An econ post yay
Apr. 9th, 2008 12:55 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
solarbirdHere, have a credit-market potpourri, before I get back to music stuff:
No more 100% LTV mortgages in Great Britain, which is not immune from the credit crunch and housing downturn. Meanwhile, Washington Mutual is getting out of the wholesale mortgage business entirely. They were a major wholesaler, so that's going to put another crimp on lending.
One of the current responses (this one by Rep. Mark Kirk (R-IL)) is HR 5649, which nationalises $300B in mortgage debt. Read that again. US$300 billion:
Incidentally, pending home sales fell more than expected again in February. Boston Fed president Eric Rosengren is shocked! Shocked! that housing hasn't recovered yet.
Auction-rate securities auctions continue to collapse as well. Rates for municipalities are going through the roof, which is bad; Jefferson County, Alabama is desperately trying to avoid the largest government bankruptcy in history. Dole Foods and the Tribune Company are having to draw down on bank lines to avoid default. That's also bad. Student loans are facing more troubles as Education Resources Institute Inc. files Chapter 11. They're a student loan guarantor, reportedly a large one; bad again. But you are starting to see some more credit movement, even if it's discounted nontrivally. (Later reports put that at 85¢/$1, rather than 90¢.) And the commercial real estate bond spreads are, while still very high, out of crazytown. At least, the higher-rated tranches. That's good, too; we'll see whether it lasts.
But overall, the CEO of Morgan Stanley says things are the worst he's seen in 40 years. Alan Greenspan sees that and raises him a decade to 50 years. Oh, and oil bounced off a new intraday record of $112.21/barrel before closing at an astronomical $110.87. I'm already seeing $4/g for diesel; it looks like regular unleaded won't be that far behind.
No more 100% LTV mortgages in Great Britain, which is not immune from the credit crunch and housing downturn. Meanwhile, Washington Mutual is getting out of the wholesale mortgage business entirely. They were a major wholesaler, so that's going to put another crimp on lending.
One of the current responses (this one by Rep. Mark Kirk (R-IL)) is HR 5649, which nationalises $300B in mortgage debt. Read that again. US$300 billion:
6.A.1) AUTHORITY- The Corporation may issue bonds in an aggregate amount not to exceed $300,000,000,000, which may be sold by the Corporation to obtain funds for carrying out the purposes of this Act, or exchanged as hereinafter provided.It also forgives underwater portions of loans acquired, lets people pick random-ass payment schedules, and all sorts of junk. It also authorises equity loans. Damn, that's a lot of new debt, and damn, that's one big hunk of nationalisation. But it is the sort of large-scale intervention the IMF wants, only it wants it globally. Hm, difficult.
Incidentally, pending home sales fell more than expected again in February. Boston Fed president Eric Rosengren is shocked! Shocked! that housing hasn't recovered yet.
Auction-rate securities auctions continue to collapse as well. Rates for municipalities are going through the roof, which is bad; Jefferson County, Alabama is desperately trying to avoid the largest government bankruptcy in history. Dole Foods and the Tribune Company are having to draw down on bank lines to avoid default. That's also bad. Student loans are facing more troubles as Education Resources Institute Inc. files Chapter 11. They're a student loan guarantor, reportedly a large one; bad again. But you are starting to see some more credit movement, even if it's discounted nontrivally. (Later reports put that at 85¢/$1, rather than 90¢.) And the commercial real estate bond spreads are, while still very high, out of crazytown. At least, the higher-rated tranches. That's good, too; we'll see whether it lasts.
But overall, the CEO of Morgan Stanley says things are the worst he's seen in 40 years. Alan Greenspan sees that and raises him a decade to 50 years. Oh, and oil bounced off a new intraday record of $112.21/barrel before closing at an astronomical $110.87. I'm already seeing $4/g for diesel; it looks like regular unleaded won't be that far behind.
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no subject
Date: 2008-04-09 08:44 pm (UTC)Regular gasoline is USD equivalent $4.66 / gallon on Vancouver Island. Diesel is $4.44 / gallon -- note that price spread here always has diesel below regular gasoline.
Higher price attributable mainly to taxes, I suspect, as refinery gate prices in Alberta are benchmarked against US West Texas i/m price. In US dollars, natch.
And that **other** globally-traded fuel? Spot price US $135/short ton FOB Roberts Bank for 11,000 BTU / 1% sulphur / 11.5% ash (as rec'd basis) thermal. In other words, watch electricity prices go shed-roof bonkers this summer, regardless of fuel source (since the arbitrageurs rapidly level out any source differentials).
ETA: if this follows historical pricing relationships, then it predicts $135/barrel oil. Damn, I wish I didn't have such a monstrous daily commute to work.
no subject
Date: 2008-04-09 08:47 pm (UTC)ETA: Hee, you edited as I was composing a reply. @whee US$135/barrel!
no subject
Date: 2008-04-09 09:04 pm (UTC)Might could be, since we have two functional refineries serving the coastal barge trade: Ioco in Port Moody and Shellburn in Burnaby. FWIW, northern Vancouver Island typically ties for most expensive fuel prices with the towns along the Alaska Highway in NEBC, which of course is where most of the crude oil comes from these days.
Rule of thumb is that coal, being more costly to transport and distribute, prices out at one tonne coal = one barrel of WTI oil.
Energy equivalent is more like 4.13:1 IIRC. (Don't quote me on latter, and I will check it when I get home).ETA: checked against my copy of the NCB aide-memoire. Correct conversion, assuming HHV of oil at 6.12 gigajoules/barrel and coal at 32.5 gigajoules/tonne is 5.31:1. I will leave it as an exercise to the reader to work back from tonnes to those archaic short-tons. At least I was within the correct order-of-magnitude. Gonna go get that MRI now, ought to be able to scramble their magnets with such astounding mental capacities....