Debt crisis spreads to US municipalities (you ain't seen nothin' yet - this one is really bad)

[UpInArms]

Source: Financial Times via Yahoo

A collapse in confidence in a $330bn corner of the debt market has left US municipalities and student loan providers facing spiralling interest rate costs.

The implosion of the so-called auction-rate securities market - amid worries that bond insurers guaranteeing much of this debt could face rating downgrades - is the latest incarnation of the credit crisis.

The market, heavily used by municipal borrowers and backed by triple-A rated guarantees from bond insurers such as Ambac and MBIA (NYSE:MBI), was until now used as a safe harbour for investors.

The interest rates on such bonds reset either weekly or monthly and a lack of interest from investors can trigger a sharp rise to compensate holders.

The market's sudden slump has pushed interest rates as high as 20 per cent for entities from the Port Authority of New York & New Jersey to a hospital.

"The auction securities market is falling apart," said David Cooke, chief financial officer at Park Nicollet Heath Services in Minneapolis.

Read more: http://news.yahoo.com/s/ft/20080214/bs_ft/fto021320082104388221

[roamer65]

1. Williams reports at SGS that Federal Reserve intervention...

has now gone beyond pre-1933 bank holiday levels. I am sure his figures are inflation adjusted.

http://www.shadowstats.com

The banking system would be flat on its back right now if it were not for massive liquidity injections by the Fed.

I am not surprised this crisis is spreading into all debt markets.

[OKthatsIT]

2. and BUSH wants $550 BILLION for the PENTAGON

Money doesnt grow on trees..ITS STOLEN FROM YOU AND ME

[sarcasmo]

43. Let's not forget, borrowed from China.

[Robbien]

3. These are the securities Buffett wanted to take over

Which would be good for the country, but not such a good deal for the monolines. But I'm not crying any tears over the greedy monolines getting into the CDO business thereby putting the muni securities at risk.

[A HERETIC I AM]

22. Not true.

Buffet's interest was in acting as a "Reinsurer" for MBIA and/or AMBAC. There is no indication that he wanted to "take over" the Auction Rate Securities market.

ARS, MARS and MARPS represent about $300 billion of a more than $25 Trillion US debt securities market. The failure of an auction is alarming, but it hardly spells doom for bonds in general.

[sendero]

25. That number you keep throwing around..

... 25 trillion, is that an annual issuance number? If so, please provide some kind of citation, it seems a tad high.

[A HERETIC I AM]

38. Here's where I got it from....

From Wikipedia

The bond market (also known as the debt, credit, or fixed income market) is a financial market where participants buy and sell debt securities, usually in the form of bonds. As of 2006, the size of the international bond market is an estimated $45 trillion, of which the size of the outstanding U.S. bond market debt was $25.2 trillion.<1>

Nearly all of the $923 billion average daily trading volume (as of early 2007) in the U.S. Bond Market<2> takes place between broker-dealers and large institutions in a decentralized, over-the-counter (OTC) market. However, a small number of bonds, primarily corporate, are listed on exchanges.

References to the "bond market" usually refer to the government bond market, because of its size, liquidity, lack of credit risk and, therefore, sensitivity to interest rates. Because of the inverse relationship between bond valuation and interest rates, the bond market is often used to indicate changes in interest rates or the shape of the yield curve.

So that $25 Trillion figure would be already issued, tradeable debt securities.

I've tried several different Google searches to find out how exactly much new debt is issued in the US annually but could not find a concrete answer.

The Auction Rate Securities mentioned in the OP are also previously issued debt. These are not new bonds. They are bonds whose interest rate is reset via auction on a regular basis. Many of these securities are very long term - 30 years or more and some are even perpetual.

[sendero]

39. Ok well just to be clear..

... if there are 25 trillion of bonds outstanding, a LOT less than that are issued each year. Given the maturity periods, probably something like a tenth.

