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Sun Dec 11, 2011, 03:09 PM

 

The decline of “safe” assets

Presenting the unwanted mutant offspring of the most important chart in the world*…



You’ll find the above on page 143 of the Credit Suisse 2012 Global Outlook, which we’ve stuck in the usual place.

It shows how the world’s outstanding stock of safe haven assets denominated in either dollars or euros has evolved, adjusted to account for the Fed’s purchases of US Treasuries and other assets in recent years as part of quantitative easing.

The chart helps explain much of what’s happening in global financial markets now, especially in Europe (not on its own, mind you — we said “helps” explain):

– Begin with the ongoing collateral crunch, and how the decline of safe assets is directly tied to the dramatic fall in the availability of high-quality collateral in European lending markets. So much of it is now encumbered via direct bilateral funding agreements or by sitting at the central bank drawing liquidity.

http://ftalphaville.ft.com/blog/2011/12/05/778301/the-decline-of-safe-assets/



11 replies, 2723 views

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Always highlight: 10 newest replies | Replies posted after I mark a forum
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Arrow 11 replies Author Time Post
Reply The decline of “safe” assets (Original post)
dkf Dec 2011 OP
Ruby the Liberal Dec 2011 #1
westerebus Dec 2011 #2
eridani Dec 2011 #3
dixiegrrrrl Dec 2011 #5
dixiegrrrrl Dec 2011 #6
eridani Dec 2011 #8
dixiegrrrrl Dec 2011 #9
AnnaLee Dec 2011 #10
Owlet Dec 2011 #4
Art_from_Ark Dec 2011 #7
phantom power Dec 2011 #11

Response to dkf (Original post)

Sun Dec 11, 2011, 04:21 PM

1. That is startling.

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Response to dkf (Original post)

Sun Dec 11, 2011, 04:54 PM

2. Nominated for chart of the year.

Talk about the walking dead, you got proof.

What's for dinner? Deflation on a stick.

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Response to dkf (Original post)

Mon Dec 12, 2011, 05:17 AM

3. Could you please post the URL for the chart?

Right clicking only lets you copy the picture, NOT the URL>

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Response to eridani (Reply #3)

Mon Dec 12, 2011, 11:52 AM

5. Here:



right clicking on my mouse gives me option list, down at bottom is
"image info" which usually will give you URL of the image when you click on it.

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Response to dixiegrrrrl (Reply #5)

Mon Dec 12, 2011, 11:54 AM

6. Great contribution the "savings" issue of earlier.

I gotta find that article that Jim Rogers wrote about safe investments.
Essentially he said he is 100% into commodities, meaning land and food.
How he has that structured in somewhere in the article.

ahhhh..here it is, FWIW.

http://www.thedailycrux.com/content/9384/Jim_Rogers/eml

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Response to dixiegrrrrl (Reply #5)

Tue Dec 13, 2011, 06:39 AM

8. No such thing as "image inf0" in IE 8

Are you using a different browser?

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Response to eridani (Reply #8)

Tue Dec 13, 2011, 09:27 AM

9. Ohhhhhh...yes, I am using FireFox.

And just checked my Opera Browser, it also works on B click for
"image properties".
Maybe if you have room in your platform to download one of those?

FWIW, I find Opera loads faster than FF, and have started using it more and more.

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Response to eridani (Reply #8)

Tue Dec 13, 2011, 07:09 PM

10. In IE

Right click and choose properties. The properties box opens and you can copy the url and paste it in your browser.

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Response to dkf (Original post)

Mon Dec 12, 2011, 10:08 AM

4. Why were 'US private label structured products" (read 'mortgage-backed securities") ever considered

"safe" assets? It really makes one wonder if the monkeys running the world's financial institutions really know what they're doing. Of course, MFGlobal's solution to the scarcity of collateral that Draghi is talking about in the FT article was to simply claim its customers 'safe' assets as its own, and use them as collateral in its own borrowing.

All of this is not going to end well.

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Response to Owlet (Reply #4)

Tue Dec 13, 2011, 01:35 AM

7. I think they were considered "safe" because the Big Three ratings companies

gave trillions of dollars worth of that junk a top rating back in the day.

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Response to Owlet (Reply #4)

Wed Dec 14, 2011, 11:20 AM

11. As I understand it, the first MBS products were actually safe...

that is, they were composed of mortgages whose ratings weren't cooked. But there are only so many performing mortgages in the world, and when those ran out, our Galtian Overlords made the fateful (and probably predictable) decision to basically start Making Shit Up and constructing MBSs out of crap, and lying about their ratings.

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