Where did all that money go?
Jun. 10th, 2008 08:32 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
solarbirdBig selloff in T-bills today (bonds), but a flat to lower stock market overall. Dollar was up, oil was down, gold was down. Where did all those dollars go? I dunno, but something weird is going on in bonds, regardless.
Irwin Kellner at Marketwatch says this round of stagflation will be worse than the 70s because wages will be further behind the inflation curve. Dr. Roubini at RGE Monitor is not as convinced about stagflation, seeing a severe but still more conventional recession, unless there is a military strike on Iran (as he considers fairly likely), at which point a severe stagflation effect becomes overwhelmingly more probable.
By the way, the US trade deficit continues to worsen, but now the worsening is entirely due to oil, which is now half the trade deficit.
And going back to a place we haven't been in a while; remember the ABXes? All those CDOs and the frozen derivatives market that had shown a bit of recovery for a while? that's all over now; all categories are at record lows, with AAAs hitting 50% of value. That's what happens when prime lending starts to keel over too. The lowest tranches are now at a nickel to the dollar - tasty! Junk bond defaults are also rising sharply, and a lot of banks are a lot of nervous about a lot of credit lines - US$6B worth, more specifically.
Irwin Kellner at Marketwatch says this round of stagflation will be worse than the 70s because wages will be further behind the inflation curve. Dr. Roubini at RGE Monitor is not as convinced about stagflation, seeing a severe but still more conventional recession, unless there is a military strike on Iran (as he considers fairly likely), at which point a severe stagflation effect becomes overwhelmingly more probable.
By the way, the US trade deficit continues to worsen, but now the worsening is entirely due to oil, which is now half the trade deficit.
And going back to a place we haven't been in a while; remember the ABXes? All those CDOs and the frozen derivatives market that had shown a bit of recovery for a while? that's all over now; all categories are at record lows, with AAAs hitting 50% of value. That's what happens when prime lending starts to keel over too. The lowest tranches are now at a nickel to the dollar - tasty! Junk bond defaults are also rising sharply, and a lot of banks are a lot of nervous about a lot of credit lines - US$6B worth, more specifically.
