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Pirates Of The ‘Carry-On-Regardless’

Posted by jayfromeire on Mar 25th, 2010 and filed under Economic Crisis, International. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry from your site


William K. Black wrote a book in 2005 titled “The Best Way to Rob a Bank is to Own One” where he outlined the fraud and corruption at the highest levels of international banking.                   

What we are seeing now in the light of massive bonuses, involving billions of Euro, Dollars and Pounds, being handed out to executives and lower level employees, is simply the same culture of fraud and corruption which has seeped down to the lower levels of an industry which has utterly disregarded any pretence of moral conscience.       

           
 

This industry has deliberately plunged the world and the majority of ordinary people into a period of extreme doubts and anxieties over the future of themselves, their children and future generations.        

The climate of greed in this industry has undeniably never changed. Whilst the international bankers have absconded with the wealth of nations, their cronies in subsidiary banks, where ordinary people’s financial security is crucial, are now doing the same. These lower level parasites continue to coerce governments into passing legislation, in Ireland’s case, NAMA – (Never Any Money Again).                   

This is happening across the developed world and allows governments, without the consent of its citizens, to literally tax working people to pay for the illegal and corrupt practices of a criminal cabal responsible for the state of the world today.                    

This is piracy of the highest order, and the ordinary people paying for this, for generations to come, will be born into a financial bondage to the coming world state which amounts to nothing less than SLAVERY.               

We are being financially raped by the banking elite who simply demand that our government pass the very legislation which will condemn the citizens to a future of indentured servitude. We, the taxpayers, will have to cough up our last cent to the parasites of finance to furnish their lavish lifestyles of champagne parties and fancy yachts, whilst we are left struggling to make ends meet.                 

The government tells us we need to get through this current financial crisis together, by pulling together don’t you know, whilst they maintain their positions of power over us and live the highlife with their banker and building developer buddies. They don’t take responsibility for, or account to the public for, the catastrophe they’ve inflicted on families and businesses in this country. At the same time they try to justify their uselessness and inflated salaries, presumably in line with their inflated egos and ludicrous self belief in their value to society, whilst at the same time maintaining their massive expense accounts and lavish pension arrangements which nobody else in the country is entitled to.

machholz responce 

Careful what you ask for!

With the cries of change the government getting louder, I caution and ask the question will we be any better off?

Make no mistake I want to have a change of government and I want to jail All the corrupt Basta***

Responsible for the mess we are now in.

What exactly will the new government do about the political gangsters responsible for the mess we are now in?

see posting

Fianna Fail ship on the rocks

Fianna Fáil TD for Carlow-Kilkenny John McGuinness today accused Brian Cowen of weak leadership and called on him to consider his position as leader of Fianna Fáil and as Taoiseach.

In an interview broadcast on KCLR96FM this morning, Mr McGuinness said this week’s Cabinet reshuffle showed “a lack of vision, strategy and imagination.”

He also claimed he Taoiseach had “put the party and tribalism first and the country second, with his reshuffle.

“There wasn’t enough emphasis on the economics of the situation, the need for a powerhouse within Government to formulate policy and move things forward with a direct focus on those who are unemployed,” said Mr McGuinness.

“There isn’t an obvious plan for people…we haven’t reached out to those people that need the leadership in terms of their unemployment status or their business strategy to say, and by the way, this is what we are going to do next to support you and to get you out of your difficulties,” he added.

Here we see the Fianna Fail machine is now beginning to fall apart

The obvious self preservation of the party leadership being the main emphases in the latest Cabinet reshuffle.

Things are bad, when their own party members start attacking their own leadership.

With the establishment of NAMA with the support of the above Mr. John Mc Guinness

This government lost all claim to be of the people and for the people.

They sold us out the international bond holder’s .In America the large banks have realized the reality of the situation on the ground and have started a new incentive to keep people in their homes even to the extent that they write down 35%-50% of the lone on these people’s homes

To-day we here that Anglo Irish Bank is now looking for another 10,000,000,000:00 that’s 10 Billion Euros

So far we have given them 5 billion and the other banks have gotten approx 7,500,000,000 and will be expecting to get another 9,000,000,000:00

With all this money it would be cheaper for the government to pay off every house mortgage in the country and let the banks and international bond holders go and developers and commercial investors go and whistle and negotiate their own way out instead of making the taxpayers of this country pay for them.

