If capital market conditions tighten when economic recovery is still not secure, then a downward spiral is well-nigh inevitable".
"EBay is communicating that they expect capital market conditions to be much better next year," said Sandeep Aggarwal, an Internet research analyst at Collins Stewart.
But the more the government takes, the more difficult it will be for the banks to raise private capital should conditions deteriorate further.
In the first quarter, Qualcomm's satellite business was hit by economic and capital market conditions, as well as a recent decision by the satellite telephone company Globalstar Telecommunications Ltd. to suspend payments on its debt as it looked at restructuring options.
The material adverse change clause, which requires something significant to change, specifically ruled out "changes affecting any or all of the wholesale distribution industries for construction" and "general financial or capital market conditions, including interest rates or currency exchange rates".
Lloyds has £295bn of wholesale funding [of which half matures in less than one year] and total assets of £978.9bn, which, quite understandably, would cause anyone stress in the current capital market conditions," said Bruce Packard, banks analyst at Seymour Pierce.
Early 2006 is likely to see a continuation of these factors, and while the headwind of an eventual "normalization" of credit quality and capital market conditions will inevitably crimp future profit growth, interest rate rises in the Eurozone may benefit margins.
"With capital market conditions the way they are, I think it's really unlikely," said Scott Ellison, who is director of wireless mobile communication at the Massachusetts-based research firm IDC and works out of its New York office.
REITs are highly sensitive to capital market conditions, which remain very difficult for many borrowers, because REITs must pay at least 90 percent of earnings as dividends to shareholders to keep from being taxed themselves.
