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The news these days is full of stories about swaps gone awry, where “awry” means “down in value for people who bet on rates going up, because rates went down.” Oakland and Libor, yes, but there’s a fun one in Floyd Norris’s column last week about this horror: The security had a mouthful of a name: Floating Rate Structured Repackaged Asset-Backed Trust Securities Certificates, Series 2005-2. It was created and sold in 2005 by Wachovia Securities, then part of Wachovia Bank, which was renamed Wells Fargo Advisors after Wells Fargo acquired Wachovia. The bank called the securities Strats, a quasi-acronym
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<a href="http://ad.doubleclick.net/jump/ifre.com/ros;type=banner_top;sz=728x90;ord=635004169256093750?" target="_blank"><img src="http://ad.doubleclick.net/ad/ifre.com/ros;type=banner_top;sz=728x90;ord=635004169256093750?" width="728" height="90" border="0" alt=""/></a> Monday, 01 April 2013 Spanish bailout saves German pain 29 June 2012 | By Gareth Gore , Sudip Roy
Investors seem to have a bottomless appetite for investment grade (IG) corporate paper. Issuers are coming to market to borrow money at ridiculously low rates. Even for the longer maturities the spreads are 1-2% above the corresponding treasury yield.
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Peek under the lid of the Dutch housing market. It’s awfully idiosyncratic in there. Also it’s doing rather badly and has been the subject of recent, significant tax reforms that will drastically change its shape in the coming decades. Right into the deep end, with this chart released last week by Statistics Netherlands (CBS):
If a gaffe is what happens when a politician accidentally tells the truth, what’s the word for when a politician deliberately tells the truth? Dutch finance minister Jeroen Dijsselbloem, the current head of the Eurogroup, held a formal, on-the-record joint interview with Reuters and the FT today, saying that the messy and chaotic Cyprus solution is a model for future bailouts. Those comments are now being walked back , because it’s generally not a good idea for high-ranking policymakers to say the kind of things which could precipitate bank runs across much of the Eurozone. But that doesn’t mean Dijsselbloem’s initial comments weren’t true; indeed, it’s notable that no one’s denying them outright. Dijsselbloem’s interview can be summed up simply: we’re not bailing out banks any more. Instead, we’re going to let them fail.