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11月28日 CitmekFor Abu Dhabi and Citi, Credit Crisis Drove Deal
By HEATHER TIMMONS and JULIA WERDIGIER The New York Times, Nov 28, 2007
A falling dollar, a growing pile of oil revenue and an interest in not being overshadowed by neighboring Dubai’s increasingly high profile spurred Abu Dhabi to break with its low-key investing tradition to purchase a big $7.5 billion stake in Citigroup. That is the view of analysts, economists and deal makers who keep an eye on the secretive Abu Dhabi Investment Authority, the largest sovereign wealth fund in the world, with assets estimated at $650 billion. Despite its size, Abu Dhabi’s royal family has been largely content to pour money into low-return, low-profile investments — until now. But Abu Dhabi, the largest oil producer of the seven city-states that compose the United Arab Emirates, is worried enough about the eroding value of its pile of petrodollars that it appears ready to pursue more big-ticket deals. With the dollar shrinking, “they’re watching them depreciate and that’s driving their anxiety,” said Marc Ginsberg, former United States ambassador to Morocco, who has worked with companies in other emirates. Citigroup’s motivations were just as great. The company’s shares have dropped sharply since October, when billions of dollars in write-downs first started to mount. Later, Citi took another $8 billion to $11 billion charge related to bad subprime mortgage investments, which could wipe out its fourth-quarter profit. As a result, it offered Abu Dhabi generous terms to get its money. Both sides were driven together by the credit crisis that struck the American economy with such force this summer. Abu Dhabi, like other oil producers, has an interest in making sure the United States economy does not weaken further, said Mr. Ginsberg. And ever since Charles O. Prince III resigned as chairman and chief executive last month, and while Citi’s board has searched for a new leader, analysts and investors have renewed calls to dismantle the company. Sources close to the deal, who did not want to be quoted because they were not authorized to comment, said Abu Dhabi, a longtime Citi client, had been looking to make a play in financial services to take advantage of market dislocation. They said the emirate had considered buying mortgages or distressed loans. But in recent weeks, it decided to invest directly in financial institutions. The Abu Dhabi fund’s original plan was to buy small stakes, say $1 billion or so, in five or six different firms. But it zeroed in on the idea of making a big investment in Citigroup, those close to the deal say, after Mr. Prince was ousted. Through its relationships with Citi in the Middle East — Citi has 14 offices and 4,000 employees in the region — Abu Dhabi reached out about making a deal. The point person for Citi was Michael S. Klein, the co-head of Citigroup’s investment bank, who had spent time in the Persian Gulf region when he ran Citigroup’s Europe, Middle East and Africa operations. The negotiations took place in large part over the telephone and in video conferences before Mr. Klein and later Robert E. Rubin, the new chairman of Citigroup and a former Treasury secretary, boarded a plane to the Gulf to complete the deal. Abu Dhabi’s 4.9 percent stake means that nearly 10 percent of Citigroup will be controlled by Middle Eastern investors. Prince Walid bin Talal of Saudi Arabia already owns a stake of roughly 5 percent after bailing out the company in the early 1990s. Given sensitivity to past Arab investments, particularly last year’s aborted sale of some American ports to a Dubai firm, Citigroup officials alerted Congressional leaders in Washington before announcing the deal with the sovereign fund. “I spoke to them at some length about it the day before,” said Senator Charles E. Schumer of New York, chairman of the Joint Economic Committee and a senior member of the Senate Banking and Finance Committees, referring to senior Citigroup officials. “It seemed to me that this is good for Citigroup, it’s good for jobs in New York. It bolsters their capital position, allows what is fundamentally a very strong company to weather a difficult time,” said Mr. Schumer. He contrasted the sovereign fund’s deal with Citi to the aborted Dubai ports deal. “My worries relate when there is a very strong security interest as in the ports deal or if they are buying an entity that is not purely an economic one,” he said. Abu Dhabi has given assurances in other deals that their investments are driven only by economic considerations, not political ones. “They have made those assurances and have lived up to them in the past,” Mr. Schumer added. In a complex transaction that has been blessed by federal regulators, the Abu Dhabi fund will have no role in the management or governance of Citigroup, nor any presence on its board. “I think this is a terrific deal for Citi and the global market place as a whole,” said Sanford I. Weill, Mr. Prince’s predecessor and mentor. “One has to be impressed with how quickly the new leadership team put this together.” But Abu Dhabi’s ruling family, headed by Sheik Khalifa bin Zayed al-Nahyan, will own the largest individual stake in Citigroup when the deal closes, edging out Prince Walid of Saudia Arabia. The sovereign fund, started in 1976, has nearly double the assets of the next largest, Norway’s government pension fund, according to Standard Chartered, a British bank. Bankers in the Middle East said the sovereign fund had traditionally funneled more than three-quarters of its cash into other big global investment funds, and eschewed large individual company deals. Investing through other funds has allowed the Abu Dhabi fund to maintain a low profile and to track money flows around the world that could make future big investments like the Citi deal easier. Sheik Khalifa is also the fund’s chairman and president of the U.A.E., which was ruled by his father, Sheik Zayed bin Sultan al-Nahyan, for nearly 40 years until his death in 2004. Sheik Zayed was largely credited with helping transform the U.A.E. from a collective of nomadic Bedouin tribesmen to an oil-rich nation with a high literacy rate. While Abu Dhabi contains about 94 percent of the oil reserves in the U.A.E. and includes about 87 percent of the country’s land mass, the city-state’s international profile has paled in recent years in contrast to that of its neighbor, Dubai. Thanks to a series of big-name deals and an audacious growth strategy, Dubai is becoming a tourism destination, a regional financial center and a favored buyer of marquee assets. On Monday, Dubai International Capital said it had bought a substantial stake in the Sony Corporation. “They are different animals,” said David Butter, the Middle East regional head at the Economist Intelligence Unit, comparing Dubai’s growth strategy with Abu Dhabi’s. “The purpose of A.D.I.A. is to invest surplus cash in assets that would provide steady gain and returns over time,” he said, while Dubai, with less oil reserves, has had to create its own sources of wealth. Recently, though, Abu Dhabi has “generally been changing its approach” to investments, said Mr. Butter. With the creation of a new investment arm, Mubadala Development, in October of 2002, Abu Dhabi started to invest directly in projects like Nigerian telecommunications and power plants in Algeria. With the Citigroup deal, the Abu Dhabi fund has purchased part of one of the world’s biggest banking franchises for a bargain price. A Punk, Ziegel & Company analyst, Richard Bove, raised his rating on the bank yesterday to buy, from market perform, saying the dividend was safe and the franchise was strong. Citigroup’s stock closed at $30.32, up 52 cents yesterday, the day after the announcement of the sovereign fund’s stake. Like other sovereign wealth funds, the Abu Dhabi fund is looking for investments to help diversify foreign currency reserves earned from exporting oil. Its shift in investment strategy is not immediately being accompanied by an increase in public transparency. Several calls to the company’s headquarters in Abu Dhabi went unreturned.
