Category: Credit Crunch
The analysis published under this category are as follows.
Friday, December 21, 2007
Central Banks Flood Wall Street with Money With Little Effect / Interest-Rates / Credit Crunch
By: Money_and_Markets
Mike Larson writes: I spend my time analyzing and trading the markets now. But back in college, I double-majored in English and Journalism. So I'm familiar with many of the classics — those great works of literature that still have relevance to current events.
For instance, I can't get Samuel Taylor Coleridge's "Rime of the Ancient Mariner" out of my head. You've probably heard the classic lament:
"Water, water, every where,
And all the boards did shrink;
Water, water, every where,
Nor any drop to drink."
Thursday, December 20, 2007
Fed Liquidity Intervention in Recognition of Credit Crisis / Stock-Markets / Credit Crunch
By: David_Vaughn
Well, Christmas is just around the corner. Bet your kids are excited if you still have little ones around the house. On top of Christmas the world is coming unhinged but really nothing more exciting. Let me get something clear right up front concerning last weeks article. Number one I was not “Bush Bashing.” Heck, I voted for the man. My point in the article was the inevitability of a coming crisis in Iran . Enough said on that. Let's get back to Christmas.Read full article... Read full article...
Wednesday, December 19, 2007
Interbank Interest Rates Fall as Central Banks Succeed in Easing Liquidity Squeeze / Interest-Rates / Credit Crunch
By: Nadeem_Walayat
Concerted action by the worlds central banks is beginning to have an impact on the money market interbank rates. This resulted in a a sharp drop today in the Sterling LIBOR rate down from 6.38% last night to 6.20% today. Similar action by the US Fed and ECB has pushed Euro and US Dollar LIBOR rates significantly lower as the graph below demonstrates.Read full article... Read full article...
Wednesday, December 19, 2007
Interbank Market Under Pressure Due to Year End Reporting / Forecasts / Credit Crunch
By: Ned_W_Schmidt
Can financial system be in as big a mess as central banks' actions suggest? Year end is rapidly approaching, and accounting convention calls for all to strike balance sheets. Those financial statements influence the evaluations of firms by investors, regulators, and rating"agencies. Because of credit chaos, those institutions want to show sound, liquid balance sheets. As a consequence of the unusual demand for liquidity, the inter bank market for funds is under serious pressure.Read full article... Read full article...
Tuesday, December 18, 2007
US Fed Emerges to Lead the World Out of the Subprime Crisis via the New Auction Facility / Interest-Rates / Credit Crunch
By: Axel_Merk
True leadership may have finally emerged to resolve the subprime crisis, although it was difficult to spot during a tumultuous week at the Federal Reserve (Fed). On Tuesday, December 11, 2007, the Fed cut interest rates by 0.25%. The Dow Jones index, disappointed in what was another effort by the Fed to claim to be both on top of inflation and the crisis in the credit markets, fell about 300 points. Around 6:30pm E.T. that night, ‘sources close to the Fed' suggested that banks would be able to borrow money from the Fed directly at rates set through an auction, rather than the discount rate set by the Fed. This was confirmed the next morning at around 8:13 am E.T., minutes before futures trading resumed, together with an announcement that foreign central banks, effective immediately, would be allowed to engage in currency swap agreements with the Fed. Read full article... Read full article...
Tuesday, December 18, 2007
Credit Crunch Far From Being Over, Further Economic Uncertainty? / Stock-Markets / Credit Crunch
By: Regent_Markets
To say that Wall Street has been paying close attention to the actions of the US Federal Reserve recently is an understatement to say the least. Last week was no different as the Dow Jones & Co reacted frantically to Fed attempts to stoke greater movement in moribund credit markets.Read full article... Read full article...
Tuesday, December 18, 2007
Fed $40 Billion Auction Will be Liquidity Acid Test for Nervous Markets / Interest-Rates / Credit Crunch
By: John_Mauldin
The Fed is getting ready to auction of $40 billion in repos this week. The stock market acted is if this was a special gift stuffed into its Christmas stocking last week, rebounding after a serious drop in the market the day before. This week in Outside the Box, Dr. John Hussman tells us why the $40 billion is more smoke and mirrors than actual money. It seems they had $39 billion coming due this week anyway. And in a $12.7 trillion dollar banking system it may not make much difference.
This is not a long article, but it is important. You need to understand how the Fed works and when its actions make a difference. Hussman is very good at writing clear, easy-to-understand material on complex subjects.
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Sunday, December 16, 2007
Worsening Credit Crunch Crisis to Send Gold Soaring and US Dollar Plunging / Commodities / Credit Crunch
By: Julian_DW_Phillips
Why are the banks hurting so much?
In the U.K. banks have asked top U.K. corporate clients not to draw on lending facilities to which they are entitled in order to preserve their balance sheets as they approach the financial year-end. The banks are urging some of their biggest clients not to draw on standby credit facilities as the sub-prime crisis and squeeze on interbank lending have affected banks' ability to fund themselves. The problems started with the closure of the commercial paper market as a means of cheap funding for companies in the summer. Banks have to provide standby financing of up to 100% to backstop commercial paper programs.
