| HeraldNet - Snohomish County's online news source |
 TUESDAY, FEBRUARY 9, 2010 10:59 pm |
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Investors still leery of credit troubles NEW YORK -- The credit markets revealed both good news and bad this week: There's finally more cash in the financial system, but people aren't putting it to use yet.Bank-to-bank lending rates have fallen for 20 straight days -- suggesting that financial institutions have grown much more willing to lend to one another. But the decline in the rate isn't being met with the market enthusiasm many thought it would; investors, understandably, still don't want to take on risk with the economy in such a perilous state. The corporate bond markets showed a few signs of thaw this week, but remained too tight for most companies to take advantage of. The securitization market -- where banks repackage consumer debt into bonds that can be traded -- is at a virtual halt. Meanwhile, more individuals are losing their jobs, raising the probability that people will fall further behind on their debt payments. "There are no credit-worthy borrowers," said Daniel Alpert, managing director at the investment bank Westwood Capital. "You can throw all the money you want at the banks." Central banks around the world have pumped money directly into banks, initiated currency swaps, slashed interest rates, guaranteed various types of deposits and debt, and paid interest on both required and excess funds in reserves. Those efforts have helped the three-month London interbank offered rate tumble to a four-year low of 2.29 percent Friday, down from 3.03 a week ago and down from 4.82 percent on Oct. 13 -- when fear about lending to financial institutions was peaking in the wake of Lehman Brothers Holding Inc.'s bankruptcy and American International Group Inc.'s takeover by the government. Bringing down this rate was necessary, analysts say. But if the first phase of the financial crisis was a credit freeze, the second phase is a business standstill -- and some say that phase has begun in full force. For all types of companies -- from lenders to manufacturers to retailers -- the goal right now is to "preserve capital, above all else," Alpert said. This is the big reason employers slashed 240,000 jobs in October, after cutting 284,000 in September. And banks are in no hurry to take risks, given that so many sources of revenue during the housing boom have dried up. The only public term issuance of asset-backed securities in October was a $500 million deal from AmeriCredit, according to Barclays Capital's fixed income research, and there were no new issuances of securities backed by credit cards or student loans for the month. Since the beginning of the year, issuance is down 31 percent for securities backed by cards; down 45 percent for securities backed by auto loans; and down 41 percent for securities backed by student loans, Barclays said. |
- A revolutionary 747
- Fire breaks out at Everett car dealer
- Everett rethinks boutique wineries
- A tidy lawn could be law in Lynnwood
- Snohomish County's bargain housing won't last
- Boeing's 747-8 takes off after weather delay
- Plan for I-5 closures this week
- A new bowling alley for Monroe?
- Lake Stevens man homeless after fire
- I-5 bridge joint may give you a jolt, but it isn't damaged
- Vote on school levies by Tuesday
(11) - A tidy lawn could be law in Lynnwood (10)
- State Senate votes to toss I-960's tax-raising hurdle (9)
- Lynnwood sets height limit on grass: 8 inches (8)
- Everett rethinks boutique wineries (5)
- Everett police officers cleared in 2008 shooting death (5)
- 1949 travel aid shows how few places blacks were welcome in Washington (4)
- I-5 bridge joint may give you a jolt, but it isn't damaged (4)
- A new bowling alley for Monroe? (3)
- Toyota has powerful D.C. friends (3)
- Edmonds educator, famous announcer dies
- Mill Creek to appeal ruling on annexation
- Through the air, with the greatest of ease
- E-W thriving under new coach
- The path to citizenship
- EUUC puts on ‘Pants & Shoes’
- Wolfpack wins the ‘Battle'
- Lynnwood’s annexation plans OK’d
- Arlington's Cascade Valley Hospital celebrates expansion, national award and 100 years of service
- Business Licences Feb. 2010
- Technology tips for launching your own business
- Business Events Feb. 2010
- Tech Talk: No excuse today for going without a Web site
- State already raising fees and rates that restrict business growth
- Some legislators again targeting people’s initiative petition rights
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