Vikas Bajaj, Eric Dash, Andrew Ross Sorkin and Louis Uchitelle contributed reporting 11月27日 Can Sehpası (AKCitmek)
Sustukça Sıra Falan KalmayacakOrtaçağa yolculuk...
Bekir Coşkun Hürriyet, 27.11.2007
DÜN bir bayan okurumdan ilginç bir e-posta aldım. Okurumun adını bende saklı tutarak ve kimi bölümlerini kısaltarak aktarıyorum: "Ben bir şirkette çalışıyorum. Cuma günü kardeşimle öğlen tatilinde yemeğe çıktık. Biz çoğu zaman Ümraniye’ye gideriz. Yine öyle yaptık. Ümraniye’de ’cuma’ olması sebebiyle yine birçok işyeri kapalıydı. Ender açık yerlerden (.....) mağazasına girdik. Mağazanın sahibi, kapalı bir bayanla münakaşa ediyordu. İlk bakışta bunu anlayamadık. Sonra (.....)nın sahibinin yüksek sesi dikkatimizi çekti. Kapalı kadın, bugünün cuma olduğunu söylüyor, ısrarla mağazanın kapatılmasını istiyordu. (......) sahibi ’Burasının İran olmadığını’ tekrarlıyordu. Kapalı kadın sinirlenip gitti. Ama (.....)nın sahibi bir önceki sefer o kadının erkekler ile geldiğini ve mağazayı yıkacaklarını söyleyip gittiklerini bize anlattı. Çok korkmuştu..." * Okurumun notu böyle. Başta İstanbul’un kimi semtleri olmak üzere birçok tutucu kentte cuma günleri işyerlerinin, çarşıların, mağazaların tarikatların baskısıyla kapatıldığını biliyoruz. Kimi esnaf isteyerek... Kimisi tehdit ile... İşte tam bu sırada, yani dün eski TBMM Başkanı, AKP’nin en öndeki üç isminden birisi Bülent Arınç, Meclis’in "cuma günleri" tatil olmasını istedi, biliyorsunuz. * Devletin tepesindeki koltuklar el değiştirip de karşı devrim Türkiye’yi ele geçirdikten sonra işte böyle oldu. Taban dalgası yükseldi... Sertleşti... Artık dinciler daha cesur, daha iddialı, daha sabırsız, daha yırtıcı, daha hırçınlar. Bu yüzdendir; Bülent Arınç’ın "cuma tatili" istemesiyle, tutucu semtlerde yobazların açık işyerlerini, korku salarak ve tehditle kapatmaları birbirine denk geliyor. Ve ortaçağa yolculuk sürüyor Hadi Türkiye... Ortaçağa doğru... Yuvarlana yuvarlana... AKCitmek
| Karaborsa TefecilerÖzel sektör dışarıdan borçlanmaya itiliyorGüngör Uras
Milliyet, 27.11.2007 Yıl ortası rakamlara göre, reel sektörün (şirketlerimizin) kullandıkları döviz kredileri 108 milyar dolar. Bu kredilerin 45 milyar dolarını Türkiye'de yerleşik (yerli + yabancı) bankalar vermiş. Bunlara ek olarak şirketlerimiz yurtdışından, değişik bankalardan 63 milyar dolar kredi bulmuş. Türkiye'de yerleşik (yerli + yabancı) bankaların, şirketlere kullandırdıkları toplam 45 milyar döviz kredisinin 19.5 milyar doları Türkiye'deki şubelerinden, 25.5 milyar doları ise bu bankaların yurtdışındaki şubelerinden verilmiş. Türkiye'de Türk halkının mevduat bankalarında (yıl ortası rakamlara göre) toplam 93 milyar dolar döviz mevduatı varken, Türkiye'de yerleşik bankalar (yerli + yabancı) bunun sadece 19.5 milyar dolarlık bölümünü Türk şirketlerine kredi olarak kullandırabilmiş. Türkiye Bankalar Birliği Başkanı, İş Bankası Genel Müdürü Ersin Özince dün sabah NTV'nin ekonomi programındaki söyleşisinde, "Bu tablo olumsuz bir tablo. Türkiye'de yerleşik bankalar Türk müşterilerine döviz kredisi veremiyor. Ortada bir yanlış var Bu nedenle Türk şirketleri yurtdışından borçlanıyor. Türk bankaları yabancı bankalarla rekabet edemiyor" diyerek olan bitenin yanlışlığına işaret etti. Bu yanlışlığın kaynağı "Mevzuat Hazretleri". Türk bankalarının dertlerini Ankara'ya bir türlü anlatamamaları. (1) Türk bankaları şirketlere sadece (a) İhracatın finansmanı için, (b) Teşvik belgesine bağlanmış yatırımların döviz ihtiyacı için döviz kredisi verebilir. Başka işler için (örneğin bir şirketi satın almak için, bir ihaleye girmek için) Türk bankaları döviz kredisi veremez. (2) Türk bankalarından döviz kredisi alan şirketler ödedikleri faiz ve elde edecekleri kur farkı üzerinden yüzde 5 oranında Banka ve Sigorta Muamele Vergisi ödemek zorundadır. İşte bu nedenlerle Türk şirketleri yurtdışından borçlanmak zorunda kalıyor. İşte bu nedenle Türkiye'deki bankalar yurtiçinde 93 milyar dolarlık döviz mevduatının sadece 19.5 milyar dolarını şirketlere kredi olarak kullandırabiliyor. Yanlışı düzeltmek gerekir Açık anlatımıyla suç, ne Türk bankalarında ne de mecburiyetten yurtdışındaki yabancı bankalardan döviz kredisi kullanan şirketlerde. Suç, şirketleri bu yola iten "Mevzuat Hazretleri"nde. Şirketler döviz kredisi kullanırken tabii ki kredinin faizi de çok önemli. Ancak günümüzde döviz kredisinin yurtiçindeki ve dışındaki ana faizi büyük farklılık göstermiyor. Önemli olan, nihai maliyeti oluşturan ve de ana faizin üzerine eklenen risk ve hizmet primi. Türk bankaları ana faiz oranındaki ufak farklılıkları, risk ve hizmet primini düşük tutarak, nihai maliyette yabancı bankalarla rekabet edebiliyorlar. Uygulamada, döviz kredisi arayışındaki Türk şirketlerine yardım edenler sadece Türkiye'de faaliyette bulunan yabancı sermayeli bankalar değil. Çok sayıda yabancı bankanın Türkiye'de temsilcisi var. Bunlar döviz kredisi arayan şirketlerimizin yurtdışından dövizle borçlanmalarına aracılık ediyor. İşlemlerini yürütüyor. Neticelendiriyor. İşte Bankalar Birliği Başkanı olarak Ersin Özince'nin dikkat çekmek istediği uygulama bu çarpık uygulama. guras@milliyet.com.tr AKCitmekCiti to Sell $7.5 Billion Stake to Abu Dhabi Group
CNBC, Nov 27, 2007
Citigroup is selling up to 4.9 percent of itself for $7.5 billion to the investment arm of the Abu Dhabi government, giving the largest U.S. bank fresh capital as it wrestles with the subprime mortgage crisis and the resignation of its chief executive.
