Word: defaulting
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Dates: during 2000-2009
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...MarketWatch pointed out that the spreads on credit-default swaps for U.S. government debt jumped to 97 basis points Tuesday, nearly seven times higher than a year ago and 60% higher than at the end of last year, to a level roughly in line with those of France, according to data supplied by Markit. Those swaps are gambles that America will renege on its financial obligations. Being on par with France is even more humiliating than if we were compared to Cameroon which had a GDP of only $44 billion last year, less than Bernie Madoff took from his clients...
...clear where the banks are getting their prices. Some of the firms derive the asset values from financial models. Others try to gauge how much a group of subprime mortgage loans might be worth by looking at a price index, called the ABX, of related credit-default swaps...
...time of pessimistic forecasts and rising fear, many toxic assets are probably worth more than the bank models or credit-default-swap indexes suggest. For example, a recent reading of the ABX index puts the value of even the highest-rated subprime mortgage bonds created in 2007 at only 27% of their precrunch prices. Yes, Americans are behind on their mortgages, but even the most pessimistic prognostications do not predict that 73% of home loans will become worthless. (See pictures of the dangers of printing money...
...then there were the complete non sequiturs. Casino operator MGM Mirage closed at $2.87, up 23%, on the same day Moody's put it on its "Bottom Rung" list. The members of that list are the companies the ratings agency thinks are the most likely to default on their debt...
...With stock markets collapsing around the world, nobody needs an illustration of where that kind of hubris can lead. Ordinary folks with bills to pay may smell something funny in fiscal instruments with names like "credit-default swaps," but when you work on Wall Street and people call you a "master of the universe," you think you can make the things pay off. Even nonpartisans would agree that George W. Bush waded into the Iraq mess with more certainty than strategy. And Bill and Hillary Clinton might actually have achieved health-care reform if they had tried negotiating with...