The Economist comments

 

Mar 17th 2010, 15:50 by R.A. | WASHINGTON

PAUL KRUGMAN continues to push back against my criticism of his get-tough approach to the Chinese dollar peg. New posts on the subject are here, and here. The first concerns the question of how much of the world is in a liquidity trap, which is important because:

We’re currently living in a world in which both central banks and governments are unable or unwilling to pursue sufficiently expansionary policies to eliminate mass unemployment; so it’s a paradox of thrift world, in which anyone who tries to save more reduces demand, reduces employment, and – because investment responds to excess capacity – ends up actually reducing investment. By exporting savings to the rest of the world, via an artificial current account surplus, China is making all of us poorer.

Read more on this link http://www.economist.com/blogs/freeexchange/2010/03/chinas_currency_3?source=hptextfeature

Murder in the name of Israel

Here we have a government sponsored murder of a person who was more than likely unarmed

This tape should remove all doubt that this kind of state sponsored terrorism exist and that totally innocent countries passports are used in such international crimes and by default are endangering the lives the citizens of such countries

Shame on Israel!

Wall St. Helped to Mask Debt Fuelling Europe’s Crisis

As worries over Greece rattle world markets, records and interviews show that with Wall Street’s help, the nation engaged in a decade-long effort to skirt European debt limits. One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels.

Even as the crisis was nearing the flashpoint, banks were searching for ways to help Greece forestall the day of reckoning. In early November — three months before Athens became the epicenter of global financial anxiety — a team from Goldman Sachs arrived in the ancient city with a very modern proposition for a government struggling to pay its bills, according to two people who were briefed on the meeting.

The bankers, led by Goldman’s president, Gary D. Cohn, held out a financing instrument that would have pushed debt from Greece’s health care system far into the future, much as when strapped homeowners take out second mortgages to pay off their credit cards.

It had worked before. In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means.

Athens did not pursue the latest Goldman proposal, but with Greece groaning under the weight of its debts and with its richer neighbors vowing to come to its aid, the deals over the last decade are raising questions about Wall Street’s role in the world’s latest financial drama.

As in the American subprime crisis and the implosion of the American International Group, financial derivatives played a role in the run-up of Greek debt. Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing in Greece, Italy and possibly elsewhere.

In dozens of deals across the Continent, banks provided cash upfront in return for government payments in the future, with those liabilities then left off the books. Greece, for example, traded away the rights to airport fees and lottery proceeds in years to come.

Critics say that such deals, because they are not recorded as loans, mislead investors and regulators about the depth of a country’s liabilities.

Some of the Greek deals were named after figures in Greek mythology. One of them, for instance, was called Aeolos, after the god of the winds.

The crisis in Greece poses the most significant challenge yet to Europe’s common currency, the euro, and the Continent’s goal of economic unity. The country is, in the argot of banking, too big to be allowed to fail. Greece owes the world $300 billion, and major banks are on the hook for much of that debt. A default would reverberate around the globe.

A spokeswoman for the Greek finance ministry said the government had met with many banks in recent months and had not committed to any bank’s offers. All debt financings “are conducted in an effort of transparency,” she said. Goldman and JPMorgan declined to comment.

While Wall Street’s handiwork in Europe has received little attention on this side of the Atlantic, it has been sharply criticized in Greece and in magazines like Der Spiegel in Germany.

“Politicians want to pass the ball forward, and if a banker can show them a way to pass a problem to the future, they will fall for it,” said Gikas A. Hardouvelis, an economist and former government official who helped write a recent report on Greece’s accounting policies.

Wall Street did not create Europe’s debt problem. But bankers enabled Greece and others to borrow beyond their means, in deals that were perfectly legal. Few rules govern how nations can borrow the money they need for expenses like the military and health care. The market for sovereign debt — the Wall Street term for loans to governments — is as unfettered as it is vast.

“If a government wants to cheat, it can cheat,” said Garry Schinasi, a veteran of the International Monetary Fund’s capital markets surveillance unit, which monitors vulnerability in global capital markets.

