I am\u00a0feeling a bit shagged and fagged and fashed, it being a\u00a0day of no small energy expenditure, O my brothers and only friends.<\/p>\n
In other words – not much commentary today, folks! Just a pathetically small collection of links.<\/p>\n
It’s not just housing any more<\/a> … Econbrowser<\/em>‘s James Hamilton took a look at Monday’s economic releases and didn’t like what he saw.<\/p>\n Monoline Death Watch<\/a> … Naked Capitalism<\/em> takes a few gratuitous shots at bond insurers. I am surprised to learn that there are still a few people in the world who consider Credit Default Swap\u00a0spreads to be related, somehow, to Credit Default Risk. Besides all the other problems, forced unwinding (by, f’rinstance, Apex & Sitka of BMO fame) is elevating these spreads to hell ‘n’ gone.<\/p>\n Update 2008-3-6<\/strong>: I note the following<\/a><\/em>:<\/p>\n The higher costs are an unintended consequence of securities that allow investors to speculate on corporate creditworthiness. So-called correlation models used to value them have become unreliable in the fallout from the U.S. subprime mortgage crisis<\/a>. Last month some showed the odds of a default by an investment-grade company spreading to others exceeded 100 percent — a mathematical impossibility, according to UBS AG.<\/em>“The credit-default swap market is completely distorting reality,” said Henner Boettcher<\/a>, treasurer of HeidelbergCement in Heidelberg, Germany, the country’s biggest cement maker. “Given what these spreads imply about defaults, we should be in a deep depression, and we are not.”<\/em><\/p><\/blockquote>\n — end of 2008-3-6 update<\/p>\n Ten Year Treasuries Fall<\/a> … It will soon be fashionable again to call oneself a “bond vigilante”.<\/p>\n Rather a quiet day for prefs, on the whole … even the price moves are basically just reversals of the more egregious recent zig-zags.The market drifted up, but has not recovered the ground lost after the TD New Issue announcement.<\/p>\n