The capital injection will shore up Citi's balance sheet, which has been hurt by some $6.8 billion of writedowns and losses in the third quarter, and the potential for another $11 billion in the fourth quarter. Many investors feared Citi would have to cut its dividend to boost its capital base. The sale may also signal the freefall in U.S financial stocks is close to ending, analysts said. "Citi is big, it's widely followed, and when people see confidence in it, it should mean something," said Bo Brownstein, an analyst covering financial stocks at Cambiar Investors in Denver, Colorado. The dollar rose against the yen on the news, and Japanese bank stocks also rallied. In Tokyo trading, Citi [C 30.7 --- UNCH (0%) With the investment, Abu Dhabi will be Citi's largest shareholder. The investment reflects the increasing financial might of oil-producing countries, which have benefited from the five-fold increase in the price of petroleum over the last five years. Dubai International Capital, a private equity firm owned by the ruler of Dubai, said on Monday it made a "substantial investment" in Sony. It had said in July it was ready to spend up to $1.5 billion in Japan. A separate Abu Dhabi entity earlier this month bought a stake in U.S.-based chip maker Advanced Micro Devices [AMD 10.27 --- UNCH (0%) Abu Dhabi Investment Authority manages the surplus revenues of the government of Abu Dhabi, the world's sixth-largest oil exporter. Standard Chartered estimated in September its assets were worth $650 billion. Both Dubai and Abu Dhabi are members of the United Arab Emirates Federation. Sir Win Bischoff, Citi's interim chief executive said in a statement on Monday: "This investment, from one of the world's leading and most sophisticated equity investors, provides further capital to allow Citi to pursue attractive opportunities to grow its business." State-run funds are keen for stakes in global banks, which can benefit from the development of emerging markets, a person familiar with the funds said. Citi operates in over 100 countries, and has boosted its investments in emerging markets over the last 12 months, including buying a Turkish brokerage house and a commercial and retail bank based in El Salvador. More than $100 Billion Acquisitions in general have taken up some $25 billion of Citi capital over the last year, according to CIBC World Markets analyst Meredith Whitney. Combined with writedowns in the third quarter and expected future writedowns, Citi may have to cut its dividend to replenish its capital, Whitney wrote on Oct. 31. She estimated that Citi would need another $30 billion of capital.
Citi said on Nov 4 it does not plan to cut its dividend. On the same day, Citi said it may take $8 billion to $11 billion of additional writedowns in the fourth quarter, and that its chief executive Charles Prince was resigning. Bischoff was named interim chief executive, and Citi is looking at permanent replacements. Citi is also taking early steps to cut staff and reduce costs, according to press reports. Citi said earlier this year it was cutting about 5 percent of its staff, or 17,000 jobs. On Monday, Citi shares closed at $29.80 on the New York Stock Exchange, falling below $30 for the first time in more than five years amid mounting concerns of further losses and writedowns. Citi's market value has fallen by more than $100 billion this year. U.S. Senator Charles Schumer, who opposed Dubai Ports World's plan to purchase assets at six U.S. ports and raised questions about Borse Dubai's plans to swap stakes with Nasdaq [NDAQ 43.4 --- UNCH (0%) Abu Dhabi displaces Saudi Prince Alwaleed bin Talal as Citi's largest shareholder. Prince Alwaleed acquired his Citi stake in 1991 when the bank struggled with Latin American loan losses and the U.S. real estate market collapse, and his shares in the banks were worth some $6 billion earlier this month. Last month, Bear Stearns [BSC 91.04 --- UNCH (0%) Bear Stearns had also been battered by the subprime mortgage crisis, and many investors had hoped its tie-up with a foreign bank would include a cash infusion. Just a Regular Shareholder Under terms of Citi's agreement, the Abu Dhabi Investment Authority will have no special rights of ownership or control and no role in the management or governance of the bank, including no right to name board members. The Abu Dhabi Investment Authority is buying mandatory convertible securities that can be converted into Citi stock in 2010 and 2011 at prices ranging from $31.83 to $37.24 per share. The number of shares the investment group receives will adjust based on Citi's share price, with a higher share price giving the investor fewer shares. The securities will also pay a fixed coupon of 11 percent per year, payable quarterly. That may seem steep, but after accounting for the fact that 60 percent of that coupon is tax-deductible, the coupon rate is similar to the dividend rate on Citi's shares, a person familiar with the matter said. The investment is expected to close within the next several days, Citi said. 11月26日 Bu Kriz, O KrizBu Kriz, 'O Kriz'...Ergin Yıldızoğlu (Cumhuriyet 26.11.2007) The Band Plays OnCurrency Twilight ZoneMike Shedlock / Mish Nov 26, 2007 Questions about reserve currency status are being raised in Bet your bottom dollar tensions will follow. Europe has finally had enough of America's "benign neglect" dollar policy. As a large economic area, with a floating exchange rate, the eurozone suffers most. Over the past seven years, the single currency has risen by a shocking 82 per cent against the greenback. That's hammered eurozone exports - provoking serious trade disputes between the EU and US, the world's two biggest trading blocks. No wonder French President Nicolas Sarkozy describes America's drooping dollar as "a precursor to economic war".Sword of Damocles Will Europe intervene in the currency markets? That is the question I am asking as Airbus eyes radical moves as euro nears $1.50. Plane maker Airbus plans to introduce radical measures to prevent the surge in the euro from throttling the company. According to a report in German newspaper Der Spiegel, Airbus chief executive Tom Enders had admitted that the maker of the A380 superjumbo may face "massive losses" as the euro heads toward $1.50.Exchange Rate Twilight Zone I have to laugh at this comment "The euro zone doesn't really have anyone in charge of exchange rates." Is every country supposed to have a currency czar dictating the value of its currency? Exactly how is this supposed to work? The following example should clarify the picture. Twilight Zone Picture