[A HERETIC I AM]

40. I can more than likely find a specific figure for you tomorrow...

I have an acquaintance that is a Bond trader and I'll give him a call.

Still, one tenth or 10% of $25 Trillion is $2.5 Trillion - a huge amount, either way.

And keep in mind that the maturities of the various types of debt securities can range from basically overnight to eternity. There are perpetual debt securities, there are 100 year bonds, there is 60 day commercial paper, etc.



Edited for sentence structure

[A HERETIC I AM]

42. Here are the numbers through 3Q2007

Total US Capital Markets Outstanding, as of September 30, 2007

Equity                         $22.3 Trillion

Treasury                        $4.4 Trillion

Federal Agency                  $2.9 Trillion

Municipal                       $2.6 Trillion

Mortgage Related                $7.1 Trillion

Asset Backed                    $2.5 Trillion

Money Market                    $4.0 Trillion

Corporate                       $5.7 Trillion

The figure for Treasuries includes marketable public debt
Figures may not equal 100% due to rounding

Total                          $51.5 Trillion
Total Debt                     $29.2 Trillion

 The Equity portion is issued stock.
The remaining is the debt securities market.
.
.

Debt issuance YTD through 3Q2007 Compared to YTD through 3Q2006


Issue                                  Total YTD 3Q2007       2006
■ Long-term municipal bond             $324.4 billion        $265.8 billion 
■ Treasury gross coupon                $544.0 billion        $591.8 billion year-to-date 2006.
■ Federal agencies’ long-term          $685.0 billion        $547.3 billion year-to-date 2006.
■ Mortgage-related                   $1,630.0 billion      $1,490.0 billion year-to-date 2006.
■ Asset-backed issuance totaled        $759.6 billion        $648.2 billion year-to-date 2006.
■ Global CDO-funded                    $412.3 billion        $375.5 billion year-to-date 2006.
■ Outstanding money market volume    $4,030.0 billion As of the end of the third quarter
■ Corporate bond                       $881.1 billion        $767.0 billion year-to-date 2006.
■ Total equity underwriting            $175.2 billion        $128.1 billion year-to-date 2006.
Total all categories                   $9,441.6 Billion or $9,441,600,000,000.00
Total Debt issuance                    $9,266.4 Billion or $9,266,400,000,000.00

The above information is from this report from the Securities Industry and Financial Markets Association

www.sifma.org

[sendero]

46. Well....

...looking at those numbers, you pretty much have to admit that 300 billion is a significant portion of the issuance in any given year, and that was my point.

[A HERETIC I AM]

47. Your point is fair then, I'll give you that...BUT

that 300 billion mentioned in the article is not numbered in the "issuance" in this case. That money is already floated - already underwritten - already in the hands of the issuers and the paper is in the hands of the holders.

The $300,000,000,000 market of Auction Rate Securities involves debt that has already been issued and is now being traded. I may be seem to be drawing a line with a fine pen here but it is a line that needs to be seen, nonetheless. This is not "new" debt.

And yes, of course, any time you start talking about figures with nine zeros to the right, we're talking serious money.

[sendero]

50. Fair enough..

.... but I will have to add that at this point, this particular method of funding is dead in the water. Munis cannot pay 20%.

If it is revived in the coming weeks or maybe a few months, well then it's not a great big hairy deal, if not, it most certainly is.

I'm sure you are aware of the "monoline hearings" and I would suggest to you that whether you think this situation is serious or not a lot of congress critters are basically in panic mode.

[tularetom]

4. Looking at higher property taxes down the road

All the things being contemplated to keep homeowners from foreclosure aren't gonna mean shit if they lose them later to tax sales because the higher interest rates on muni bonds resulted in higher property taxes to the citizens.

Or they could just continue to print money and make the dollar even more of joke.

[ConcernedCanuk]

5. Flame away, but y'all should have seen this coming - LONG ago.

.
.
.

