Jim,
The Auld Sod seems to have succumbed as well. I guess it’s the famine all over again. Soon the IMF will be coming to Dublin. God help us. The numbers are staggering:
"Mary Harney, health minister and former deputy Prime Minister said,: ‘We’re spending € 500 million a week more than we’re raising." (FT, today, p.1)
When adjusted for population 80x and exchange rate 1.5, this is the US equivalent of $3.12 Trillion per annum. Someone please check my math, the room is starting to sway…
CIGA Pedro
Dear Jim,
Are these not the same schools that teach this crap?
CIGA RS
Harvard Paid $500 Million to Exit Backfired Swaps
By John Lauerman and Michael McDonald
Oct. 16 (Bloomberg) — Harvard University, the world’s richest school, paid almost $500 million to investment banks to escape interest-rate swaps that backfired, according to the school’s annual report released today.
Harvard paid $497.6 million during the fiscal year ended June 30 to get out of $1.1 billion of interest-rate swaps intended to hedge variable-rate debt for capital projects, the report said. The university in Cambridge, Massachusetts, said it also agreed to pay $425 million over 30 to 40 years to offset an additional $764 million in swaps.
The transactions began losing value last year as central banks slashed benchmark lending rates, forcing the university to post collateral with lenders, said Daniel Shore, Harvard’s chief financial officer. Some agreements require that the parties post collateral if there are significant changes in interest rates.
“When we went into the fall, we had some serious liquidity management issues we were dealing with and the collateral postings on the swaps was one,” Shore said in an interview today. “In evaluating our liquidity position, we wanted to get some stability and some safety.”
Harvard sold $2.5 billion in bonds, in part to pay for the swap exit, even as the school’s endowment recorded its biggest loss in 40 years, the Harvard report said.
Type of Derivative