Intervention action by Europe to strengthen the dollar would lead to an accumulation of dollars problem in Europe compounding the problem of accumulation of dollar reserves by China and Japan. A further complication is the oil producers are dumping dollars in mass to exchange for Euros. Obviously the top three points are a mess in and of themselves. Intervention by the EU would make matters worse and I have left out potential reactions by Japan, China and the UK as well, should the ECB attempt intervention. Exchange Controls Are Not The Answer The above should make it very clear that exchange controls are not the answer. However, that is not stopping the question: Will Europe impose exchange controls to head off disaster? The die is now cast. As the euro brushes $1.50 against the dollar, it is already too late to stop the eurozone hurtling into a full-fledged economic and political crisis. We now have to start asking whether the EU itself will survive in its current form.My Comment: Talk of the EU breaking up is misguided even as the problems facing the EU are dramatically understated. Portfolio inflows into the eurozone reached a record EUR46.2bn in September. China, Asian wealth funds, Petrodollar sheikdoms, and now even Nigeria, have all joined a stampede into euros, utterly disregarding the underlying reality that Europe is in no better shape the United States itself. It is in worse shape, though this is disguised by the cycle. It is much worse in terms of economic dynamism and demographics.My comment: On that I agree. The Euro is horribly overvalued vs. the US dollar. However, attempts at currency controls always fail unless they are in alignment with the current trend. Thus, should the EU attempt currency intervention, the result could easily see Europe swamped by counter action from the oil producing states who want to diversify out of dollars without crashing it. Exchange controls are the nuclear option, but .... French President Nicolas Sarkozy certainly seems inclined to go this route. ....While it may be idle speculation as to what the exact trigger is that causes the collapse of Bretton Woods II and with it US dollar hegemony, in due time the US will lose reserve currency status. The sooner it happens the better it will be for everyone. In the meantime it is clear the US, EU, China, and Japan are all engaged in economic warfare. Mistakes will be costly and the EU would be making a big mistake to retaliate with currency intervention. All such actions would accomplish would be to increase dollar reserves in the EU that it would not know what to do with. Simply put, currency intervention cannot be the solution, given that currency intervention is one of the problems. The eventual way out is easy to see. What needs to happen is for countries to refuse to finance US debt in dollars. But remember this is the twilight zone. Taking that action would cause non-dollar currencies to rise. Virtually no country wants its currency to rise for fear of losing exports to the now failing model of US consumers buying stuff they do not need and cannot afford. So the band plays on, just as it did on the sinking Titanic. Life would be much simpler under a gold standard than it is in the currency twilight zone. http://globaleconomicanalysis.blogspot.com Tüketici ve Sanayici GeçinenlereBelirsizlik artınca Merkez uyarmaya devam ediyor
Erdal Sağlam Hürriyet, 26.11.2007
DÜNYA ekonomisindeki belirsizlik, her hafta yaşanan yeni bir gelişmeyle, yoğunlaşmaya, piyasadaki aktörlerin kafasını karıştırmaya devam ediyor. Bu belirsizlik içinde ihracatçı ve bazı sanayiciler, yine bilindik şikáyetlerini dile getirirken, Merkez Bankası yönetimi de ısrarla fiyat istikrarının önemini anlatmaya devam ediyor. Merkez Bankası Başkanı Durmuş Yılmaz geçtiğimiz hafta sonunda yine "yüksek faiz-düşük kur" şikáyetini ileten sanayicilere, öncelikli görevlerinin fiyat istikrarını sağlamak olduğunu tekrarlamış ve faizleri Türkiye’den daha düşük olan ülkelerin paralarının da güçlendiğine dikkat çekmiş. Bizce tartışmaya açık bir söylemle, Yılmaz, sanayi ve üretimin önünü açmak için faiz oranlarını indirdiklerini belirtmiş ve dünyada faiz ve enflasyon oranları artarken, Türkiye’de yaşanan tersi trendin nedeninin geçen yıl yaptıkları 4 puanlık faiz artışı olduğunu ifade etmiş. Yılmaz, ABD mortgage piyasaları ve hedge fonlarla ilgili krizin maliyetinin ne olacağının belli olmadığını hatırlatmış. Krizin dış piyasalarda iflaslara ve el değiştirmelere yol açıp açmayacağının net olarak bilinmediğini de vurgulayarak, iş dünyasına, "Önümüzdeki dönemde daha dikkatli olmak gerekiyor" uyarısında bulunmuş. TERS ALGILAMALAR Gerçekten de dışarıya baktığınızda, neredeyse her geçen gün, birbiriyle ters algılamalar da yaratan, inişli çıkışlı, yönü belli olmayan bir trend görüyorsunuz. Türkiye’de bu kadar çok harekete alışmış olan yerli piyasa oyuncuları, dünyadan da benzer hareketler geldiğinde biraz şaşırıyorlar. Ancak gördüğümüz kadarıyla, özellikle 2001 krizini yaşayan bizim bankacılar, yabancı oyunculara kıyasla çok daha soğukkanlı olabiliyorlar. Kasım ayını toplantı yapmadan geçiren Amerikan Merkez Bankası’na (FED) ilişkin beklentiler gün be gün değişiyor. Ekim toplantısından sonra olmayan yeni faiz indirimi beklentisi, ABD şirket açıklamaları ardından yeniden hortladı. Hatta bir ara ipin ucu kaçırıldı; Aralık’taki rutin toplantıyı beklemeden FED’in olağanüstü toplantı yapıp faiz indirebileceği söylenmeye başladı. Ama geçen hafta açıklanan FED tutanaklarından sonra faiz indirimi olasılığı yine azalmış görünüyor. Tutanakların açıklaması "FED ekonomi için kötümser bir tablo çizse de faiz indirimlerinin devam etme konusunda çok da istekli görünmüyor" yorumlarına yol açtı. SANAYİCİ DE TEMKİNLİ OLMALI 2008 yılında ekonomide yavaşlama bekleyen FED, önümüzdeki yıl için büyüme oranı tahminini Haziran’da açıkladığı yüzde 2.5-2.75 aralığından, yüzde 1.8-2.5 aralığına indirdi. Ayrıca FED üyelerinin büyüme konusunda aşağı yönde risklerin Ekim’de, Eylül’e kıyasla daha da artmış olduğu tespitinde bulundukları açığa çıktı. Dolar, hem Euro hem de Yen’e karşı değer kaybederken, faizlerdeki artışa Avrupa da katıldı. 16 Kasım günü yüzde 4.98 olan dolar faizi geçtiğimiz hafta sonunda yüzde 5.04’e yükselirken, bir süredir ılımlı seyreden Euro faizi ise 8 baz puanlık yükselişle haftayı yüzde 4.70’ten tamamladı.... Altın fiyatları, ham petrol fiyatları geçen hafta içinde de yükselmeye devam etti. Dünyada, görüldüğü gibi; her açıdan fiyatların yükselmeye devam ettiği gözleniyor. Buna karşılık içeride, geçen hafta açıklanan beklenti anketine göre enflasyon beklentilerindeki kötüleşmenin orta ve uzun vadeye yayıldığı gözleniyor, tahvil ve bono faiz beklentileri de yukarı yönde değişiyor. TEMKİNLİ OLMA İHTİYACI Merkez Bankası Başkanı Durmuş Yılmaz’n da dediği gibi; dünyadaki trend ortada ve içeride çok daha temkinli olunması gereken bir dönem yaşanıyor. Bankacılara baktığımızda, bir yandan iyimserliklerini korumak istediklerini gözlüyoruz ama bir yandan da belirsizliğin sonunda gelebilecek tehlikelere de hazırlıklı yakalanmak zorunda olduklarını düşünüp, buna göre davranmaya çalışıyorlar. Bizce sanayiciler ve reel sektörün de çok iyi hesap yapması gereken bir dönemdeyiz. Yudum Yudum Uyuduk
Zeytinyağı BilmecesiZeytinyağında stok var ama ithalat isteniyorGüngör Uras