Banks eagerly exploited what was, for them, a highly lucrative symbiosis with free-spending governments. While Greece did not take advantage of Goldman’s proposal in November 2009, it had paid the bank about $300 million in fees for arranging the 2001 transaction, according to several bankers familiar with the deal.

Such derivatives, which are not openly documented or disclosed, add to the uncertainty over how deep the troubles go in Greece and which other governments might have used similar off-balance sheet accounting.

The tide of fear is now washing over other economically troubled countries on the periphery of Europe, making it more expensive for Italy, Spain and Portugal to borrow.

For all the benefits of uniting Europe with one currency, the birth of the euro came with an original sin: countries like Italy and Greece entered the monetary union with bigger deficits than the ones permitted under the treaty that created the currency. Rather than raise taxes or reduce spending, however, these governments artificially reduced their deficits with derivatives.

Derivatives do not have to be sinister. The 2001 transaction involved a type of derivative known as a swap. One such instrument, called an interest-rate swap, can help companies and countries cope with swings in their borrowing costs by exchanging fixed-rate payments for floating-rate ones, or vice versa. Another kind, a currency swap, can minimize the impact of volatile foreign exchange rates.

But with the help of JPMorgan, Italy was able to do more than that. Despite persistently high deficits, a 1996 derivative helped bring Italy’s budget into line by swapping currency with JPMorgan at a favorable exchange rate, effectively putting more money in the government’s hands. In return, Italy committed to future payments that were not booked as liabilities.

“Derivatives are a very useful instrument,” said Gustavo Piga, an economics professor who wrote a report for the Council on Foreign Relations on the Italian transaction. “They just become bad if they’re used to window-dress accounts.”

In Greece, the financial wizardry went even further. In what amounted to a garage sale on a national scale, Greek officials essentially mortgaged the country’s airports and highways to raise much-needed money.

Aeolos, a legal entity created in 2001, helped Greece reduce the debt on its balance sheet that year. As part of the deal, Greece got cash upfront in return for pledging future landing fees at the country’s airports. A similar deal in 2000 called Ariadne devoured the revenue that the government collected from its national lottery. Greece, however, classified those transactions as sales, not loans, despite doubts by many critics.

These kinds of deals have been controversial within government circles for years. As far back as 2000, European finance ministers fiercely debated whether derivative deals used for creative accounting should be disclosed.

The answer was no. But in 2002, accounting disclosure was required for many entities like Aeolos and Ariadne that did not appear on nations’ balance sheets, prompting governments to restate such deals as loans rather than sales.

Still, as recently as 2008, Eurostat, the European Union‘s statistics agency, reported that “in a number of instances, the observed securitization operations seem to have been purportedly designed to achieve a given accounting result, irrespective of the economic merit of the operation.”

While such accounting gimmicks may be beneficial in the short run, over time they can prove disastrous.

George Alogoskoufis, who became Greece’s finance minister in a political party shift after the Goldman deal, criticized the transaction in the Parliament in 2005. The deal, Mr. Alogoskoufis argued, would saddle the government with big payments to Goldman until 2019.

Mr. Alogoskoufis, who stepped down a year ago, said in an e-mail message last week that Goldman later agreed to reconfigure the deal “to restore its good will with the republic.” He said the new design was better for Greece than the old one.

In 2005, Goldman sold the interest rate swap to the National Bank of Greece, the country’s largest bank, according to two people briefed on the transaction.

In 2008, Goldman helped the bank put the swap into a legal entity called Titlos. But the bank retained the bonds that Titlos issued, according to Dealogic, a financial research firm, for use as collateral to borrow even more from the European Central Bank.

Edward Manchester, a senior vice president at the Moody’s credit rating agency, said the deal would ultimately be a money-loser for Greece because of its long-term payment obligations.

Referring to the Titlos swap with the government of Greece, he said: “This swap is always going to be unprofitable for the Greek government.”

source  http://www.nytimes.com/2010/02/14/business/global/14debt.html?pagewanted=2

Omar Hassan Ahmed Bashir

KHARTOUM, SUDAN

In a challenge to one of Africa’s most defiant strongmen, the International Criminal Court on Wednesday issued an arrest warrant for Sudan’s president on charges of war crimes in Darfur, a quest for justice that immediately complicated relief efforts for hundreds of thousands of people and raised the specter of more violence.

