Market Ticker reports that a bank has borrowed $75 million at exceptionally high interest rates, suggesting that the collateral they were offering wasn't sound enough to be acceptable. And there are futures contracts being taken out that indicate some traders expect a major financial dislocation.
In other words, this bet is one that the credit markets will go supercritical.
And it wasn't made by just one firm, one speculator, or one guy.
A few months ago I pointed out that every big equity market dump - every last one of them - has started in the credit markets. It always starts there, simply because of the volume of business transacted and the sensitivity to problems. In the equity markets one company can go "boom" and it doesn't mean much. But in the credit markets "systemic risk" - that is, a refusal to trust people as a foundational principle - once it takes hold is very, very difficult to tamp back down.
Read the whole post here. And here's the evidence (source):
4 comments:
I'm betting on typo.
I guess we're back to cock-up vs conspiracy theory, like with that futures bet in September.
... but doesn't the standard deviation figure tend to support the reading of 15?
It depends on how the calculation was done!
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