Milliyet, 26.11.2007 Bugünlerde Ege Bölgesi'nde zeytinciler işi gücü bırakmış, ülkeye ham zeytinyağı ithal edilsin mi, edilmesin mi konusunu tartışıyor. Yağlık zeytin özel işlemle eziliyor. Yağı çıkarılıyor. O yağa ham yağ deniliyor. Ham yağ özel işlemden geçirilerek işlenince rafine yağ oluyor. Ham yağ dökme olarak (varillerle satılıyor). Rafine yağın bir bölümü kutulanıyor. Markalı olarak satılıyor. Kutulu ve markalı satılamayan rafine yağ da dökme olarak (varillerle) ihraç ediliyor. Bu yağı bizden alanlar tekrar işlemden geçiriyor. Kutuluyor. Kendi markalarıyla dünya pazarında satıyor. Bizim zeytinyağı ihracatçıları ham yağ da ihraç ediyorlar ama, genelde dış ülkelere rafine edilmiş işlenmiş yağ satıyorlar. Bizim yurtiçinde zeytinyağı tüketimimiz yılda 65-70 bin ton. Kişi başına ortalama 1 kg zeytinyağı tüketiyoruz. Zeytinyağı piyasasını çok iyi izleyen dostum Ali Ekber Yıldırım'ın derlediği bilgilere göre, 2005-2006 sezonunda 44 bin 657 ton, 2006-2007 sezonunda 38 bin 126 ton zeytinyağı ihraç ettik. 2007-2008 sezonunda ihracat için yaklaşık 40 bin ton zeytinyağına ihtiyaç var. Arz talebi karşılıyor Demek ki, iç tüketime 70 bin ton, ihracata 40 bin ton olmak üzere toplam 110 bin ton zeytinyağı talebi söz konusu. Geçen yıl zeytinin "var yılı" idi. Depolarda 60 bin ton zeytinyağı kaldı. Bu yıl zeytinde "yok yılı". Zeytin hasadı başladı. Hasat edilen zeytine bakılarak bu "yok yılı"nda zeytinyağı üretiminin ne olacağı konusunda sağlıklı tahminler yapmak mümkün. Ancak 2 farklı tahmin var. İzmir Ticaret Borsası patronajındaki heyet 2007 zeytinyağı rekoltesini 72 bin ton olarak açıkladı. Ege Zeytin ve Zeytinyağı İhracatçıları Birliği'ne göre ise rekolte 84 bin ton. Geçen yıldan kalan stok eklenirse, zeytinyağı arzı 132 bin ton ile 144 bin ton arasında olacak. Bu arz da toplamı 110 bin ton olan iç ve dış talebi fazlasıyla karşılayabilecek. İhracatçı ithalat istiyor Tablo bu iken, ihracatçılar, "İç piyasada ham yağ pahalı... İhraç edecek ham yağ bulamıyoruz. Başka ülkelerden ham yağ ithal edelim. Ham yağı rafine ederek ihraç edelim" diyerek Dış Ticaret Müsteşarlığı'na başvurdu. Tarım ve Sanayi bakanlıkları da "evet" der ise ham zeytinyağı ihraç edilecek. Tariş ve üreticiler, hasat mevsimi başında bu ithalat tartışmasının başlatılarak iç piyasada fiyatların aşağıya çekilmesinin hedef alındığını söylüyorlar. Natürel sızma zeytinyağının tonu İtalya'da 3.700, Yunanistan'da 3.780, İspanya'da 2.632, Suriye'de 2.521 euro. Türkiye'de kaliteli Körfez bölgesi (Ayvalık, Edremit) yağları 3.180, güney Ege (Aydın, Muğla) yağları 2.600 euro. Avrupalı üretici kiloda 1 euro destek primi alıyor. Bizim üreticiye 11 krş destek pirimi veriliyor. Ali Ekber Yıldırım uyarıyor. Diyor ki, son yıllarda bizim yağ üreticilerimiz zeytinyağına önemli yatırımlar yaptı. Dökme zeytinyağı satarken katma değeri yüksek, kaliteli, ambalajlı, markalı ihracat artmaya başladı. Bizden dökme alan, bunu kutulayarak yüksek fiyatla satan Avrupalı alıcılar için çalışan ihracatçı tüccar pazarı kaybetmemek arayışında. Onların derdi, Türk zeytinyağının dökme olarak ihracatının devam etmesi. Kavga buradan çıkıyor. guras@milliyet.com.tr Adı Konmamış Yeni DönemDollar Displaces Yen, Franc as Favorite for Funding Carry Trade By Bo Nielsen The Bloomberg, Nov 26, 2007 Using the dollar to pay for purchases of currencies with higher yields is proving to be the most profitable trade in the foreign-exchange market. A basket of currencies including the British pound, Brazilian real and Hungarian forint financed with dollars returned 17 percent this year, compared with 9 percent when funded in yen and 7 percent in Swiss francs, according to data compiled by Bloomberg. Falling U.S. interest rates and increasing volatility in the yen and franc are making the trade even more appealing. ``With the dollar giving the appearance of being in free fall, it increases the attractiveness of using the currency to fund investments,'' said Avinash Persaud, chairman of London- based Intelligence Capital Ltd., which advises hedge funds that manage more than $89 billion. ``That process will only add more fuel to the decline.'' The last time the U.S. currency was used for so-called carry trades was in 2004, when the Federal Reserve's target rate for overnight loans between banks was 1 percent, said Niels From, a strategist at Dresdner Kleinwort in Frankfurt. Since then, it has weakened 18 percent on a trade-weighted basis, according to a Fed index. The International Monetary Fund says the dollar made up 64.8 percent of central banks' currency reserves in the second quarter, down from 71 percent in 1999. Investors are borrowing dollars and using the money to buy assets in countries with higher interest rates even though U.S. borrowing costs are 4 percentage points more than the Bank of Japan's and 1.75 percentage points above the Swiss National Bank benchmark. In carry trades, speculators get funds in a country with low borrowing costs and invest in one with higher returns, earning the spread between the two. Housing Slump Speculation against the dollar increased as the worst housing slump since 1991 forced policy makers to cut the benchmark rate twice to keep the economy out of recession. The currency depreciated in five of the past six years leading central bankers from the Arabian Peninsula to China to diversify their reserves and increase holdings of non-U.S. assets. The dollar dropped 1.2 percent last week against the euro to $1.4837, and has weakened 12 percent so far in 2007. The U.S. currency has depreciated 10 percent versus the yen this year, including 2.5 percent last week to 108.35 yen. It fell to a record 1.089 Swiss francs on Nov. 23. Investors may switch more than $100 billion of borrowing from yen or francs into dollars in the next two years for carry trades said Jens Nordvig, a strategist with New York-based Goldman Sachs Group Inc., the biggest U.S. securities firm by market value. Real, Won, Pesos The value of futures contracts held this month by hedge funds and traders betting against the dollar was a record $33.9 billion more than contracts that profit from a gain, according to New York-based Morgan Stanley, the second-biggest U.S. securities firm. Pacific Investment Management Co., which oversees the world's biggest managed bond fund, is selling dollars against the Brazil real, Mexican peso, Korean won and Singapore dollar. ``When we think about currencies on a three- to five-year basis we're very bullish on emerging markets versus the U.S. dollar,'' said Andrew Balls, who helps manage $80 billion for Newport, California-based Pimco. ``That view is only reinforced when you look at interest-rate differentials.'' The real rose 18.5 percent this year and Singapore's currency strengthened 6.4 percent, while the won was little changed. The Mexican peso fell 1.4 percent, the only one of the 16 most-traded currencies to do worse in the foreign exchange market. Interest Rates Pimco, a unit of Munich-based insurer Allianz SE, expects the Fed to lower borrowing costs to around 3 percent, from 4.5 percent. Policy makers have reduced the rate by 0.75 percentage point since Sept. 18. Interest-rate futures on the Chicago Board of Trade show investors see a 58 percent probability that the U.S. benchmark will drop to 3.75 percent by March 31. Switzerland's key rate is 2.75 percent and Japan's is 0.5 percent. The dollar produced a positive carry, the combined gain from the difference between interest rates and changes in foreign