A three-judge panel found that President Omar Hassan Ahmed Bashir “intentionally directed attacks against an important part of the civilian population of Darfur, Sudan, murdering, exterminating, raping, torturing and forcibly transferring large numbers of civilians and pillaging their property,” ICC spokeswoman Laurence Blairon said.

source http://articles.latimes.com/2009/mar/05/world/fg-sudan-war-crimes5

This is the man that Mr Browne, the English Prime Minster wants to do business with and to help fight against the Taliban in Sudan

What utter nonsense just look at the so called enquire into the war on Iraq

The ground is again being prepared for a new war and it’s all about access to cheap Oil and oil pipeline routes

This action also shows the world that the west’s morals are for sale.

There is an international arrest warrant out for this man why is he not being arrested Mr. Browne?


Irish Banks Derivative trading losses

I believe that the banks Allied Irish Bank, Bank of Ireland and Anglo Irish Bank are all hopelessly exposed to huge losses as a result of Derivative trading

They should be asked to come clean and give categorical assurances on their Derivative Trading

Apart from the huge losses on their propriety /mortgages business.ie (subprime desaster),  there is another enormous source of losses from the same banks and that is their trading in the “BOND MARKET” again I believe that they have huge exposure here as well

These Banks have lent approximately 400 billion Euros and all of it borrowed from foreign banks, these funds would have had to have  “Hedging ” or have an insurance taken out ,in case of default !

So what kind of insurance did they get then if not Derivatives?

Derivatives typically have a large notional value. As such, there is the danger that their use could result in losses that the investor would be unable to compensate for. The possibility that this could lead to a chain reaction ensuing in an economic crisis, has been pointed out by famed investor Warren Buffett in Berkshire Hathaway‘s 2002 annual report. Buffett called them ‘financial weapons of mass destruction.’ The problem with derivatives is that they control an increasingly larger notional amount of assets and this may lead to distortions in the real capital and equities markets. Investors begin to look at the derivatives markets to make a decision to buy or sell securities and so what was originally meant to be a market to transfer risk now becomes a leading indicator.

These Derivatives were traded like confetti at a wedding and have about the same value now !

 If a bank goes bust, deals are just canceled and the residual amount is transferred to the legal department. Everyone can live with that. The burden is transferred from the agent (trading floor) to the principal (the shareholders). Because risk cannot be hedged properly by market professionals, it needs to be taken over by a succession of outsiders. If outsiders are not willing to play anymore (Derivative traders) or go bust, (AIG) then risk concentrates again inside the market, where it cannot be hedged and goes Bust.

So derivatives are only as safe as their underlying  risk is liquid and delta-hedgeable.

Brian Cowen was the Finance Minister who oversaw all this gambling activity at the major Irish banks and should be made accountable for the Total Destruction of the Irish financial industry 

Brian Lenihian  is colluding with the Greens to hide the catastrophic nature of the major Banks debts! Indeed I go so far as to say they may be kept in the dark as to the combined total losses which I estimate at Anglo Irish Bank to be somewhere north of 120 Billion Euros alone!

If I am wrong, then prove me wrong, by showing us the figures of Anglo Irish Bank .

Open the books let us see for ourselves

Don’t let anyone tell you that Anglo was nor dealing in Bonds or Derivative Products,

  I call on the Minister of Finance to come out on to the Dail floor and tell the Nation that the Irish Banks have no exposure to these Derivative Markets.

 But before you do I have a question for you!

Why was there this amendment made to the NAMA Legislation?

Page 15 of the draft NAMA legislation says that the definition of a “credit facility” includes instruments such as”a hedging or derivative facility.”  Section 56, starting on page 46, then defines eligible assets for purchase by NAMA as a range of different types of “credit facilities” as well as “any other class of bank asset (Derivatives) the acquisition of which, in the opinion of the Minister, is necessary for the purposes of this Act.”

