Ampex Corp. Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Ampex Corp.

AMPX 13.57

-3.8%

Nov 3 3:59 PM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

From: Hal Campbell	10/8/2008 1:11:25 PM
	Read Replies (2) of 5839

OT wandered here, Online Compadres, out of force of old old habit.... Keep an eye on the various LIBORs and the TED SPREAD As many of you probably already know, the LIBOR indices are the rates banks are charging each other for over night loans...up to 3 month loans and beyond. Normally they track treasuries of similar duration by about 25 basis points. For example if a one month treasury bill is say 1% (nowadays it is a fraction of that) Then in normal economic times the one month LIBOR will be 1.25% or so. The difference between treasuries and the LIBOR is the TED SPREAD. So ususally the TED SPREAD is about 25 basis points. When it goes above that it usually means to one degree or another that banks are pouring their liquid funds into buying treasuries rather than lending to one another. The highest TED SPREAD I had ever seen was 300 basis points just after the housing crash of the mid 80s and just before the market crash of 1987, But the banks have zoomed past that record like it wasn't even there. The overnight TED today is over 500 basis points....and over 400 on the 1 month and 3 month LIBORS. I'm far from expert on these goings ons, but I believe the LIBOR is set overnight...so it maybe does not reflect last night's coordinated international (largely symbolic) rate cuts. What it all means? The banks ate frightened of each other's balance sheets. To a record degree. Too frightened to lend. Buying treasuries instead. Which drives up the LIBOR rates...and all the treasury buying drives down the treasury rates. Which is why the TED SPREAD is so gargantuan. Practical effect? When banks willingness to lend to one another diminishes so sharply...if it continues for too long...their ability to furnish credit to others will diminish also. And the weakest dominos will begin to tumble. Serious Times? Yep. No question. We'll all survive though. My guesses are always shaky, but I would guess that soon the 30 year Treasury Bond will reappear. And that US mark to market rules will end...at least temporarily (the French and Chinese do not use mark to market). And that the uptick rule will be reestablished for shorts. That naked shorting will be systematically attacked ( About Time!!!) And I hope that derivatives..and their mammoth leverage.. will be somehow subject to greatly increased control.Though the devil is in the details on that one.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next