In Quadrant I we have countries with high debts but resilient to a run. In the next quadrant, we’ve countries with high debts and a high risk of a run (the worse combination). The third quadrant features countries with low personal debt and resilience to a run (the best mixture), within the fourth are countries with low debts but susceptible to a run. Both measures found in designing the buyer base index are the demand-side risk indication (on the horizontal axis), and the supply-side risk sign (on the vertical axis).
The results are especially interesting when observing them on a country by country basis, as is done in the graph. It tells us of the high riskiness of peripheral eurozone economies (rightfully including Belgium, but also France and Austria), and a stressing situation in the world’s biggest economies of Japan, Germany, US, and UK. Despite the fact that the later countries don’t suffer directly from the risk of default, their high debt-to-GDP ratio makes them potentially risky, at least from the supply perspective. However, our thinking about that the strategy of acquiring this data was to give low scores to countries whose personal debt is own mostly by domestic traders (as is the case with Japan, UK, and USA).
What this essentially indicates is that countries still left of the vertical axis shouldn’t be concerned about the sustainability of their debt given that they have a lesser risk exposure than their counterparts on the right of the axis. Because the governing politicians will find it more rewarding to perform higher public debts to fund their concessions to various supporting interest groups. As long as the local entities will be the ones barring the burden, there would be no reason for the government to avoid this any time soon. Isn’t this exactly the case of Japan?
I don’t buy it. Despite the fact that their graph very precisely depicts the real ratings on the sovereign, personal debt market (except for France and Austria), the source of investment is not good enough of the category to differ between high and low-risk countries. There is a multitude of other factors at the job here.
The central bank or investment company is taking several steps to avoid this. 200 billion lending program for car loans, student education loans, and other credit. The framework of the planned program is complex. The central bank or investment company shall provide money to investors via big banking institutions known as main sellers. Investors can use the money to buy AAA-rated securities tied to consumer debt.
The Fed’s goal is to bolster those markets, sparking more financing to consumers and lower rates of interest for students, car buyers, and others. But if consumer-loan delinquencies rise and these securities default sharply, losses will eventually fall to the Fed and Treasury. 200 billion, and become expanded to add other asset classes such as commercial real estate. The home loan program is more straightforward.
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- German 5 calendar year bonds
- The final result of a simulation analysis is
- MAK Asset Management Ltd
100 billion of debt released by Fannie Mae, Freddie Mac, and the other government-sponsored companies. 500 billion of mortgage-backed securities, these firms guarantee. Private asset managers will be employed to manage this portfolio of investments. By purchasing securities linked with mortgage debt, the Fed hopes to push up the price tag on the debt, lowering yields thereby. This maneuver, theoretically, should push down mortgage rates.
Michael Feroli, an economist at J.P. Morgan Chase & Co., tuesday in an email to clients. More Fed Aid Sets Off a Rush to RefinanceDiscuss: Will the Fed’s latest programs succeed in easing the buyer credit crunch? 700 billion rescue package. 350 billion authorization. Taking such a step could be politically difficult.
350 billion when it creates such a request. That would make an easy target for lawmakers critical of Treasury’s regular pivots on how it intends to use the TARP program. Once a request is submitted, Treasury would then have to wait up to 15 days while lawmakers determine whether to vote to withhold the funds. Without a vote, the funds would be released. There is growing sentiment that lawmakers should attach new restrictions on the next chunk of money to reduce Mr. Paulson’s leeway in implementing the program. Some Republicans and Democrats have pressed for Treasury to do more to avert foreclosures, as required in the legislation authorizing the financial rescue plan. Separately, On Tuesday the requirements it is using when determining whether to bail out financial firms Treasury disclosed.