exchange, against 20 of the 24 most actively traded emerging market currencies this year, Bloomberg data show. The franc was positive against 12 and the yen versus 14. Using a currency to finance bets can drive down its value. Former Japanese vice finance minister Hiroshi Watanabe said in May that one reason the yen had fallen to a record low against the euro was because it was funding about $500 billion of carry trades. Attracting Speculators The dollar attracted speculators when the Fed cut the target rate from 6.5 percent in 2001 to 1 percent in June 2003 and kept it there for a year, said Dresdner Kleinwort's From. When the Fed started to raise borrowing costs, traders fled. The U.S. rate surpassed the European Central Bank's benchmark in December 2004, helping the dollar gain almost 13 percent versus the euro the following year. Strategists say the U.S. currency will recover because the economy is adding jobs and producing faster inflation, limiting the Fed from reducing borrowing costs. The dollar will rebound to $1.42 per euro and to 113 yen by the end of June, according to the median forecast of 41 analysts surveyed by Bloomberg. The Fed will probably cut its target a quarter-point to 4.25 percent in the next three months and leave it there through 2008, according to a separate survey from Nov. 1 to Nov. 8. The U.S. economy will accelerate to a 2 percent annual growth rate next quarter, from the current 1.5 percent, the survey showed. ``We're actually bullish the U.S. dollar,'' said Jack McIntyre, who helps manage $25 billion at Brandywine Global Investment Management LLC in Philadelphia. ``As long as the world doesn't fall off a cliff, we will see people continue to play the carry trades and the yen will be the premier funding currency.'' `Safer Source' The dollar is becoming more attractive for speculators concerned that higher volatility will reduce profits from bets funded in yen. An increase in price swings dents returns by raising the risk that gains from the spread between interest rates will be erased by foreign-exchange losses. The yen appreciated 8.7 percent against the dollar since Oct. 15 as implied volatility on one-month dollar-yen options climbed to 14.97 percent from 7.47 percent. Dealers quote implied volatility, a gauge of expectations for currency moves. ``The dollar becomes a safer source of funding'' as volatility rises, said Maxime Tessier, head of foreign exchange in Montreal at Caisse de Depot et Placement, which manages $151 billion. To contact the reporter on this story: Bo Nielsen in New York at Bnielsen4@bloomberg.net TurnikeInvestors fear new round of turmoilBy Gillian Tett and Jennifer Hughes in London and Krishna Guha in Washington
The Financial Times, Nov. 25, 2007
Investors fear the financial system is moving into new credit turmoil, which could create further losses for financial institutions - and potentially hurt sentiment in the "real" economy. Credit markets are trading at levels which imply that investors assume that the US is heading for a recession, bank analysts and economists have warned. "Recession is getting priced in," said Jan Loeys, economist at JPMorgan, adding that markets went into "virtual panic mode" last week. "Pressure is building for central banks to become a lot more active and vocal [this] week if they want to avert a collapse in credit markets." Swaps spreads rose sharply in UK gilts and US Treasuries, amid a flight to quality and fear of bank defaults. Spreads on high-yield corporate bonds and the yen-dollar exchange rate also leapt dramatically, while liquidity evaporated in many corners of the credit markets. Peter Sutherland, chairman of both Goldman Sachs International and BP, joined those voicing concern. "The US economy is in a mess," he told TV3, an Irish TV channel, yesterday. "There is a whole big issue...which has not fully played out in regard to providing credit and liquidity to institutions, so I think it is a dangerous period for the world. I think we are going to go through next year, certainly the first half of next year, with considerable traumas." Rising market tension prompted the European Central Bank to announce on Friday that it would provide fresh emergency injections of liquidity from this week. In recent days, liquidity has evaporated in parts of the European credit markets, as banks have become nervous about trading with each other. Investors are watching to see whether the US Federal Reserve will also provide additional liquidity into the US system. Analysts speculate that the Fed could extend the scale or duration of long-term open market operations, lower the discount rate at which it lends directly to banks, or even announce more radical steps. Ben Bernanke, Fed chairman, is also likely to reassure the market that the US central bank recognises the threat to growth posed by the relapse. One factor undermining investor confidence is that the projected size of this year's credit shock is now rising rapidly. The US government initially forecast $50bn losses on subprime securities. However, investment banks now expect $200bn-$500bn subprime losses - and additional massive losses in other debt markets, such as credit card loans. Lawrence Summers, former US Treasury secretary, writing in today's Financial Times, says: "The odds now favour a US recession that slows growth significantly on a global basis." A second problem is continued deep uncertainty about which institutions hold these losses. This has prompted the six biggest audit firms to outline a common approach to the valuation of banks' securities in their end-of-year results. Siz Darbe Nedir Bilir Misiniz?Vakit'in Generalli bulmacasının şifresi: Siz Kral DeğilsinizHürriyet, ANKA, 26.11.2007 Yaptığı birçok haberle "tartışma konusu" olan ve en son Danıştay üyelerine yapılan saldırıda "hedef gösterdiği" iddia edilen Anadolu’da Vakit gazetesi, bugün yayınladığı sayısındaki bulmacayla dikkat çekti. |
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| Avrupa Merkez Bankası (ECB) dünyada artan likidite sıkıntısı nedeniyle piyasaya para enjekte edeceklerini açıkladı. Likiditedeki sıkıntıyı kredi pazarındaki durgunluğa bağlayan ECB Başkanı Jean-Claude Trichet, "Önümüzdeki hafta şu an miktarını bilmediğimiz oranda para enjekte edebiliriz. Bunu yıl sonuna kadar ara ara yapabiliriz" dedi. ECB’nin bu yeni müdahale açıklaması, bankalararası piyasada 3 aylık faiz oranlarında 8 gün üst üste yaşanan artışların ardından geldi. YENİ DÖNEM BAŞLIYOR: Yapısal anlamda değişikliklere yol açacak yeni finansal krizler beklediğini belirten Trichet, kredileri güvenlik altına almaya dayalı yeni bir dönemin başlayacağını da söyledi. ECB’nin bu açıklamaları, Euro’nun dolar karşısında 1.4966 seviyesine kadar çıkmasının ardından geldi. Euro para sisteminin, zorlu piyasa koşullarıyla başa çıkma yeteneğini kanıtlamasının da son olaylardan çıkarılması gereken bir ders olduğunu belirten Trichet "Son olaylar, kredi derecelendirme kuruluşlarının yapılandırılmış kredi piyasalarında oynadıkları önemli rolü bir kez daha vurgulamıştır" dedi. |
Tuğlasına Kiremitine Dokunmadan
Have We Seen Worse of Mortgage Crisis?
