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Post by jeffolie on Mar 28, 2008 17:18:48 GMT -6
UBS Reducing Value of Auction Rate Securities in Individual Accounts From the WSJ: UBS Cutting Value Of Auction-Rate Securities In Brokerage Accounts ... UBS AG is marking down the value of the securities in its brokerage customers' accounts. Until now, customers who were unable to sell securities in regularly scheduled auctions were told that the securities retained full value and would receive higher interest rates. UBS ... will mark them down this afternoon and inform clients via their online statements shortly thereafter ... The markdowns will range from a few percentage points to more than 20% ... I know investors in ARS, and their banks have been telling them they can't sell - but their principal is safe - it is just a liquidity problem. UBS is telling their customers they can't sell, and their principal is no longer safe. calculatedrisk.blogspot.com/2008/03/ubs-reducing-value-of-auction-rate.html
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Post by jeffolie on Mar 28, 2008 17:35:10 GMT -6
Auction-rate bond failures rose to about 71 percent this week, leading borrowers from Dallas and Fort Worth's airport to Ascension Health in Missouri to refinance the debt and avoid paying penalty interest rates. The number of auctions that failed to draw enough buyers to a market that also includes debt of student lenders and closed- end mutual funds increased from 69 percent last week, according to data compiled by Bloomberg. Rates are set through a bidding process managed by banks typically every seven, 28 or 35 days. States and municipalities are fleeing the auction-rate market after it began collapsing about seven weeks ago as investors balked at buying the securities on concern about the creditworthiness of bond insurers guaranteeing the debt. Auction failures have numbered in the hundreds each day since Feb. 13. www.bloomberg.com/apps/news?pid=20601087&sid=abRsV3HPMYxE&refer=home
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Post by jeffolie on Mar 28, 2008 18:16:19 GMT -6
Technology firms, which traditionally shunned debt and were thought to be relatively immune to a credit crunch, are seeing their earnings dented by holdings of auction-rate securities. Dallas telecom company MetroPCS Communications Inc. recently took an $83 million charge related to auction-rate securities, the arcane debt instruments -- once thought to be as safe as cash -- that are now nearly impossible to sell in today's jittery markets. Last Thursday, hand-held-device maker Palm Inc. said it, too, would take a charge for auction-rate holdings, though it hasn't disclosed how much. Other tech companies, including Internet-service provider EarthLink Inc., said in ... online.wsj.com/article/SB120666247023070263.html?mod=hps_us_whats_news
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Post by jeffolie on Mar 28, 2008 18:24:07 GMT -6
Oh, those were "cash equivalents" eh? Now they have a 20% haircut? Why do I think that's not going to go over very well? Yes, there are lawsuits over this already, and there will be plenty more too I suspect...... market-ticker.denninger.net/
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Post by unlawflcombatnt on Mar 29, 2008 2:51:31 GMT -6
Here's a graphic from Denninger's post showing showing consumer spending: According to Briefing.com, real consumer spending increased 0.0% in February, +0.1% in January, and -0.1% in December. A net 3-month total of 0% increase in real consumer spending is means that the 75% of GDP attributed to consumer spending was also 0 during that time. Investment spending has declined over that time, meaning that for the 3 months ending in February, GDP growth is likely 0, or below 0.
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