Archive for the ‘Debt ceiling’ Category

The Oracle holds his own Tea Party

Tuesday, August 16th, 2011

The Oracle of Omaha shook things up a little on Monday with an op-ed piece in the New York Times saying the rich should pay more in taxes. Some may argue that Buffett did not show a lot of backbone with his timing. If he wrote this as the GOP was holding the line on any new revenues during the debt ceiling debate or last year when Congress was battling to extend the Bush tax cuts to 2012, this would have had more impact. To be fair, however, this is not the first time he made this point. He has often noted that it is wrong that he is taxed at a lower rate than his secretary.  (more…)

Tags:
Posted in Debt ceiling, economy | 1 Comment »

Financial pros: Country strong, but…

Friday, August 12th, 2011

A large majority of companies holding U.S. Treasuries had “no intention of changing their holdings as a result of the S&P move [to downgrade U.S. credit rating to AA+],” according to a survey of members by the Association for Financial Professionals (AFP) AFP Survey-Reaction to U.S. Credit Rating Downgrade[1]. The bigger impact, according to a quarter of respondents who are made up of senior level treasury and financial professionals, is the United States being viewed as a less desirable investment destination due to the downgrade. (more…)

Posted in Credit crisis, Debt ceiling, economy | No Comments »

Markets plunge: It is the technicals stupid

Friday, August 5th, 2011

As some of the first wire stories on Thursday’s market plunge began to come across my desk I was struck by one in particular. The headline said, “Geithner stays and the market tanks”.

 I have to admit I found that amusing. You see, I had just posted a chart on our web site indicating how some significant technical support areas had been breached on the Dow Jones Industrial Average. I had been having a conversation with one of our contributors about this and he had indicated earlier in the week that the market could be facing a turning point.

(more…)

Tags: ,
Posted in Debt ceiling, Markets, economy | 1 Comment »

The Debt ceiling debate and unintended consequences

Thursday, August 4th, 2011

As our political leaders were patting themselves on the back for averting a crisis — albeit with both sides of the debate frustrated they didn’t get everything they wanted, even those who got almost everything — a strange thing was happening in the markets. Equity indexes continued to tank.

Perhaps some analysts and pundits breathed a big sigh of relief when equities rebounded after a huger sell-off on Wednesday to close higher. No relief was in sight today as the Dow dropped more than 500 points and the S&P 500 dropped 55 pushing both indexes into the red for 2011.  (more…)

Tags: , ,
Posted in Debt ceiling, Markets, economy | No Comments »

Default-Day is not at hand but there are casualties

Wednesday, July 27th, 2011

The other day we pointed out how a market was developing for credit default swaps on U.S. government debt. The Bloomberg story which we referred to indicated that the market was pricing in a higher likelihood of a default and how volume had grown in the contract as more institutions looked to hedge their exposure to such an event.

While interesting, what perplexed us given the scope of government and Federal Reserve activity over recent years, is how the mechanics of such a transaction would play out. While minor fluctuations in this CDS could be hedged and traded, if a real default becomes likely it is doubtful the markets would be allowed to decide.

(more…)

Tags:
Posted in Credit crisis, Debt ceiling | No Comments »