Why Derivatives May Be the Biggest Risk for the Global Economy
Four years after the U.S. recession ended, the global economy is still beset by problems. The present danger comes from Cyprus – where the sea foam once gave birth to the goddess Aphrodite but now only creates froth in panicky financial markets. The proposed bailout plan for troubled Cypriot banks would impose losses of up to 40% on the largest depositors. And that, in turn, could undermine confidence in the banks of other troubled euro zone countries. Cyprus is only the latest challenge for global financial stability, however. In the U.S., deteriorating urban finances – from Detroit to Stockton, Calif. – threaten municipal bond holders, public-sector workers, and taxpayers. In addition, a rise in long-term interest rates seems inevitable sooner or later, either because of inflation or because the Federal Reserve backs away from its easy-money policies. Higher interest rates would mean big losses for bond investors, and also for government-sponsored entities, such as Fannie Mae and ...
addition
aphrodite
bankruptcy
billion
brothers
calif
commodity
confidence
cypriot
cyprus
detroit
edifice
entities
fannie mae
federal reserve
finance
freddie mac
inflation
investment
irs
lehman
london
morgan
options
payments
policy
recession
stability
stockton
Mergers and Acquisitions Boom! Is This a Good Sign for the Economy?
Wall Street dealmakers are off to a busy start to 2013, as some of corporate America’s most recognizable names have become involved in multi-billion-dollar mergers and acquisitions. Just yesterday, American Airlines and US Airways announced they would be merging in an $11 billion deal, while private equity firm 3G and Warren Buffett‘s Berkshire Hathaway announced a $28 billion joint acquisition of food conglomerate H.G. Heinz. And these two deals follow hard upon $24.4 billion leveraged buyout of Dell by private equity firm Silver Lake Partners and the firm’s founder, Michael Dell. Indeed, according to data from Deallogic, U.S. companies have spent $219 billion on mergers and acquisitions so far in 2013, a sharp increase from 2012, when firms spent just $85 billion during the same period. And U.S. firms are on pace to have the biggest year in M&A activity since 2000. While all this activity will be surely benefit shareholders of acquired firms — as well as lots of Wall ...
acquisition
action
activity
airlines
airways
america
american
availability
berkshire
billion
buffett
conditions
consolidation
deallogic
dell
deregulation
equity
federal reserve
government
hathaway
heinz
innovation
instance
investment
lake
michael
partners
policy
street
wall
warren
Fed Likely to Stick to Low-Rate Message This Week
WASHINGTON — When the Federal Reserve meets this week, it’s likely to affirm a message it intends to help lift the economy: that consumers and businesses will be able to borrow cheaply well into the future — even after unemployment has dropped sharply. Last month, the Fed signaled for the first time that it will tie its policies to specific economic barometers. It said that as long as the inflation outlook is mild, it could keep short-term rates near zero until unemployment dips below 6.5 percent from the current 7.8 percent. That could take until the end of 2015, the Fed predicted last month. The Fed’s guidance was designed to give consumers, companies and investors a clearer sense of when super-low borrowing costs might start to rise. Though some key sectors of the economy are improving, analysts think the Fed still feels more time is needed for low rates to spur borrowing, spending and economic growth. One reason is that many Americans remain anxious about the budget impasse in ...
americans
billion
business
decision
diane
economists
fed
federal reserve
government
guidance
inflation
investment
mesirow
policy
recession
rotation
swonk
unemployment
washington