Jon Markman Says to Bundle Up for a Deep Credit Freeze

By on October 26, 2008

Jon Markman, at MSN Money, doesn’t expect credit markets to improve anytime soon and that we can expect a very poor economy as a result.

Markman explains that from July 2007 to Oct. 1 of this year, “junk spreads,” the difference between what lowest-rated companies pay for money and what the government pays, rose from 240 basis points to 1,124 basis points. (The difference between a 2% interest rate and a 12% interest rate would be 1,000 basis points.) That was already the widest spread ever seen. Yet from Oct. 1 to Oct. 9, the spread surged to 1,391 basis points, or 13.91 percentage points. And in the 10 days leading up to October 23rd, it has surged to 1,595 basis points.

Markman also comments on some high profile investors that are receiving margin calls including Kirk Kerkorian.


Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>