NEW YORK - When Domenico Colombo saw that his monthly mortgage payment was about to balloon by 30 percent, he had a clear picture of how bad it could get.
His payment was scheduled to surge by an extra $1,500 in December. With his daughter headed to college next fall and tuition to be paid, he feared ending up like so many neighbors in Fort Lauderdale, Fla., who defaulted on their mortgages and whose homes are now in foreclosure and sporting "For Sale" signs.
Colombo did manage to renegotiate a new fixed interest rate loan with his bank, and now believes he'll be OK _ but the future is less certain for the rest of us.
In the months ahead, millions of other adjustable-rate mortgages like Colombo's will reset, giving them a higher interest rate as required by the loan agreements and leaving many homeowners unable to make their payments. Soaring mortgage default rates this year already have shaken major financial institutions and the fallout from more of them, some experts say, could spread from those already battered banks into the general economy.
The worst-case scenario is anyone's guess, but some believe it could become very bad.
"We haven't faced a downturn like this since the Depression," said Bill Gross, chief investment officer of PIMCO, the world's biggest bond fund. He's not suggesting anything like those terrible times _ but, as an expert on the global credit crisis, he speaks with authority.
"Its effect on consumption, its effect on future lending attitudes, could bring us close to the zero line in terms of economic growth," he said. "It does keep me up at night."
Some 2 million homeowners hold $600 billion of subprime adjustable-rate mortgage loans, known as ARMs, that are due to reset at higher amounts during the next eight months. Subprime loans are those made to people with poor credit. Not all these mortgages are in trouble, but homeowners who default or fall behind on payments could cause an economic shock of a type never seen before.
Some of the nation's leading economic minds lay out a scenario that is frightening. Not only would the next wave of the mortgage crisis force people out of their homes, it might also spiral throughout the economy.
The already severe housing slump would be exacerbated by even more empty homes on the market, causing prices to plunge by up to 40 percent in once-hot real estate spots such as California, Nevada and Florida. Builders like Chicago's Neumann Homes, which filed for bankruptcy protection this month, could go under. The top 10 global banks, which repackage loans into exotic securities such as collateralized debt obligations, or CDOs, could suffer far greater write-offs than the $75 billion already taken this year.
Massive job losses would curtail consumer spending that makes up two-thirds of the economy. The Labor Department estimates almost 100,000 financial services jobs related to credit and lending in the U.S. have already been lost, from local bank loan officers to traders dealing in mortgage-backed securities. Thousands of Americans who work in the housing industry could find themselves on the dole. And there's no telling how that would affect car dealers, retailers and others dependent on consumer paychecks.
Based on historical models, zero growth in the U.S. gross domestic product would take the current unemployment rate to 6.4 percent. That would wipe out about 3 million jobs from the economy, according to the Washington-based Economic Policy Institute.
By comparison, in the last big downturn between 2001-03 some 2 million jobs were lost, according to the Labor Department. The dot-com bust early this decade decimated the technology sector, while the Sept. 11, 2001, terror attacks hurt the transportation and allied industries. Economists said the country was officially in recession from March to November of 2001, but the aftermath stretched to 2003.
There is increasing evidence that another downturn has begun.
Borrowers who took out loans in the first six months of this year are already falling behind on their payments faster than those who took out loans in 2006, according to a report from Arlington, Va.-based investment bank Friedman, Billings Ramsey. That's making it even harder for would-be buyers to get new mortgages _ a frightening prospect for home builders with projects going begging on the market, and for homeowners desperate to unload property to avoid defaulting on their loans.
Meanwhile, the number of U.S. homes in foreclosure is expected to keep soaring after more than doubling during the third quarter from a year earlier, to 446,726 homes nationwide, according to Irvine, Calif.-based RealtyTrac Inc. That's one foreclosure filing for every 196 households in the nation, a 34 percent jump from just three months earlier.
Such data suggests more Americans could lose their homes than ever before, and those in peril are people who never thought they'd welsh on a mortgage payment. They come from a broad swath _ teachers, pharmacists, and civil servants who were lured by enticing mortgage terms.
Some homebuyers gambled on interest-only loans. The mortgages, which allowed buyers to pay just interest at a low rate for two years, were too good to pass up. But with that initial term now expiring, many homeowners find they can't make the payments. The hopes that went along with those mortgages _ that they'd be able to refinance because the equity in their homes would appreciate _ have been dashed as home prices skidded across the country.
"It's been said a lot of people have been using their homes as ATM machines," said Thomas Lawler, a former official at mortgage lender Fannie Mae who is now a private housing and finance consultant. "The risk has a lot of tentacles."
This example illustrates the distress many homeowners are in or will find themselves in: A subprime adjustable-rate mortgage on a $400,000 home could have payments of about $2,200 a month, with borrowers paying 6.5 percent, interest only. When the teaser period expires, that payment becomes $4,000, with the homeowner paying 12 percent and now having to come up with principal as well as interest.
Minneapolis resident Chad Raskovich found himself in a such a situation. He hoped _ it turned out, in vain _ to gain more equity in his home and that a strong record of payments would enable him to secure a better loan later on.