Can't keep on borrowing off Peter to pay Paul.

I cut up my credit cards 27 years ago.

I buy with nothing but cash, VERY infrequent use of debit card.

Live in an area where I can heat with wood if need be, grow crops, and get water from springs, rivers and lakes nearby.

And of course those rivers and lakes have food(fish) in them.

And the forests have game from birds to bear.

I'm poor, but not threatened by an impending financial crisis.

It's them high-rolling city-folks with tons of "cash" that will suffer.

Not me.

I will survive.

[physioex]

7. Gladly....

This is the "I got mine mentality" which I can't stand. Thise type of mentality is greatly found in that other party and hopefully not in ours/mine. Not every one can live in the country and "live of the land".

Yes I agree that credit cards are bad and too many Americans are extended on their creidts as I pay my balance off every month. As a matter of fact I encourage fellow DUrs who can pay their balance to get a credit to take advantage of cash rebates. In the reverse world of the credit cards people like myself are considered dead heads.

Anyways the mess we are in came from the lack of requlation that allowed lenders to give money to people with less than average credit these "exotic mortgages" with no ovesight. And one way or another we are all going to pay for this mess. And yes many people here on DU did see this mortgage crisis coming look at many posts going back well over two years ago.

[Alcibiades]

14. Its not simply regulation

but the explosion of credit in all its forms. The last phase of the development of empire typically ends in an explosion of fraud, credit and speculation. To say one is to imply the other, as they go hand in hand.

The cause of our current problem isn't simply mortgages, and it's not exotic or arcane: the root cause is spending more than we earn, which we have done for a myriad of reasons (there's profit to be made off this behavior, so its encouraged; mismanagement at the Fed under Greenspan; outsourcing of jobs; self-interested parties that have profited from the current administration's disastrous fiscal policy; above all, the fact that the wages of US workers with a high school education or less have been stagnant since 1979.) Combine all this with cost-push inflation caused by the increase in commodity prices (i.e. oil) and BOOM, you get a perfect storm.

This isn't the S&L crisis, which could have been averted with better regulation (and which, in itself, should have served as a wake up call). Make no mistake, the titans of high finance are looking to pin this on those very "people with below average credit" you mention, but that's just the weakest spot in the levee system. The levees broke, but the water was going to overrun them eventually anyway. The real problems are the whole system of exporting jobs and importing cheap goods (often made in inhumane conditions), debt-driven consumerism, usury, and the middlemen and speculators who live off what they skim off of other people's money.

In other words, pretty much what Marx predicted for advanced capitalism late in Volume III of Capital.

[physioex]

18. I didn't put it that way...

But you are right we have look at the whole credit mess. But credit cards have been around for decades and people sorta are kinda on to their scam.

But the mortgage crisis is unique. Use to be that getting a mortgage was a big deal and would require credit checks, years of employment, and years at residence, etc. Like the guy on 60 Minutes said you would know your mortgage broker and see him at the grocery store and would know him. Just a gag I called a mortgage guy over a year ago to see what type of loan I could get. Basically all he did was ask me a couple questions and made up an income and I was approved on the spot for a huge sum of money. I always been a renter and I didn't take it him, but it was just a funny situation....

[Alcibiades]

41. It's not that way anymore

I'm in the market for a house, and we're now considered as having too high a debt to income ratio, because we already have the value of a nice house in student loans. The mortgage broker told me that 6 months ago, it would be no problem, they would have written a stated income loan for whatever amount we wanted.

There's a serious moral hazard problem in the banking industry. Lenders know that, no matter what, they will be bailed out, so they do lend money to anyone, but least mortgages are secured by something. The problem is more visible in these markets because these are actual people, living on actual property, making actual payments. If the other shoe ever drops, it will probably be something to do with more speculative forms of credit, loans secured by nothing and money created out of thin air, like we saw with Enron and will see again somewhere.