Why is the National Treasury Management Agency actively looking to recruit a Derivatives Valuation Service Provider to NAMA?

And before you deny that look below!

Title: Appointment of a Derivatives Valuation Service Provider to NAMA
Published by: National Treasury Management Agency
Publication Date: 19/08/2009
Application Deadline:  
Notice Deadline Date: 08/09/2009
Notice Deadline Time: 16:00
Notice Type: Contract Notice
Has Documents: Yes
Abstract: On the direction of the Minister for Finance, the NTMA is seeking to appoint a Derivatives Valuation Service Provider to provide valuation services (the “Services”) in respect of derivatives positions which will be transferred to NAMA. It is envisaged that one firm will be appointed to conduct the valuation of derivative positions transferring from all of the participating institutions. The Service Provider appointed will be expected to: A. Interact closely with participating institutions in order to extract key data items agreed with NAMA and required in order to carry out the valuation of derivatives. B. Determine derivatives’ valuations based on market-accepted methodologies and market rates. Valuations will incorporate adjustments which will be based on the creditworthiness of the derivatives’ counterparties and which will be specified in guidelines agreed by NAMA with the service provider.

C. The Service Provider will be required to work closely with an Audit Co-ordinator appointed by NTMA. The Audit Co-ordinator will collate valuation data and conduct audits of valuations provided by the Service Provider.

D. The Service Provider will be expected to provide a certificate to NAMA on completion of all valuations which confirms that the valuation of derivatives has been carried out on the basis of a market-accepted methodology and assumptions provided by NAMA and represents a fair assessment of the market value of such derivatives.
CPV: 66000000.

Well Boys I can save you the trouble,

There is no way in hell that anybody can put a valuation on these toxic papers /contracts .

With the collapse of the AIG the effective market no longer exists

To prove my point

When Lehman Brothers declared bankruptcy, it triggered the transfer of large sums in the CDS market to insure buyers of Lehman credit default risk protection against all losses from that event. The sellers of these contracts received the Lehman debt and in return they were obligated to pay the contract buyers (the insured parties) enough money to make the buyers “whole” i.e. to give them their full investment in the bonds back as if they had never bought the Lehman bonds.

The auction for Lehman’s debt occurred on Friday afternoon and the final auction price was $8.62. This means that for each $100 initial par value, the debt is only worth $8.62. The sellers of Lehman CDSs (Derivative contracts) were obligated to pay the insured counterparties 91.375% of the bonds’ face value and, in return, they received the bonds.

Who had to foot the bill for Lehman CDSs (Derivative contracts) Why AIG of course!

There was a 92% loss on the stated value of the Lehman contracts and I would suspect that there in now no value on all other outstanding contracts .Why ,because there isn’t enough money printed all over the world to pay for all the contracts that have being entered into .

The perceived values of these Derivatives were based on “thrust” and not real true values!

  

What are Derivates????

Here is a short introduction I manages to find /compile for those of you that are interested in this the mother of all financial scams.

The current difficulties we are witnessing in the financial markets, is just one leg of a 3 legged stool that has come off .The next leg that is about to fall off is the Derivatives leg

and this is

Derivatives are contracts whose value is “derived” from the price of something else, typically, ‘cash market investments’ such as stocks, bonds, money market instruments or commodities.

An equity derivative, for example, might give you the right to buy a particular share at a stated price up to a given date. And in these circumstances the value of that right will be directly related to the price of the “underlying” share: if the share price moves up, then the right to buy at a fixed price becomes more valuable; if it moves down, the right to buy at a fixed price becomes less valuable.

1.

This is but one example of a particular kind of derivative contract. However, the close relationship between the value of a derivative contract and the value of the underlying asset is a common feature of all derivatives.

There are many different types of derivative contract, based on lot of different financial instruments; share prices, foreign exchange, interest rates, the difference between two different prices, or even derivatives of derivatives. The possible combinations of products are almost limitless. What then are derivatives used for?

Derivatives have two main uses: hedging and trading.

Suppose you have a position in a cash market which you want to maintain for whatever reason – it may be difficult to sell, or perhaps it forms part of your long term portfolio. However, you anticipate an adverse movement in its price. With a derivatives hedge it is possible to protect these assets from the fall in value you fear. Let’s see how.