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Friday, December 14, 2007
Doomed to Fail - Central Banks Auctioning of Low Interest Rate Loans to holders of US Mortgaged-Backed Securities / Interest-Rates / Credit Crunch
By: Peter_Schiff
This week's announcement by the Fed that it will create a new mechanism to provide funding for credit challenged banks has been lauded by Wall Street as an innovative approach to solving the credit crisis. In truth, it is really just the same response the Fed has had for all problems great and small: crank up the printing presses, shower money on the problem, and hope that financial pain can be obscured by the balm of inflation. Both the Fed and Washington politicians are completely clueless regarding the ill effects of the plan, and are simply acting in desperation to keep a ticking time bomb from exploding before the next election.Read full article... Read full article...
Wednesday, December 12, 2007
Credit Bubble Bursting to Lead to Across the Board Asset Price Deflation / Stock-Markets / Credit Crunch
By: Christopher_Laird
Riding upon the greatest credit bubble in history, greater than anything ever –(my interpretation of Doug Noland) one has to wonder what the future holds, if that bubble is breaking. That bubble includes the greatest housing bubble in history, the greatest world stock and bond bubble.
Just for the US housing bubble, it is estimated that, in a mere 5 years since 2002, $5 trillion was both pulled out of US housing and also the housing stock rose that much in value. $10 trillion total.
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Monday, December 10, 2007
Credit Crunch Contagion Spreads - Stock Markets Could Crash 50% During 2008 / Stock-Markets / Credit Crunch
By: Captain_Hook
Make no mistake about it, the credit crunch is still spreading and contagious , and will remain that way until all debt that needs to be purged from the system has been expunged. Unfortunately for all concerned, with conditions in key factors displaying signs of Super-Cycle Degree tops, such as in demographic trends for example, this process could take longer than the current batch of bankers would prefer, and in fact likely scuttle the present day credit-based monetary system as a result. This is why one should not be surprised to see blank check policy and / or monetization rates continue accelerating moving forward, along with falling interest rates in bringing real yields down in an effort to support a faltering Western banking model. And because this is a global affair expect to see competitive devaluations begin to occur more frequently soon as well, which in total will continue to benefit precious metals in both relative and nominal measure as an increasingly stressed populations search for safe means to save wealth once again. In this sense, an entire era of speculation in paper assets is quickly turning the corner at present. Read full article... Read full article...
Sunday, December 09, 2007
Fed Panic! - Paulson's Subprime Mortgage Bailout is to Help the Banks not the People! / Stock-Markets / Credit Crunch
By: Mike_Whitney
A nation's economy is a reflection pool. The face that looks back from the water; is the face of the culture and the prevailing ethos. It's no different with America. The stewards of the US economic system—Paulson and Bernanke—are inextricably linked to a political/military establishment which has been thoroughly marinated in a culture of violence and corruption. Paulson's “Marshall Plan” for subprime homeowners is just the gloved hand of the despot. The other hand is still busy gouging out eyes at Guantanamo, or clubbing foreign nationals at CIA black sites, or dropping incendiary bombs on schoolchildren in Falluja. It's all the same. The culture of war and demagoguery has its roots in the economic system. Its financial leaders are just as culpable as any low-ranking GI at Abu Ghraib. Read full article... Read full article...
Friday, December 07, 2007
Impending Global Financial Crisis As Credit Markets Grind to a Halt / Interest-Rates / Credit Crunch
By: Mike_Whitney
The wreckage in the housing market just keeps piling up. Sales of existing homes in October dipped 23.5% from last year. Prices on new homes dropped 13% year over year. Third quarter foreclosures skyrocketed to 635,000, a 94% increase over last October and an all-time high on the Misery-Meter. The real estate market is in free-fall and the real trouble hasn't even begun yet.
California, Nevada, Arizona and Florida are mired in a full-blown housing depression. Inventory is off-the-chart. Presently, there's a 10.8 month backlog and the numbers are steadily rising. If foreclosures continue at the current pace, by the end of 2008, there'll be a 14 month inventory. That means that every builder in the country could take off his tool-belt right now and stop working FOR MORE THAN A YEAR before the market would clear. Contractors would be filling out job-applications at Red Lobster or looking for an empty street-corner with a tin cup.
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Thursday, December 06, 2007
Credit 'Crunch' or Credit Collapse? / Interest-Rates / Credit Crunch
By: Alex_Wallenwein
How can you protect yourself during the worsening credit crunch?
To figure that out, we first need to understand what this 'credit crunch' really is, from the most fundamental perspective possible. For, it's root cause is not the sub-prime mortgage default crisis as financial pundits like to claim. It goes far, far deeper than that.
We all know by now that the entire world financial structure is dependent on one thing, and one thing only. That one thing is the very brick from which the splendid looking but dangerously tilting edifice is constructed:
Tuesday, December 04, 2007
FSA Warning to Mortgage Lenders To Protect Themselves Against Worsening Credit Crisis / Housing-Market / Credit Crunch
By: Sarah_Jones
The Financial Services Authority (FSA) today urged lenders to protect themselves against a possible worsening of liquidity and credit risks.
Clive Briault, FSA Retail Managing Director, told the Council of Mortgage Lenders Annual Conference: "There is a very real prospect that conditions will worsen further into next year, in terms of both liquidity and credit risks. Firms should therefore be assessing their funding and liquidity positions; undertaking robust stress testing to reflect current and prospective market conditions; reviewing and assessing their medium and longer term strategies and the options open to them; and considering contingency plans against the worst outcomes.
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