[coalition_unwilling]

30. And what Lenin suggests happens to capitalism in its latter stages, i.e.,

it turns toward imperialism. Lenin used World War I as his example of two capitalist powers (Wilhelmine Germany and Great Britain) warring with one another.

I see Iraq 1991-2001 as another example of late-stage capitalims turning to imperialism.

[ConcernedCanuk]

15. Not quite sure what you mean with ""I got mine mentality", and -

.
.
.
once you've explained it - why you can't stand it?

I have no illusions that I am superior to anyone else - I am not

but I DO have experience in living with adversities, including major poverty, lack of running water and electricity for extended periods of time - not hours, not weeks, but months.

I can handle these things now, on less than $500 a month of income - and still have a reasonable life - took me 57 years to learn - I just may be worth listening to . . . .

or not . .

[physioex]

19. Doubt most people are going to that extreme...

But most of them better start learning to live within their means. And there has to be some regulation to stop these credit card companies from giving out all the unsecured debt soo easily.

[shanti]

20. you are definitely worth listening to!

:hi: i've always had the dream of self-sufficiency, but, well...life got in the way. but major props to you for living off the grid -"they" hate that!

[Megahurtz]

34. Bizzare.

How in the world, pray tell, did you get an "I've got mine" mentality from Canuck's post??? :wtf::crazy:

I would be willing to bet that you have way more money, toys, stuff etc. and credit cards than he does.

FYI the "I got mine" mentality is about rich and financially well-off middle-class people which the U.S. has plenty of,
not someone living frugally in Canada.

[Alcibiades]

8. I have been predicting worldwide collapse of the economy

for my entire adult life. The only surprise has been that massive borrowing and Keynesian economics on a scale not envisioned by their namesake.

A whole lot of folks are going to learn the meaning of the concept "relative deprivation."

[CHIMO]

11. Hope

That your Doctor doesn't live in one of them cities.

[ConcernedCanuk]

16. "Hope That your Doctor doesn't live in one of them cities." - now what does that mean?

.
.
.
I can't even fathom what you mean by that remark . .

Do you want to end my confusion?

please . .

[CHIMO]

37. Well

If he lives in one of those cities that experiences the tumult that you suggest then I don't think that you will get much medical attention if you should require it.

Didn't mean to confuse.

[ConcernedCanuk]

45. I dunno what kinda health system you got down there, but our doctors live in town.

.
.
.

Even this small community of 2,000 has a hospital and 4 doctors, one always on call.

And I can get medical attention from any one of them, any time, no charge.

We have a heliport to transport those to larger facilities nearby if need be.

And our Ambulance Service is "on patrol" 24/7.

Usually with 2 Paramedics.

So I ain't worried.

[monktonman]

21. Cooooool lets ALL move to the forest!

Oh, thats right....then there wouldnt be a forrest.
Idiot.

[annabanana]

23. Blackwater clients purchase wildernesses, worldwide.. erect fences

heavily armed guards patrol the "king's forest". . death penalty for poaching...

[Peregrine Took]

54. What should we do with the money we have in mutual funds?

My husband says to just leave it there and it will "come back" as it usually has done in the past but I am so worried I want to just take it out and put it in a mattress!

[Megahurtz]

32. Obviously

you've never been to Canada. :dunce:

[humus]

44. local means of subsistence

"Agriculture... is our wisest pursuit, because it will in the end contribute most to real wealth, good morals and happiness." --Thomas Jefferson to George Washington, 1787. ME 6:277


The fraudulence of these oligarchic forms of economy is in their principle of displacing whatever good they recognize (as well as their debts) from the present to the future. Their success depends upon persuading people, first, that whatever they have now is no good, and second, that the promised good is certain to be achieved in the future. This obviously contradicts the principle - common, I believe, to all the religious traditions - that if ever we are going to do good to one another, then the time to do it is now; we are to receive no reward for promising to do it in the future. And both communism and capitalism have found such principles to be a great embarrassment. If you are presently occupied in destroying every good thing in sight in order to do good in the future, it is inconvenient to have people saying things like "Love thy neighbor as thyself" or "Sentient beings are numberless, I vow to save them." Communists and capitalists alike, "liberal" and "conservative" capitalists alike, have needed to replace religion with some form of determinism, so that they can say to their victims, "I am doing this because I can¹t do otherwise. It is not my fault. It is inevitable." The wonder is how often organized religion has gone along with this lie.

