The credit markets are a more important measure of the severity of the financial crisis than the stock markets, as Henry Paulson, the Treasury secretary, and others have noted.
Below indicators are used to measure credit crisis
Treasury Bills
Libor Rates
Ted Spread
Commercial Paper
High Bond Yeilds
For credit crisis indicators daily movement check out on nytimes.
http://www.nytimes.com/interactive/2008/10/08/business/economy/20081008-credit-chart-graphic.html
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You mean the risk to a systemic failure is easing. I am not at all
sure that the REAL indicators are even looked at - the volume of
issuances in the securitisation markets. All of the sources quoted on
the blog only give an indication of sentiment, not a real nuts-and-
bolts of a sustained recovery in the real credit markets which have
been the cause of the infarction. Therefore, on the basis that US
house prices may fall a further 15% upwards [i.e. to 40%], there is
little room for complacency. The real losses on hand and needing to be
worked out, are way beyond the measnurs introduced by the US
government. Therefore, sentiment in the equity index for a sustained
upward drive are premature in my view.
Put it simply: the unwinding has been severe so far, but it is likley
only the beginning. Remember the Tsunami charts for US ARM - that
showed tickler rates are due to reset for a sustained period - another
four years if memory serves me.
So short term periods of ebulliance across a greater period of overall
decline, is what logic would seem to dictate. Anything else, would in
my view, be evdidence of a bubble being generated in equities, again.
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