"It's not just me, it's a lot of people I know. The housing market in the Twin Cities has dramatically changed for the worse in the years since I purchased my home. Now we're just looking for a solution," he said.
Colombo, who lives in the planned community of Weston just outside Ft. Lauderdale, said the reset on his home would have "destroyed' his financial situation. He went to Mortgage Repair Center, one of hundreds of debt counselors trying to bail out desperate homeowners, to work with his lender.
"But many people in my neighborhood didn't get help, and some have literally just walked away from their homes," said Colombo. "There are over 133,000 homes on the market in Broward-Miami-Dade counties, and some of them were actually abandoned. People in this situation don't like to talk about it, and end up getting hurt because they don't."
Many Americans are unaware that a borrower defaulting on a loan can have an impact on everyone else's well-being and that of the nation. After all, the amount of mortgages due to reset is just a fraction of the United States' $14 trillion economy.
But the series of plunges that Wall Street has suffered in past months prove that no one is immune when mortgages turn sour.
Today's financial system is interconnected: Mortgages are sold to investment firms, which then slice them up and package them as securities based on risk. Then hedge and pension funds buy up such investments.
When home prices kept rising, these were lucrative assets to own. But the ongoing collapse in housing prices has set off a chain reaction: Lenders are tightening their standards, borrowers are having a harder time refinancing loans and the securities that underpin them are in jeopardy.
This has resulted in more than $500 billion of potentially worthless paper on the balance sheets of the biggest global banks _ losses that could spill into the huge pension and mutual funds that also invest in these securities and that the average worker or investor expects to depend on.
There's more pain left for Wall Street: "We're nowhere close to the end of the collapse," said Mark Patterson, chairman and co-founder of MatlinPatterson Global Advisors, a hedge fund that specializes in distressed funds.
"I just assumed banks could stomach these kind of losses," said Wendy Talbot, an advertising executive when asked about the subprime crisis outside of a Charles Schwab branch in New York. "I guess you don't really pay attention to things until your forced to. ... You put out of your mind the worst things that can happen."
The subprime wreckage could dwarf the nation's last big banking crisis _ the failure of more than 1,000 savings and loans in the 1980s. The biggest difference is that problems with S&Ls were largely contained, and the government was able to rescue them through a $125 billion bailout.
But this situation is far more widespread, which some experts say makes it more difficult to rein in.
"What really makes this a doomsday scenario is where would you even start with a bailout?" housing consultant Lawler asked.
Sen. Charles Schumer, D-N.Y., a key member of Senate finance and banking committees, said borrowers are the ones who need relief. The playbook to bail out the economy would not be applied to the banks and mortgage originators, but money could be funneled through non-profit organizations to homeowners that need help, he said in an interview with The Associated Press.
"There is a worst-case scenario because housing is the linchpin of our economy, and more foreclosures make prices go down, that creates more foreclosures, and creates a vicious cycle," Schumer said. "You add that to the other weakness in the economy _ on one end is the home sector and the other is the financial sector _ and it could create a real problem."
He also believes Federal Reserve Chairman Ben Bernanke should do more to help the economy. Bernanke said in recent comments he has no direct plans to bail out the mortgage industry, but to instead offer relief through cheap interest rates and further liquidity injections into the banking system.
There's also been talk of letting government-backed lenders like Fannie Mae and Freddie Mac buy mortgages of as much as $1 million from lenders, pay the government a fee for guaranteeing them and then turn them into securities to be sold to investors. This would extend the government's support, and its exposure, to the mortgage market to help alleviate stress.
Either way, the impact of a fresh round of subprime losses remains of paramount concern to economists _ especially since there's little certainty about how it would ripple through the U.S. economy.
"We all know that more hits from these subprime loans are coming, but are having a devil of a time figuring out how it will happen or how to stop it," said Lawler, who was once chief economist for Fannie Mae.
"We've never been in this situation before."
Parasal Kuraklık
Trading in derivatives slows to a trickle
By David Oakley and Sarah O’Connor
The Financial Times, Nov 23, 2007
Liquidity in some of the world’s biggest derivatives markets has dried up this week amid increasing fears over the health of the international financial system.
Over-the-counter trading in derivatives of equities, credit and interest rates have all seen much lower volumes as problems in financial markets have prompted investors to sit on the sidelines.
Analysts said flows had slowed to a trickle this week – even lower than in the summer when the credit squeeze was at its peak – as investor appetite for risk had diminished amid talk of potential bank defaults.
Although Thursday is typically slow because of the US Thanksgiving holiday, bankers said the week had been unusually light because of the growing fears that a big bank could go under as a result of losses in the US subprime mortgage and structured finance markets.
David Brickman, head of European credit strategy at Lehman Brothers, said: “Generically, trading volumes [in credit derivatives] are a lot lower than they were in the summer.
“The theory is that if people can’t trade bonds, they’re going to go to CDS [credit default swaps]. But in an environment like this you can’t get liquidity on single-name CDS either. That just leaves the indices.”
Another credit analyst said: “A lot of people have written off this year and hung up their boots until the new year. There’s no big bond issues in the primary market or activity in the secondary market. You can’t make money when there’s no liquidity.”
These markets are usually highly liquid, turning over huge volumes every day. Outstanding contracts in equity, credit and interest rate derivatives amount to $400,000bn, dwarfing the $60,000bn in the value of share trading on the world’s 10 biggest stock exchanges, according to the latest figures from the Bank for International Settlements.
Nino Kjellman, head of equity derivatives Europe at Deutsche Bank, added: “Liquidity has severely declined. In the current environment, appetite for risk is rare. Either people are sitting on the sidelines waiting for more visibility or, approaching year-end, they are reluctant to bet on risk.
“We see that investors are increasingly prepared to lower their risk exposure, which creates an imbalance and causes liquidity to dry up.”
Significantly, equity derivatives volumes have risen on the exchanges, such as Liffe and Eurex. Analysts said this was because exchanges tend to be used for hedging rather than speculative bets.
A contract at an exchange also has no links to the beleaguered banking sector; unlike a bilateral over-the-counter trade, when investors could lose all their money if the bank were to default, even if they were on the right side of the trade.
Interest rate derivatives volumes, including swaps and options where traders take positions on the monetary policy outlook, have also been sharply lower this week. The darkening mood was reflected in the underlying money markets and stock markets, too.
US interbank money market rates hit fresh record highs as they rose for a seventh day in a row on Thursday, according to the British Bankers’ Association.
Three-month dollar Libor rose to 5.03 per cent – 53 basis points more than the Federal Reserve’s benchmark interest rate of 4.5 per cent – the highest it has ever traded above the key US lending rate.
This week, the Dow Jones Industrial Average is down 2.9 per cent, while the FTSE 100 is 2 per cent lower.
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