To cause the land-using economies to overproduce is even simpler. The farmers and other workers in the world's land-using economies, by and large, are not organized. They are therefore unable to control production in order to secure just prices. Individual producers must go individually to the market and take for their produce simply whatever they are paid. They have no power to bargain or make demands. Increasingly, they must sell, not to neighbors or to neighboring towns and cities, but to large and remote corporations. There is no competition among the buyers (supposing there is more than one), who are organized, and are "free" to exploit the advantage of low prices. Low prices encourage overproduction as producers attempt to make up their losses "on volume," and overproduction inevitably makes for low prices. The land-using economies thus spiral downward as the money economy of the exploiters spirals upward. If economic attrition in the land-using population becomes so severe as to threaten production, then governments can subsidize production without production controls, which necessarily will encourage overproduction, which will lower prices - and so the subsidy to rural producers becomes, in effect, a subsidy to the purchasing corporations. In the land-using economies production is further cheapened by destroying, with low prices and low standards of quality, the cultural imperatives for good work and land stewardship.

Albert Schweitzer, who knew well the economic situation in the colonies of Africa, wrote nearly sixty years ago: "Whenever the timber trade is good, permanent famine reigns in the Ogowe region because the villagers abandon their farms to fell as many trees as possible." We should notice especially that the goal of production was "as many...as possible." And Schweitzer makes my point exactly: "These people could achieve true wealth if they could develop their agriculture and trade to meet their own needs." Instead they produced timber for export to "the world economy," which made them dependent upon imported goods that they bought with money earned from their exports. They gave up their local means of subsistence, and imposed the false standard of a foreign demand ("as many trees as possible") upon their forests. They thus became helplessly dependent on an economy over which they had no control.


Such was the fate of the native people under the African colonialism of Schweitzer¹s time. Such is, and can only be, the fate of everybody under the global colonialism of our time. Schweitzer's description of the colonial economy of the Ogowe region is in principle not different from the rural economy now in Kentucky or Iowa or Wyoming. A total economy for all practical purposes is a total government. The "free trade" which from the standpoint of the corporate economy brings "unprecedented economic growth," from the standpoint of the land and its local populations, and ultimately from the standpoint of the cities, is destruction and slavery. Without prosperous local economies, the people have no power and the land no voice.

--wendell berry

[Occulus]

27. There's some smug dripping from your chin...

...you might want to wipe it off.

[jaksavage]

28. Bravo for turning your back

on this corrupt lifestyle system.
The trouble with your formula is that if 50% of the population followed your example, there would be no water source available that wasn't polluted from some guy doing the same thing above you. The wood would get further away each year and even if you had the magic place and space, then for sure some asshole or group of assholes would stop by and take what you have. Of course you can defend your self but to live a life always on the defense is not much of a life at all.

It is the middle who will suffer. The top 1% and their families will relocate.
I believe the days of the shotgun on the front porch with granny in a rocking chair could return. I'd rather have that than a nursing home anyday.

It is a big stinking mess made all the worse by unsustainable spending practices. From top to bottom.

And... all that creative financing wasn't to risky borrowers, much of it was done to payoff credit cards and car loans. Saving money on interest, sounds good right.

One world many people, Peace

[ConcernedCanuk]

29. I don't see anything in my post that suggests everyone should do as I have done

.
.
.

And I am NOT going to respond to individual posters that belittle, begrudge, and make fun of me/my lifestyle.

