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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: CalculatedRisk who wrote (41131)	11/15/2005 5:47:08 AM
From: Chispas	Read Replies (1) \| Respond to of 116555

TRADERS ARE BETTING BIG ON GM TO FAIL : Wall Street traders yesterday were wagering big money that General Motors, long the icon of American manufacturing might, is headed for a big crash. A GM bankruptcy had been seen as unthinkable, given its massive cash position. Yet one corner of the finance world — the esoteric players that buy and sell complicated credit default swaps — see little difference between the auto giant and recent bankruptcy filers Delta Airlines and auto parts supplier Delphi. Credit default swaps offer insurance against the possibility of a company defaulting on its bonds' principal or interest payments — essentially offering a way to bet on a company's declining creditworthiness. In GM's case, traders are paying $2 million up front plus $500,000 a year to insure or bet on $10 million of GM debt for a five-year term. Those buyers get the full amount insured if the borrower defaults, while the sellers would get the bonds. The up-front price of GM's credit default swaps has been increasing from about $1 million last week, according to Bloomberg. That spike in prices means smart money is openly dismissive of GM management's tough talk about cost cutting and new car models, traders told The Post. "I'm buying credit swaps, and paying what it costs, because for two years GM has continued to deteriorate. And the worst is yet to come," said a trader at a $1 billion Greenwich, Conn.-based hedge fund. GM analysts, however, said they think bankruptcy is a distant proposition for Detroit's largest carmaker. "The [bankruptcy] argument and concern is associated with the Delphi filing and has little to do with GM, if you look at the company," said Michael Ward, an auto analyst who consults with Soleil Securities. "There aren't a lot of filers that have $19.2 billion in cash, not to mention GMAC, to fall back on," said Ward. GM shares continued to be hammered, falling 74 cents, or 3 percent, to $23.74 in New York Stock Exchange action. Its shares are down 40 percent this year. ............................................... Registration site with pop ups - nypost.com

To: CalculatedRisk who wrote (41131)	11/15/2005 11:06:07 AM
From: mishedlo	Respond to of 116555

No quick move to inflation target, Bernanke says Tuesday, November 15, 2005 3:47:00 PM afxpress.com WASHINGTON (AFX) -- Ben Bernanke, President Bush's nominee to replace Fed chief Alan Greenspan, said he is in favor of having the central bank set a formal inflation target, but said he would not move quickly. "I will take no precipitate steps in the direction of quantifying the definition of long-run price stability," Bernanke said Tuesday in testimony prepared for delivery at his confirmation hearing before the Senate Banking Committee. Although he expressed strong support for a formal inflation target-where the Fed would set a public numerical inflation goal, Bernanke said he would only move to install a formal inflation target if a consensus developed at the central bank. At the moment, many top Fed officials have expressed opposition to a formal target, although there is certainly some support for the idea. Bernanke pledged to continue Greenspan's policy and monetary policy strategy. "If I am confirmed, I am confident that my colleagues on the Federal Open Market Committee and I will maintain the focus on long-term price stability as monetary policy's greatest contribution to general economic prosperity and maximum employment Bernanke, a well-regarded academic from Princeton University who came to Washington in 2002 to serve on the Fed's board of governors before joining the Bush White House in June, said he would be independent from political influence Bernanke said he supported the recent trend at the Fed towards greater transparency. Members of the committee seem disposed to approve Bernanke. The chairman of the committee, Sen. Richard Shelby, R-Ala., said before the hearing that Bernanke would face "a vigorous examination on both sides of the aisle," but saw no roadblocks in his path toward confirmation Once the committee votes, probably later this week, the nomination would move to the full Senate. A simple majority would be required. Bernanke has been nominated to take Alan Greenspan's seat on the board beginning on Feb. 1. The term lasts 14 years