Archive for November 14th, 2008

How the US originated crisis impacted other economies?

November 14, 2008

I have written a paper summarising how the crisis which originated in US has imapcted other economies.

Let me know your comments.

WTO raises concern over falling trade finance

November 14, 2008

I had pointed WTO is concerned that trade finance would be imacted by ongoing trade crisis. WTO in a meeting stressed on the problem and provided some stas as well:

  • The main one is the shortage of liquidity to finance trade credits. The market currently estimates the liquidity gap in trade finance at about $25 billion.
  • The second is a general re-assessment of the risks caused by the financial crisis and by the slowing down of the world economy.
  • These problems are being felt most acutely by traders and banks in the emerging market economies

Further Pascal Lamy has warned the situation is likely to worsen and impact the world trade.

CDS volumes declines marginally by 1%

November 14, 2008

BIS in its latest study points Credit Default Swaps have declined by 1% between Dec-07 and Jun-08. The detailed file in Pdf is here and excel files are here. The total derivative market is like this (in USD Billions):

  Dec-06 Jun-07 Dec-07 Jun-08 Dec-06 Jun-07 Dec-07 Jun-08
Forex 40,271 48,645 56,238 62,983 1,266 1,345 1,807 2,262
Interest rate 291,582 347,312 393,138 458,304 4,826 6,063 7,177 9,263
Equity linked 7,488 8,590 8,469 10,177 853 1,116 1,142 1,146
Commodity 7,115 7,567 8,455 13,229 667 636 1,899 2,209
CDS 28,650 42,580 57,894 57,325 470 721 2,002 3,172
Others 39,740 61,713 71,146 81,708 1,609 1,259 1,788 2,301
Total 414,845 516,407 595,341 683,725 9,691 11,140 15,813 20,353

As it can be seen, outstanding CDS have declined from USD 57.9 tn to 57.3 tn. All other derivative instruments, there is robust growth. This report has got much more analysis like Herfindahl index for measuring market concentration etc.

Let me analyse it in details and point if anything interesting.

Assorted Links

November 14, 2008

1. ACB says we should now call it a economic crisis

2. WSJ Blog points Bernanke reputation has been damaged

3. MB points to some nice explanation to recent mon pol moves.

4. Mankiw points good time to buy stocks? Hamilton has some advice as well

5. Rodrik points Calvo converts to supposing capital controls to manage sudden outflows

6. Fin Prof points to a Buffet interview. It also points to historic volatility in US stock markets

7. ALB points to a financial literacy test

8. A new blog on finance – http://marketblog.wordpress.com/ (by Washburn University students and faculty)

9. CTB points to Fitch downgrading several emerging economies. It points to another blog which gives tons of pictures and charts on the crisis


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