BUT

NOW I will make a suggestion.

Pick apart my post, and see SOMETHING in there that you can do - both for yourselves and the environment.

And thank you to all the ones that saw something positive.

[Megahurtz]

33. You 're Welcome!

:hi:

[llmart]

31. I don't see your post as self-centered at all.

Maybe some DU'ers do because the truth is hitting home to them too. I look around me and observe all the time and what I see are many, many people living way beyond their means. Geez. Did anyone watch the Oprah show yesterday? Do you think the lifestyle shown on her show was rare? No, it isn't.

You can flame away at me also, but I'm almost 60 years old and when my husband and I were first married we saved every extra penny in a passbook savings account and considered it untouchable. It was for a down payment on a house. The general wisdom back then was that you should have AT LEAST 20% of the purchase price of a home before you even considered buying. You figured out your monthly expense INCLUDING homeowner's insurance, property taxes, and mortgage insurance and bought something that wouldn't take more than 20% of your take home pay per month. You had ONE major credit card and it was used only for emergencies, not because you wanted to get frequent flyer miles for some airline.

Yeah, I know some of you think this is just plain old-fashioned, but guess what? People aren't any happier or more satisfied with their lives now that they can have whatever they want whenever they want.

No, I don't live off the grid as you do, but I can live with very little and still be happy.

[ConcernedCanuk]

36. I hope others will see this, because I do not presently live off the grid, but I have . .

.
.
.

and am ready, much more ready than I was 3 years ago when my landlord cut off my hydro AND water.

Right now, all my water comes from melted snow, and a small amount from a gas station in town that I use for coffee and other drinks that require water.

I don't see anything in your post that even comes close to "flame-worthy". Thank you for your positive response.

I have a very small solar setup - less than $500 worth, and am presently on *gasp* hydro (the grid)

I heat my small 18 foot trailer with a combination of hydro and propane. I also have a circa 40's cook-stove right outside the trailer in a not so sealed enclosure, but can get that enclosure up to 70 degrees(Fahrenheit) even when it is 20 below (Celsius)

I am fortunate enough to live on a 35 acre farm that has more wood than 10 families could burn in a lifetime, and that'd be just burning the poplar, which is about 40% of the property - the rest is mostly spruce with some pine, which I nor the owner of the property wish to cut.

Also, we have a lot of trees down from recent storms, and I even got permission from the municipality to take all the wood I want/need from the downed trees. And there is enough within 5 kilometers for 4 - 5 years wood, so I need not even touch the farm property at present.

I was given a 4000 watt generator by one of by best friends and neighbors, who are also the ones that gave me the wood-stove. - yes - I have GOOD friends in that respect.

Generator is set up and ready to go in the event of a power outage if need be, as would be in the winter, but would not have much need for it in the summer, of course restricting my time on the net - which is not a bad idea anyways - there is a whole world OUTSIDE, and I wouldn't miss the net a bit while out with momma nature, never do.

Plain old fashioned is good - I do realize that a great majority of people must live in cities - but they all got roofs, no?

Well - one can put solar panels, and solar hot water heaters on roofs - and weather out the increasing amounts of power outages that we have now, and I can only see increasing.

Not to mention taking a wee bit off of one's carbon footprint.

But from a SELLING point - imagine oneself being the only one on the block with lights and internet access when the power goes out - hmmm - might make some think again about $500 - $1000 for a solar "starter-kit" if you want to call it that . . .

So I rambled on - but as another responder indicated - I might be worth listening to.

Those that want to ridicule and deny - I would only ask them one thing.

Please just pass me by?

[Alcibiades]

6. Devaluation and inflation

That's where we're headed. Government intervention in the economy is bad, except when it uses the power of its printing presses.

[FirstLight]

9. ...first, bankruptcy..

...ports flooded, infrastructure collapsing, social disorder


then Martial Law

...money will mean nothing, it will be bartering for life and necesity...

