The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Bond outlook August 29th

A systems failure means the system must change. Consider how, and follow through the logic of the housing bubble busting, the credit squeeze and the carry trade.

Bond Outlook [by bridport & cie, August 29th 2007]

Some weeks ago we attributed the problems of the US financial markets to systemic failure. That is a useful starting point to consider answers to the questions, “What will be different when this crisis is over?” Each contributor to the system will see its role changed:

  • Fed bail-outs à la Greenspan will give way to a Bernanke approach that allows financial markets to pay the price for excessive asset inflation
  • Rating agencies have already totally lost credibility and will have to be much more severe and realistic if they are to regain it
  • Banks will have to return to more bread and butter lending as distinct from creating opaque structured and securitised products (which gave them large margins)
  • The lobbying system in the USA, partly responsible, as Candidate Obama says, for allowing abusive mortgage practices will have to changed
  • The “Mark-to-Model” and “Level 3 inputs”, or should they be called “Mark to Magic”, which have allowed so much obfuscation on asset values and even allowed banks to declare fictive profits, have to be eliminated.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree