wildcard
21st April 2010, 11:22 PM
http://finance.yahoo.com/tech-ticker/article/471254/%22Punishingly-High%22-Interest-Rates-Coming-in-Second-Wave-of-Financial-Crisis%2C-Bianco-Says
Vid auto starts at link.
"Punishingly High" Interest Rates Coming in Second Wave of Financial Crisis, Bianco Says
Posted Apr 21, 2010 07:30am EDT by Peter Gorenstein in Investing, Recession, Banking
Related: xlf, ^dji, ^gspc, tlt, tbt, BRK-B, PG
As this week's earnings show, banks are once again printing money, lots of it; and most economists believe the recession is a thing of the past, even if jobs are still hard to come by.
Unfortunately, Jim Bianco President of Bianco Research in Chicago thinks this might be the eye of the storm rather than the dawn of a new day. "My fear is, history shows, we might have a second leg to the financial crisis in [the form of] a sovereign debt crisis."
The crisis is of course already visible in Greece where yields on their 10-year government bonds just hit a record high as Europe works out a bailout package for the heavily indebted nation. Meanwhile, in Portugal - another one of Europe's so-called PIIGS - bond yields are also spiking, fueling suspicion the debt crisis may spread.
With huge federal deficits, this something the U.S. also needs to worry about. "I'm not suggesting the U.S. is on the verge of defaulting," Bianco says, but the market is already signaling it's hesitation to lend to the government. Two-year notes sold by Berkshire Hathaway Inc. in February yielded less than U.S. Treasuries of similar maturity; the same is true of paper issued by Procter & Gamble, Johnson & Johnson and Lowe's, Blooomberg reports.
As growing budget crises in states and municipalities from California to New York come to a head, Bianco fears it will be too much for the Treasury to bear. "If one of these municipalities has to borrow from [the federal government] they're all going to have to borrow from them, pretty much on the same day," he speculates.
If that happens, Bianco is confident you can bet on "very high, punishingly high interest rates for the economy." And that storm may cause even more damage than the first.
Vid auto starts at link.
"Punishingly High" Interest Rates Coming in Second Wave of Financial Crisis, Bianco Says
Posted Apr 21, 2010 07:30am EDT by Peter Gorenstein in Investing, Recession, Banking
Related: xlf, ^dji, ^gspc, tlt, tbt, BRK-B, PG
As this week's earnings show, banks are once again printing money, lots of it; and most economists believe the recession is a thing of the past, even if jobs are still hard to come by.
Unfortunately, Jim Bianco President of Bianco Research in Chicago thinks this might be the eye of the storm rather than the dawn of a new day. "My fear is, history shows, we might have a second leg to the financial crisis in [the form of] a sovereign debt crisis."
The crisis is of course already visible in Greece where yields on their 10-year government bonds just hit a record high as Europe works out a bailout package for the heavily indebted nation. Meanwhile, in Portugal - another one of Europe's so-called PIIGS - bond yields are also spiking, fueling suspicion the debt crisis may spread.
With huge federal deficits, this something the U.S. also needs to worry about. "I'm not suggesting the U.S. is on the verge of defaulting," Bianco says, but the market is already signaling it's hesitation to lend to the government. Two-year notes sold by Berkshire Hathaway Inc. in February yielded less than U.S. Treasuries of similar maturity; the same is true of paper issued by Procter & Gamble, Johnson & Johnson and Lowe's, Blooomberg reports.
As growing budget crises in states and municipalities from California to New York come to a head, Bianco fears it will be too much for the Treasury to bear. "If one of these municipalities has to borrow from [the federal government] they're all going to have to borrow from them, pretty much on the same day," he speculates.
If that happens, Bianco is confident you can bet on "very high, punishingly high interest rates for the economy." And that storm may cause even more damage than the first.