February 2008

From Chart of the Day


The chart pretty much speaks for itself. In case you want to feel optimistic that maybe the worst is over… It’s worth revisiting the following older chart from Credit Suisse (via Calculated Risk)…


It’s not just sub-prime folks…  Michael Jackson’s Neverland Ranch may go up for auction under foreclosure soon, and Veronica Hearst (of the Hearst publishing empire) recently lost a beach-front mansion to foreclosure

At the end of last year I found myself banking at a new bank…  the interesting thing to consider is that I copied down the interest rates for my savings account at this bank at the time, which provides for a nice point of comparison.

Here is a quick table of the interest rates back then compared to today.  Mind you, this is only after 3 months time…

Balance Dec 2007 Feb 2008
Up to $1k 2.05% 1.26%
Up to $5k 3.11% 1.31%
Up to $10k 3.49% 1.76%
Up to $25k 3.63% 1.86%
Over $25k 4.26% 2.01%

I can only imagine how low rates are at the big retail banks.

The interest rates to be earned on cash have been cut in half in barely a quarter’s time.  I read in a news article today that the same bank has put thousands of HELOCs on hold (HELOC = home equity line of credit) due to fear of falling real estate values that back the credit. 

The flip side is that you can still get higher rates from the online money market accounts…  ING Direct (3.4%), HSBC Direct (3.55%).  They’re down significantly from previous rates (~5% for HSBC), but not quite as dramatically as retail banks.

And if you’re not too particular (or have complete faith in the FDIC insurance) you can also go to E*Trade for 4.1% rates.

Rumors of my demise have been greatly exaggerated. But I can say that starting a hedge fund from scratch is a petit morte of sorts. And dead mean tell no tales, right?

Well, I’m not even sure if I should be speaking about this as the powers that be declared on high that a hedge fund can only be marketed by word-of-mouth and, even then, to “qualified investors” only. But what constitutes word-of-mouth is fuzzy. Let’s all agree that a blog is wordy and mouthy enough.

Besides, all I’m really saying is that Lunaria Capital Management exists. And that the web site is here. (more…)

It’s worth taking note that the recession calculator is forecasting with a 94% probability* a recession will occur in the next 12 months.  The calculation is based on the current 10 year, 3 month, and overnight rates…

It’s not surprising, considering that the yield spread (30yr/3mo) looks like this: