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Reuters Compare Todays Crisis With The Past

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FACTBOX-Rating past financial crises

Thu Aug 9, 2007 9:16PM BST

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[-] Text [+] NEW YORK, Aug 9 (Reuters) - The current tightening of

credit has drawn comparisons to past financial crises, ranging

from the collapse of Long-Term Capital Management, the Russian

default in 1998, the U.S. savings and loans crisis in the 1980s

and even the Great Depression. The following is a partial handicapping of past crises, on

a scale of "1" (minor) to "10" (terrible), according to an Aug.

6 Lehman Brothers report. HANDICAPPING CREDIT CRISES

-1973-75: 10, almost off the scale to an 11. Middle East War, Arab oil embargo, quadrupling of oil

prices, Watergate, worst global economic slump since the great

depression. The Baa/BBB corporate bond market was effectively

shut for an extended stretch. AAA spreads widen 199 percent but

later tighten by 72 percent.

-1981-82: Another 10. Worst global/U.S. recession since the

great depression: U.S unemployment hit 10 percent, the highest

since the 1930s. Spreads soar 108 percent, then rally by 68

percent.

-1998: A 10. Triple punch body blow. Russian

devaluation/default, LTCM, and revelations that led to an

impeachment vote on U.S. President Clinton. Credit spreads

widen 111 percent, then rally 30 percent.

-2001: A 10 for 9/11, Onset of global recession, Enron.

High-grade spreads widen by 26 percent, followed by a 17

percent rally.

-2002: An 8 for WorldCom, continuation of malaise.

High-grade spreads widen by 43 percent, followed by a 61

percent rally as the world economy recovers.

-1979: An 8. Iranian revolution, another leap in oil prices

and U.S. rust belt restructuring. AAA spreads pop 361 percent,

than contract 91 percent. Rating agencies begin to sharply

reduce ratings on electric utilities. (Three Mile Island

nuclear accident in March did not help.)

-2007: A 7 so far, with a higher final grade possible. First

"neo-modern credit market correction," magnified by subprime

flu. High-grade spreads widen by 48 percent. World economic and

corporate fundamentals far superior to past credit crises, but

this could change. Stay tuned. SOURCE: Lehman Brothers, Global Relative Value report, Aug.

6, 2007

The article from reuters

edited for formatting

Edited by stuckmojo

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FACTBOX-Rating past financial crises

Thu Aug 9, 2007 9:16PM BST

Email this Article |Print this Article | RSS

[-] Text [+] NEW YORK, Aug 9 (Reuters) - The current tightening of

credit has drawn comparisons to past financial crises, ranging

from the collapse of Long-Term Capital Management, the Russian

default in 1998, the U.S. savings and loans crisis in the 1980s

and even the Great Depression. The following is a partial handicapping of past crises, on

a scale of "1" (minor) to "10" (terrible), according to an Aug.

6 Lehman Brothers report. HANDICAPPING CREDIT CRISES

-1973-75: 10, almost off the scale to an 11. Middle East War, Arab oil embargo, quadrupling of oil

prices, Watergate, worst global economic slump since the great

depression. The Baa/BBB corporate bond market was effectively

shut for an extended stretch. AAA spreads widen 199 percent but

later tighten by 72 percent.

-1981-82: Another 10. Worst global/U.S. recession since the

great depression: U.S unemployment hit 10 percent, the highest

since the 1930s. Spreads soar 108 percent, then rally by 68

percent.

-1998: A 10. Triple punch body blow. Russian

devaluation/default, LTCM, and revelations that led to an

impeachment vote on U.S. President Clinton. Credit spreads

widen 111 percent, then rally 30 percent.

-2001: A 10 for 9/11, Onset of global recession, Enron.

High-grade spreads widen by 26 percent, followed by a 17

percent rally.

-2002: An 8 for WorldCom, continuation of malaise.

High-grade spreads widen by 43 percent, followed by a 61

percent rally as the world economy recovers.

-1979: An 8. Iranian revolution, another leap in oil prices

and U.S. rust belt restructuring. AAA spreads pop 361 percent,

than contract 91 percent. Rating agencies begin to sharply

reduce ratings on electric utilities. (Three Mile Island

nuclear accident in March did not help.)

-2007: A 7 so far, with a higher final grade possible. First

"neo-modern credit market correction," magnified by subprime

flu. High-grade spreads widen by 48 percent. World economic and

corporate fundamentals far superior to past credit crises, but

this could change. Stay tuned. SOURCE: Lehman Brothers, Global Relative Value report, Aug.

6, 2007

The article from reuters

edited for formatting

1998 as bad as 1973????? ******** it was! An article written by some 20 year old college kid investment banker wannabe doing an internship I think.

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-2002: An 8 for WorldCom, continuation of malaise.

High-grade spreads widen by 43 percent, followed by a 61

percent rally as the world economy recovers.

this recovery didnt take place until after march 2003 iraq war.

just look at the charts for chrissakes

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-2001: A 10 for 9/11, Onset of global recession, Enron.

High-grade spreads widen by 26 percent, followed by a 17

percent rally.

I must have missed the global recession in 2001, which globe exactly?

Edited by Bear Goggles

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I must have missed the global recession in 2001, which globe exactly?

you can thank GB and the BOE for that one, saving the day through loose monetary and fiscal policy.

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