As we have already said, the value of a derivative contract is related to the value of the underlying asset it relates to. Because of this, with derivatives, it is possible to establish a position (with the same exposure in terms of the value of the contract), which will fluctuate in value almost in parallel with an equivalent underlying position.

It is also possible with derivative contracts to go either long or short; in other words you can take an opposite position to the position you have in a particular underlying asset (or portfolio).

Hedging involves taking a temporary position in a derivatives contract(s), which is equal and opposite to your cash market position in order to protect the cash position against loss due to price fluctuations. As the price moves, loss is made on the underlying, whilst profit is made on the derivative position, the two canceling each other out.

Protecting assets which you hold from a fall in value by selling an equivalent number of derivative contracts, is known as a short hedge.

 2.

A long hedge, on the other hand, involves buying derivatives as a temporary substitute for buying the underlying at some future point. This is to lock in a buying price. In other words, you are protecting yourself against an increase in the underlying price between now and when you buy in the future.

Cash and derivatives markets move together more or less in parallel, but not always at the same time, or to the same extent. This introduces a certain amount of what is called hedge inefficiency, which may need to be adjusted. At other times, an imperfect hedge might be knowingly established, which leaves a small exposure to the underlying market depending on the risk appetite of the individual.

Trading

Derivatives trading, as opposed to hedging, means buying and selling a derivatives instrument in its own right, without, that is, a transaction in the underlying. For instance, a trader can get exposure to the US government bond market by buying and selling US government bond futures without ever dealing in the actual bonds themselves.

The aim when trading derivative contracts is profit, not protection.

The risks associated with derivatives are very different to those incurred in the cash markets. When buying a share for example – a long position – your maximum possible loss is the amount you originally paid for it.

Derivatives, on the other hand, exhibit a lot of different risk profiles. Some provide limited risk and unlimited upside potential.

For example, the risk of loss with a derivative contract which confers a right to buy a particular asset at a particular price is limited to the amount you have paid to hold that right. However, profit potential is unlimited.

Others display risk characteristics in which while your potential gain is limited, your losses are potentially unlimited. 

For example, if you sell a derivative contract which confers the right to buy a particular asset at a particular price, your profit is limited to the amount you receive for conferring that right, but, because you have to deliver that asset to the counterpart at expiry of the contract, your potential loss is unlimited.

Because of the wide range of risk profiles which derivative contracts exhibit, it is vital that you have a clear understanding of the risk/return characteristics of any derivative strategy before you execute it.

Leverage

Apart from the structure of the instrument itself, the source of a lot of the risk associated with derivative contracts stems from the fact that they are leveraged contracts.

Derivative products are said to be ‘leveraged’ because only a proportion of their total market exposure needs to be paid to open and maintain a position. This percentage of the total is called a ‘margin’ in futures markets; and a ‘premium’ in options markets. In this context, ‘leverage’ is the word used in all English-speaking derivative markets.

Because of leverage your market exposure with derivative contracts can be several times the cash you have placed on deposit as “margin” for the trade, or paid in the form of a premium.

Leverage, of course, can work both in your favor and against you. A derivative which gives you a market exposure of 10 times the funds placed on deposit is excellent if prices are moving in your favor, but not so good if they are moving against you, as losses will mount up very rapidly.

 3.

In other words, with leveraged positions, losses are magnified as well as gains.

Follow link to see advertisement

http://www.e-tenders.gov.ie/search/show/search_view.aspx?ID=AUG125404

What is the Bond Market??

 Bond marke

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.

Nearly all of the $923 billion average daily trading volume (as of early 2007) in the U.S. bond market 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.

 

Market structure

Bond markets in most countries remain decentralized and lack common exchanges like stock, future and commodity markets. This has occurred, in part, because no two bond issues are exactly alike, and the number of different securities outstanding is far larger.

However, the New York Stock Exchange (NYSE) is the largest centralized bond market, representing mostly corporate bonds. The NYSE migrated from the Automated Bond System (ABS) to the NYSE Bonds trading system in April 2007 and expects the number of traded issues to increase from 1000 to 6000.[1]

 Types of bond markets

The Securities Industry and Financial Markets Association classifies the broader bond market into five specific bond markets.

