Category: Credit Crisis 2008
The analysis published under this category are as follows.
Sunday, March 02, 2008
Credit Crisis Pushes United States Into Stagflation / News_Letter / Credit Crisis 2008
By: Nadeem_Walayat
The week saw stocks take a tumble and commodities such as Gold soar as the credit crisis reasserted its presence in the form of liquidity fueled rampant money supply growth leading to surging inflation in the US to 4.3%.(CPI), well above the target of 2%. The slowing US economy and rising inflation imply the US is now in a stagflationary environment, as the US Fed pulls out all the stops in an attempt to delay a recession until after the November presidential election.Read full article... Read full article...
Saturday, March 01, 2008
Credit Contagion Spreads from Monoline Insurers to VIE's / Stock-Markets / Credit Crisis 2008
By: Anthony_Cherniawski
The next 3-letter acronym for toxic securities: “VIE” - While banks are lending another $3 billion to Ambac, a bond insurer, in the hope of staving off more rating downgrades, yet another entity looms large in the field of risk management. Suddenly, a new class of structured investment vehicle called Variable Interest Entities (VIEs), now contain toxic properties. It appears that the VIEs are bond issues that participate in the Auction Rate Securities (ARS) market. These bonds have a clause in their covenant that, if an auction fails to provide adequate liquidity, the yield on the bond resets (higher, of course) to a “fail rate.” Read full article... Read full article...
Friday, February 29, 2008
Credit Crisis Timeline - From Foreclosures To Bank Failures / Stock-Markets / Credit Crisis 2008
By: Paul_Lamont
As Charles Kindleberger asks in the investment classic Manias, Panics and Crashes ; “the essence of financial distress is loss of confidence. What comes next - slow recovery of belief in the future as various aspects of the economy are corrected, or collapse of prices, panic, runs on banks, a rush to get out of illiquid assets and into money?”
Our timeline of financial distress is below:
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Friday, February 29, 2008
Tax Rebate 2008 - United States Congress Resorts to Trickle-Up Irrationality / Economics / Credit Crisis 2008
By: Andy_Sutton
The Roman poet Juvenal used the term ‘bread and circuses' to characterize palliative measures taken by the imperial Roman government to lure the populace into a state of blissful ignorance. This blissful ignorance comes at the expense of the solution of long-term societal problems, and arguably was a significant component of the end of the Empire.
Charles Fourier described his economic pinnacle a bit differently, opining that the oceans would turn to lemonade and roasted chickens would fly into our mouths. He used this amazing statement to describe a utopian socialism where the government was the ultimate provider.
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Friday, February 29, 2008
Bank Failures Warning! - Banking Crisis Entering a New Stage? / Stock-Markets / Credit Crisis 2008
By: Money_and_Markets
Mike Larson writes: I'm going to cut to the chase here: The U.S. financial industry is facing unprecedented challenges. Unlike past crises, which tended to be isolated in one or two parts of the credit market, this one is different ...
We are seeing major credit problems popping up in everything from residential mortgages to commercial mortgages to leveraged buyout loans to credit cards to auto loans. (And I'm probably forgetting a few!)
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Thursday, February 28, 2008
Are Your Savings and Investments Safe From Bank Failures? / Personal_Finance / Credit Crisis 2008
By: Christopher_Laird
Time to ask a few good questions
about your Interest rates - I think its time to start asking some basic questions about what we all think we are doing financially. Is what we do appropriate for the times? Or, more to the point, do we view risk appropriately?
Do we live in a time where we might just see our personal banks, or financial institutions such as money market funds, MMFs, fail?
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Wednesday, February 27, 2008
Ambac Bailout May Cause Credit Crisis to Worsen / Stock-Markets / Credit Crisis 2008
By: Axel_Merk
A consortium of banks is considering injecting $3 billion dollars into Ambac, the mono-line insurer that relies on its AAA rating to insure, amongst others, municipal bonds and CDOs ( collateralized debt obligations ). What appears as a rescue plan and may appease the markets short-term, may plant the seeds for disaster.
