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  • Greece: A Ratings History

    Alexander Gloy

    Everything seemed fine until end 2009. Few people talked about it. The debt was there. The deficits known. But Greece was still able to issue more debt. Until January 2010. S&P woke up first (BBB- is the lowest investment-grade rating; below means “junk”): Source: FT MoneySupply Blog Luckily the country is run by trustworthy politicians who…

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  • Short term US T-bills almost back to zero

    Alexander Gloy

    Look at 1-month yield for US Treasury bills: almost back to zero. Risk is out – everyone wants to be in a (presumably) safe place (even if there is basically no interest). $1,000,000 invested at 0.02% for one months yields less than $20. Pays for the cab ride home. With Libor steady at above 0.5%…

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  • Belgium CDS rise after election – Moody’s downgrades Greece to “junk”

    Alexander Gloy

    Decent move in Belgian CDS (credit default swaps) today (+16% to 130bps) after Flemish separatists emerged as strongest party in Sunday’s elections. After elections in 2007 it took nine months to form an unstable five-party coalition (leading to three governments in as many years). Fears are the highly indebted country might break up leaving the French…

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  • How the stock market really works:

    Alexander Gloy

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  • Bailout loop:

    Alexander Gloy

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  • Another red flag: Commercial Paper (CP)

    Alexander Gloy

    What are CP’s? They are unsecured “promissory notes”, sold by large companies and banks with excellent credit ratings to finance short-term needs. They mature within 1 to 270 days (35 on average). Unsecured means there is no collateral (except asset-backed CPs). If the issuer goes belly-up while you hold a CD the joke’s on you.…

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  • How the Swiss National Bank tried to keep the CHF from appreciating – and failed

    Alexander Gloy

    According to preliminary data foreign currency reserves at the Swiss National Bank (SNB) in May went up to CHF 232bn from 153bn in April. Meaning they intervened with 4bn per work day in May, up from 1bn previously. And now they wasted half of GDP on potentially worthless currencies (Euros, Dollars). Why does the SNB…

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  • Is BP worth a buy after losing 50%?

    Alexander Gloy

    Take a look at CDS (credit default swap) for BP (British Petroleum): because of the possible clean-up costs for the Gulf of Mexico oil spill (especially after a hurricane) insurance costs against bankruptcy today increased by almost 50% to 383bps (basis points). That means it would cost $38,300 annually to insure $1,000,000 of debt against…

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