In the credit markets for bonds, loans and credit derivatives, spreads that had been wide began to narrow (see chart).France Telecom now plans to reduce its debt by euro20 billion–30 billion by 2003, bringing its burden back to the levels before it bought Orange from Vodafone last year.
Some analysts believe its derivative book, spread among several vehicles is actually larger than JP Morgan Chase today.
Mr. Greenberger, still concerned about regulatory battles he lost a decade ago, says that Mr. Greenspan "felt derivatives would spread the risk in the economy".
If we could we would be working somewhere else," he says of the exotic credit derivatives that spread risk, like a contagion, through the financial system.
He spent two years studying the complexities of the new credit derivatives that spread financial risk, but also exacerbated the economic downturn when the credit squeeze set in. "The fact that the banks are stronger and risk is spread more broadly should make the system more stable," Mr. Geithner said in an interview in early 2007.
Among many kinds of binary collision programs, the program TRIM and its derivatives have spread widely.
Not only were asset prices rising even faster than debt but the use of derivatives was spreading risk across the system and, in particular, away from the banks, which had capital ratios well above the regulatory minimum.The problem with debt, though, is the need to repay it.
Experiments with poor derivative log ratio spread (DLRs > 0.3) were discarded.
The Derivative Log Ratio Spread (DLRS) for the ten hybridizations was in the range 0.11-0.24.
Samples with derivative log ratio spread above <0.20 (excellent) were evaluated for reanalysis.