Mono-line insurers used to be in the business of insuring municipal bonds. For a small fee to the insurers, municipalities were able to attach a AAA rating to their bond offerings, significantly lowering their borrowing cost. The market was so attractive that a short-term market was created where long-term debt was packaged into “auction rate securities” (ARS). ARS are a kind of commercial paper attractive to, amongst others, money market funds and treasury departments of large corporations. Municipal bond funds are also large buyers of insured municipal debt.
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Wednesday, February 27, 2008
Bank seizures of US Homes Surge by 90% As Borrowers Hit by Adjustable Rate Mortgage Resets / Housing-Market / Credit Crisis 2008
By: Money_and_Markets
Martin here with two news items I want to bring to your immediate attention.
First and foremost, talk on Wall Street yesterday that the housing market "may be bottoming" is a bunch of hooey.
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Tuesday, February 26, 2008
Subprime Mortgage Scam Lands US Tax Payer $739 Billion Bailout Bill / Stock-Markets / Credit Crisis 2008
By: Mike_Whitney
The SEC probe of the securitization of subprime mortgages into collateralized debt obligations (CDOs), announced last summer, has yielded no official enforcement cases....SEC chief, Christopher Cox, along with other top-level administration officials, has cautioned against quick-fire regulatory or enforcement responses to the worsening credit crisis, noting that the market instead should be left to work it out.” Nicholas Rummel, “SEC Drift Said to Prevent Action on Credit Crunch”, Financial Week Read full article... Read full article...
Monday, February 25, 2008
Three Great Investment Opportunities and One Grave Danger For Your Portfolio / Stock-Markets / Credit Crisis 2008
By: Money_and_Markets
In a last ditch attempt to prevent a broader financial collapse, eight major banks in six different countries — Citigroup, Wachovia, Barclays, Royal Bank of Scotland, Société Générale, BNP Paribas, UBS and Dresdner — are coming to the rescue of one U.S. bond insurance company this week: Ambac.
These are the banks that have the most exposure to structured securities and other derivatives guaranteed by Ambac ... and the most to lose if Ambac goes down.
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Monday, February 25, 2008
Credit Crunch Contagion Could Turn into Japan Style Asset Price Deflation / Stock-Markets / Credit Crisis 2008
By: Captain_Hook
The Irony Of It All - Toxic credit crunch contagion continues to spread, silently kicking the stuffing out of the economy faster than people think. Whether you want to talk about credit cards , corporations , or commercial real estate – the credit crunch is spreading, and beginning to look nastier all the time. You should know that when banks begin to fail in the States, and they will, things could spiral out of control to the extent controls will to need be placed on both digital and physical movement. Transfers between banks will cease up completely, debts will be called in (so pay them off now), systems from food distribution to medical care will break down, and Martial Law will be the result as the population retaliates. Life will change as you know it. Read full article... Read full article...
Sunday, February 24, 2008
Colossal Collateral Damage- Financial Tsunami Part V / Interest-Rates / Credit Crisis 2008
By: F_William_Engdahl
The Predators had a ball - The multi-trillion dollar US-centered securitization debacle began to unravel in June 2007 with the liquidity crisis in two hedge funds owned by Bear Stearns, one of the world's largest and most successful investment banks. The funds were heavily invested in sub-prime mortgage securities. The damage soon spread across the Atlantic to a little-known German state-owned bank, IKB. In July 2007, IKB's wholly-owned conduit, Rhineland Funding, had approximately €20 billion of Asset Backed Commercial Paper (ABCP). In mid-July, investors refused to rollover part of Rhineland Funding's ABCP. That forced the European Central Bank to inject record volumes of liquidity into the market to keep the banking system liquid. Read full article... Read full article...
Saturday, February 23, 2008
Will the G-7 Nations Impose Capital Controls? / Commodities / Credit Crisis 2008
By: Julian_DW_Phillips
Finance leaders from the Group of Seven, industrialized nations discussed collective action “to calm markets, if price moves become irrational .” Finance ministers and central bankers from the G7 –the United States, Canada, Japan, Britain, France, Germany, and Italy—said that financial market turmoil was serious and persisting. They also said more work was needed to restore markets to good working order and safeguard global growth. The European Central Bank believes that turbulence on financial markets could continue for months. Read full article... Read full article...
