Research Zeitgeist: Green Shoots vs Noxious Weeds
While “green shoots” do seem to be emerging, there are still plenty of noxious weeds around to choke off their growth.
Certainly, the weeds are getting more attention than the green shoots among visitors to Research Recap. This week’s top post was the news that Standard & Poor’s has increased its loss assumptions for 2005-2007 vintage subprime and Alt-A residential mortgage-backed securities transactions. S&P then pulled out its weed whacker to downgrade a raft of these instruments.
Visitors were also interested in the possibility a “jobless recovery” posited by Oxford Anaytica. and in a survey from McKinsey finding that US consumers are choosing not to spend.
The top post of the last month by a large margin was the news from Fitch Ratings of a sharp jump in delinquencies on US auto-loan backed securities.
On a more positive note, Oxford Analytica’s forecast of a tripling of carbon trading by 2012, spurred by efforts to curb greenhouse gas emissions, also drew strong interest.
In a week when the possibility of AIG’s equity value being zero it’s worth revisiting this quote:
Research Recap Requote of the Week
It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing $1 on any of those transactions. - Joe Cassano, former head of AIG’s Financial Products group commenting on AIG’s 2005 vintage subprime credit default swaps in August 2007 as quoted by Michael Lewis in Vanity Fair.
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