Bond market participants

Bond market participants are similar to participants in most financial markets and are essentially either buyers (debt issuer) of funds or sellers (institution) of funds and often both.

Participants include:

Because of the specificity of individual bond issues, and the lack of liquidity in many smaller issues, the majority of outstanding bonds are held by institutions like pension funds, banks and mutual funds. In the United States, approximately 10% of the market is currently held by private individuals.

Bond market volatility

For market participants who own a bond, collect the coupon and hold it to maturity, market volatility is irrelevant; principal and interest are received according to a pre-determined schedule.

But participants who buy and sell bonds before maturity are exposed to many risks, most importantly changes in interest rates. When interest rates increase, the value of existing bonds fall, since new issues pay a higher yield. Likewise, when interest rates decrease, the value of existing bonds rise, since new issues pay a lower yield. This is the fundamental concept of bond market volatility: changes in bond prices are inverse to changes in interest rates. Fluctuating interest rates are part of a country’s monetary policy and bond market volatility is a response to expected monetary policy and economic changes.

Economists’ views of economic indicators versus actual released data contribute to market volatility. A tight consensus is generally reflected in bond prices and there is little price movement in the market after the release of “in-line” data. If the economic release differs from the consensus view the market usually undergoes rapid price movement as participants interpret the data. Uncertainty (as measured by a wide consensus) generally brings more volatility before and after an economic release. Economic releases vary in importance and impact depending on where the economy is in the business cycle.

Bond investments

Investment companies allow individual investors the ability to participate in the bond markets through bond funds, closed-end funds and unit-investment trusts. In 2006 total bond fund net inflows increased 97% from $30.8 billion in 2005 to $60.8 billion in 2006.[2] Exchange-traded funds (ETFs) are another alternative to trading or investing directly in a bond issue. These securities allow individual investors the ability to overcome large initial and incremental trading sizes.

Bond indices

Main article: Bond market index

A number of bond indices exist for the purposes of managing portfolios and measuring performance, similar to the S&P 500 or Russell Indexes for stocks. The most common American benchmarks are the Lehman Aggregate, Citigroup BIG and Merrill Lynch Domestic Master. Most indices are parts of families of broader indices that can be used to measure global bond portfolios, or may be further subdivided by maturity and/or sector for managing specialized portfol

Bond market
   
Bond · Debenture · Fixed income
   
Types of bonds by issuer Agency bond · Corporate bond (Senior debt, Subordinated debt) · Distressed debt · Emerging market debt · Government bond · Municipal bond · Sovereign bond
   
Types of bonds by payout Accrual bond · Auction rate security · Callable bond · Commercial paper · Convertible bond · Exchangeable bond · Fixed rate bond · Floating rate note · High-yield debt · Inflation-indexed bond · Inverse floating rate note · Perpetual bond · Puttable bond · Reverse convertible · Zero-coupon bond
   
Securitized Products Asset-backed security · Collateralized debt obligation · Collateralized mortgage obligation · Commercial mortgage-backed security · Mortgage-backed security
   
Derivatives Bond option · Credit derivative · Credit default swap · CLN
   
Pricing Accrued interest · Bond valuation · Clean price · Coupon · Day count convention · Dirty price · Maturity · Par value
   
Yield analysis Nominal yield · Current yield · Yield to maturity · Yield curve · Bond duration  · Bond convexity  · TED spread
   
Credit and spread analysis Credit analysis · Credit risk · Credit spread · Yield spread · Z-spread · Option adjusted spread
   
Interest rate models Short rate models · Rendleman-Bartter · Vasicek · Ho-Lee · Hull-White · Cox-Ingersoll-Ross · Chen · Heath-Jarrow-Morton · Black-Derman-Toy · Brace-Gatarek-Musiela
   
Organizations Commercial Mortgage Securities Association (CMSA) · International Capital Market Association (ICMA) · Securities Industry and Financial Markets Association (SIFMA)

Retrieved from “http://en.wikipedia.org/wiki/Bond_market

     See also Link

(http://www.investinginbonds.com/)

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