Friday, February 22, 2008
Credit Crunches Typically Have Proven to be Investment Opportunities / Stock-Markets / Credit Crisis 2008
By: Steve_Selengut
Many investors are beginning to think that income investing is every bit as risky as equity investing, but nothing has really changed in the relationship between these two basic building blocks of corporate finance. What has changed in recent years is the nature of the derivative products created by the wizards of Wall Street to deliver both forms of securities to investors. The most popular form of equity delivery today is the three-levels-of-speculation Index Fund. New ETFs are birthed every day and, in total, have become as common as common stocks. Have you noticed that regulators always strive to prevent financial disasters from happening... again? Read full article... Read full article...
Friday, February 22, 2008
Credit Default Swaps, the Next Financial Armageddon? / Stock-Markets / Credit Crisis 2008
By: Anthony_Cherniawski
Everyone knows that homeowners insurance is designed to insure against fires and floods but few are familiar with credit default swaps, arcane financial instruments invented by Wall Street about ten years ago. Credit default swaps (CDS) were designed as “insurance” to reimburse banks and bondholders when companies failed to pay their debts. Credit default swaps have become so popular among banks that the Comptroller of the Currency (OCC), which regulates banks, reports that they are the fastest growing derivatives product in the market, growing 19% from the second quarter to the third quarter last year to $14 trillion in value. Read full article... Read full article...
Thursday, February 21, 2008
Gold Reacting to Central Bank Money Attempting to Prevent Collapsing Credit Bubble / Commodities / Credit Crisis 2008
By: Christopher_Laird
Bottomless financial pits - With gold again having a try at $1000, speculators aside, one wonders how far that has to go?
Well, for one thing, Central Banks have posted about only $2trillion worth of financial injections and bailouts since only August 07 to combat the credit collapse.
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Wednesday, February 20, 2008
Narodny Rock Bank and the G7's Men of Action / Stock-Markets / Credit Crisis 2008
By: Adrian_Ash
"...Individually or together...erm...in pretty difficult and uncertain times...erm..."
IN TIMES OF CRISIS , it's always good to know there are bright, committed people working non-stop to sort things out. Or so everyone seems to believe.
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Wednesday, February 20, 2008
US $2 Trillion Bailout- Monetary Inflation to Send Gold Soaring / Commodities / Credit Crisis 2008
By: Jim_Willie_CB
Like a whirlwind, the crisis triggered by the housing crisis and mortgage debacle has extended to almost every phase of the landscape in US economic and financial life. And the rookies running the US Federal Reserve initially said the problem would be contained. My claim made in late June 2007 (see article, click here ) was that it involved absolute contagion to the system, which is what we see vividly now. Let's review some high level stresses in several arenas, examine the response potentials, and check on the gold and US Dollar impact. One should note, the gold & silver prices will soon demonstrate strong independence from the US Dollar Just like in 2005, gold can rise even with some bounce in the buck. Unlike 2005 though, the buck is likely not to make much in the way of advances. Read full article... Read full article...
Tuesday, February 19, 2008
The Credit Crash - The Next Shoe to Drop Will Be... / Interest-Rates / Credit Crisis 2008
By: John_Mauldin
As everyone by now knows, there is chaos in the municipal bond market. This week's Outside the Box is from good friend and Maine fishing buddy David Kotok of Cumberland Advisors ( www.cumber.com ).
Briefly, he outlines the problems we are seeing in munis, but then he goes on to warn of the possible next shoe to drop in closed end municipal bond funds. David is one of the smarter advisors I know, and when he points out a problem, I would suggest taking action.
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Monday, February 18, 2008
Ben Bernanke and Henry Paulson - What They Needed to Say / Stock-Markets / Credit Crisis 2008
By: Andy_Sutton
This week, we saw in mild fashion what can happen when at least one part of society begins to have doubts about another's ability to do its job. We saw Ben Bernanke and Henry Paulson on Capitol Hill this week offering testimony to Congress about the various messes we are involved in as a nation, including, but not limited to: the credit mess, the housing mess, the economic situation, the stimulus package and the list goes on. Read full article... Read full article...