200 at 1pm...

[popdonnelly]

Harry Reid

1) Doesn’t know what he’s talking about.

2) Is lying.

[blam]

Market down 170 as I type.

[Brett66]

Governments are running out of time to stop the rot before the credit crisis takes another lurch for the worse.

They stepped up to the plate already- and fouled out.

[wastoute]

thanks for the quote and bump for l84 for the missus

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