Blog Posts by Aaron Task

Follow The Daily Ticker on Facebook!

During the 2008 financial crisis, the London Interbank Offered Rate (LIBOR) was a key barometer of the failing health of the banking sector. When LIBOR spiked in late summer 2008, it was a clear sign banks weren't willing to lend to other banks and the term "counter-party risk" became part of the vernacular.

LIBOR is the rate at which banks will lend to other banks and a critical component to the inner-workings of the global financial system. As with the 10-year Treasury note and fed funds rate, literally trillions of dollars of other financial instruments -- including corporate loans and mortgage rates -- are pegged to LIBOR, making it one of most important financial indicators in the world, if not the most important.

Fast-forward to today and the events of 2008 still resonate.

Last week, Barclays paid roughly $450 million to settle charges by U.S. and U.K. regulators that its traders had manipulated LIBOR. A day after he resigned as Barclays CEO,

Ford (F) shares stumbled Friday after the automaker warned losses in its international division could be three times greater than the $190 million first-quarter loss.

Pre-tax losses could hit $570 million in the just-concluded second quarter, the company disclosed in an SEC filing, released after CFO Robert Shanks told The NY Times "overall company profits will be substantially lower" because of weakness in its international division.

When I sat down with Ford CEO Alan Mulally last week, he expressed great concern about Europe but gave no indication that the company was facing bigger-than-expected losses.

"We haven't backed off one bit on our investment in new vehicles" for Europe, Mulally said. While the European market "is really deteriorating," he noted overall auto sales are still around 14 million units.

"It's a very important market for us, we have a great product line and so we're going to stay laser-focused on serving those customers, even during the toughest of times," he

Nineteen looks like a lucky number in Europe. The EU Summit -- the 19th such confab since the debt crisis began -- is resulting in progress on two major issues: long-term fiscal unity and short-term relief for Spain and Italy.

"We affirm our strong commitment to do what is necessary to ensure the financial stability of the euro area, in particular by using the existing EFSF/ESM instruments in a flexible and efficient manner in order to stabilize markets," the official statement from the EU Summit reads.

Importantly, officials agreed to allow the European Stability Mechanism (ESM) to directly recapitalize banks, rather than having money flow through the sovereigns -- increasing their debt-to-GDP ratios.

The EU also declared that funds received from the ESM would not be senior to existing debt, removing a major concern for bondholders. Yields on Spanish and Italian debt fell sharply in response, providing relief on a critical short-term concern.

The EU asked the Eurogroup to implement these measures by July 9 and set the stage for the European Central Bank to assume the role of banking regulator for the EU by the end of the year.

The EU's goal here is to "break the vicious circle between banks and sovereigns," and the gambit appears to have paid off, at least for the moment.

Follow The Daily Ticker on Facebook!

The Supreme Court's ruling on the Affordable Care Act Thursday was destined to be controversial, regardless of the outcome. But few observers expected the Court to uphold the individual mandate. Chief Justice John Roberts sided with the majority -- basing that decision on Congress' power to levy taxes, rather than the Commerce Act.

Immediately after the ruling, Republicans declared their intention to overturn the Affordable Care Act should they retake the White House and Senate in November. GOP Presidential nominee Mitt Romney reiterated his pledge to repeal the legislation "on my first day as president."

President Obama, not surprisingly, praised the Court's ruling, calling it "a victory for people all over this country whose lives are more secure because of this law."

Lost in the partisan bickering and often hyperbolic coverage is what the Court's ruling really means for ordinary Americans.

The "vast majority" of Americans will not be affected by

Follow The Daily Ticker on Facebook!

The EU Summit is under way, the 19th such confab since the debt crisis began. This may not be Europe's absolute last chance to save the euro, but they're getting very close to the edge.

"They can kick [the can] down the road a little further...but they cannot kick it very much further," says Lee Buchheit, a partner at Cleary Gottlieb Stein & Hamilton, where he specializes in sovereign debt restructuring. "They have obvious problems with Italy and Spain now. Those are enormous economies - if they lose market access altogether and have to turn to an official sector bailout in the same way as Greece, Portugal and Ireland have done, that is a major undertaking for the EU and IMF."

As EU leaders gathered in Brussels, Spanish bond yields jumped back above the critical 7% level. Italy's Mario Monti has pushed for the new European Stability Mechanism (ESM) to buy Spanish and Italian debt to push yields down in the near term. But Buchheit believes that's a

Follow The Daily Ticker on Facebook!

Congress is reportedly close to a deal that will prevent rates from doubling on government-backed student loans. The decision only affects rates on new Stafford loans for undergrads for the 2012-13 academic year, which would rise to 6.8% from 3.4% if Congress didn't act.

While good news for students and a rare act of bipartisanship, it's a minor victory for in the wider battle to get a handle on America's student loan crisis.

Here are some of the grim statistics:

• Student loan debt hit $904 billion in the first quarter of 2012, up from $241 billion a decade ago, according to the New York Fed's quarterly report on household debt. (The Consumer Financial Protection Bureau puts total student loan debt above $1 trillion.)
• More than 37 million Americans have some student loans, with an average $23,300 of debt in 2011. Among those borrowers, 10% owe more than $54,000 and 3% more than $100,000, The NY Times reports.
• Americans are increasingly falling

Follow The Daily Ticker on Facebook!

Talk to traders today and they'll tell you the market has no conviction or direction. Trading Tuesday and Wednesday morning was described as "eerily quiet." Ask most pundits and they'll tell you that's because of uncertainty over Europe, where leaders are set to meet Thursday and Friday for the latest 'make or break' summit. (See: Europe's "Slow-bleed Emergency": Same Crisis, Different Week)

As is often the case, Barry Ritholtz, CEO of Fusion IQ, has a different opinion.

"Is this news to anybody that Europe is running into trouble?," he wonders. "All this sturm und drang over Europe is pretty well reflected in the market. It's understood."

Rather than fear of a Lehman-like event, Ritholtz says the market is being held back by the simple fact the global economy is slowing. And it's slowing down at the same time U.S. corporate profits are at record highs. Considering about 50% of S&P 500 profits come from overseas and about half of that comes from

Follow The Daily Ticker on Facebook!

After a few weeks of positive news, and a stealth recovery in its stock, Facebook (FB) has brought some unwarranted attention to itself again.

Over the weekend, the company launched a test of a feature called 'Find Friends Nearby', which allows Facebook users to locate friends using the GPS on their mobile phones. The feature prompted a backlash over concerns about privacy and stalking, and Facebook quickly took it down.

In various reports, Facebook portrayed 'Find Friends Nearby' as something being tested by a few engineers, not a formal product release. (Boys will be boys, right?)

Harder to dismiss as a mistake or a random test by some rogue elements was Facebook's decision to change every users' profile to make a facebook.com domain their primary email address.

From the outside, it appears Facebook was unhappy with the uptake of its Titan messaging system -- which supposedly can aggregate all your emails, texts and instant messages into one