[FirstLight]

10. kick & rec

:kick:

a real issue is always a good one, thanks for the info

[screembloodymurder]

12. Congress will save us.

If they're not too busy with baseball and HGH.

[unblock]

13. if buffett is jumping in, you can bet it's sound. brk-a isn't $143,980/shr because he's an idiot.

the monolines have their own problems, as does sallie mae, but the muni market is fundamentally sound. this is a classic example of an overabundance of fear. the real problem is with the investors, not the securities.

[PetraPooh]

17. Yes but he is only willing to buy the good ones and at a bargain

price. He intends on leaving the bad 'uns with the bond insurers. I'll see if I can find the link I read yesterday. Or did I hear it on PPTV? I'll go looking.

[Jacobin]

24. The same unregulated free market that brought you the Great Depression

Fucking ass hat free market freaks.

[Joe Bacon]

26. There's NO NEED to Fear! The INVISIBLE HAND is here!

Yessiree, Mr. Invisible Hand is even right now at work fixing the markets.

Too Bad, Mr Invisible Hand follows the advice given by Andrew Mellon who said, "IN A DEPRESSION, WEALTH FLOWS BACK TO ITS NATURAL OWNERS!"

Ayn Rand would be so proud!

[UpInArms]

35. that reminds me of the

George H. W. Bush made the statements to several shadow government players, when asked what Bush meant by New World Order he said: It is the consolidation of more power and money, into the hands of tighter, whiter, righter, elitist hands.

:freak:

[poppysgal]

49. In other words

his hands (and his compatriots).

[poppysgal]

48. Interesting

:loveya: Reagonomics at work? I am having a 80's flashback-except worse!

[UpInArms]

51. here's a follow-up on the bond auctions

and hey - miss you!

:pals:

"Failed auctions" hurting U.S. closed-end funds

BOSTON, Feb 15 (Reuters) - Some top U.S. asset managers that offer closed-end funds are warning their investors of lower returns as the credit crisis has severely disrupted trading this week in an instrument they rely on to borrow and boost fund returns.

Closed-end funds, unlike traditional open-end mutual funds, issue a fixed number of units and trade on exchanges. They borrow by offering preferred securities with short-term maturities of 7 to 28 days. New interest rates are set through an auction process.

This week, the auctions failed as the institutional and wealthy individual investors that usually snap them up have stayed away due to growing concerns about the credit markets.

Banks that normally step in to buy unsold securities also backed out because they are already saddled with vast amounts of various securities whose values have tumbled with the credit crisis.

"A number of auctions for a broad variety of security types through which payment rates are reset and current investors seek to sell their securities have failed," Nuveen Investments said in a commentary on its Web site on Friday.

Nuveen, BlackRock Inc (BLK.N: Quote, Profile, Research) and Eaton Vance Corp (EV.N: Quote, Profile, Research) are among the leading players in the closed-end funds market.

Nuveen said the failed auctions affected at least 25 different fund sponsors. Its funds could see higher borrowing costs, hurting returns, and if the disruptions persisted, Nuveen may have to look for "potentially less favorable" avenues for borrowing, it said.

...more...

:hi:

[poppysgal]

52. will this affect the interest rates?

Will they lower them again? Also this is a simple question but will this affect 401 K's?
Stuck in SC.:bounce:

[UpInArms]

53. the easy answer is - yes, the interest rates will be cut

to the bone - stagflation will be the answer - the 70s will look like a walk in the park - think Japan for the past 10 years - no growth - bailing the banks out over and over and over and over - it's really disgusting to see how hard those people are working just to stay in place and maybe to even lose ground

affecting 401s?

well, not in the short-term - but in the long-term, it will affect annuities and it will be more difficult to find actual assets that have value.

It will all be very dicey. I think economically, I'm just going to do my best to :hide:

(edited cuz those fingers just don't want to type it right)