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Market Oracle FREE Newsletter

Category: Credit Crunch

The analysis published under this category are as follows.

Stock-Markets

Saturday, August 11, 2007

The Grim Reaper Pays A Visit To Wall Street / Stock-Markets / Credit Crunch

By: Mike_Whitney

Alan Greenspan's low-interest, subprime, snake-oil Caravan took another spin down Wall Street Thursday - ripping up pavement, knocking down power-poles and sending traders scampering for safety. When the dust finally settled, “Maestro's” wrecking ball had lopped another 387 points off the Dow Jones leaving markets reeling and investors cringing in fear. No doubt about it; the mood on the “Street” has taken a 180 overnight. A long procession of bears---marching three-abreast with arms locked—can now be seen winding through downtown Manhattan. Their sense of triumph is palpable.

Meanwhile the last wounded bull—still writhing at curbside-- is being carted off to slaughter.

MORTGAGE BLUES

No one has summed up the disaster in the mortgage lending business better than Paul Muolo of “Broker Universe”:
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Stock-Markets

Saturday, August 11, 2007

Survive the Credit Crunch by Sticking With Good Stocks / Stock-Markets / Credit Crunch

By: Roger_Conrad

How do you solve a liquidity crisis? The simple answer is to inject more liquidity into the financial system. The hard part is not pouring in too much and thereby setting off a speculative boom in the markets that leads to a greater meltdown later on.

That's the dilemma facing the world's central bankers today, as the investment markets confront their worst crisis in half a decade. And unfortunately, the answer is no easier this time around than it was in the summer of 1998, the time of the last liquidity crisis.

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Stock-Markets

Friday, August 10, 2007

The Fed says, “Don't Panic!” / Stock-Markets / Credit Crunch

By: Anthony_Cherniawski

Yesterday the Federal Reserve “injected” $24 billion into the market. This morning they “injected” another $19 billion. Yesterday the world banks collectively “injected” $150 billion of cash into the markets. This morning, they repeated the procedure with another $173 billion that I can account for. What does that mean? In a nutshell, the Federal Reserve and the other central banks have become the buyers of last resort for Wall Street's toxic waste.

Last night, the banks raised their overnight interest rate from 5.25% to 5.5% as a move that reflected an increased demand for cash and higher risk, even in the overnight (read: bank funds and money markets) accounts. The Fed move was meant to keep markets “orderly” by lowering rates back to 5.25%. The result was to stop the market decline , if only temporarily.

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Stock-Markets

Friday, August 10, 2007

Full Blown Liquidity Crisis Hits Stocks And Gold / Stock-Markets / Credit Crunch

By: Christopher_Laird

As news of new subprime losses emerges around the world, stock markets are selling off. What began as the first string of losses at Bear Stearns has now become wider. In fact, it is beginning to look like a developing world liquidity emergency.

This week, the large French bank Paribas froze 3 funds worth about $2 billion after it became clear they cannot value the mortgage derivatives held by the funds. Soon after this news, EU banks and institutions started to flee to cash. The ECB had to lend an unprecedented $130 billion to stave off a banking/liquidity crisis. European investors said the ECB was acting on an emergency basis.

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Stock-Markets

Thursday, August 09, 2007

A Credit Crunch, Investors Selling, and the Fed Pumping in Liquidity to Keep the Market Up / Stock-Markets / Credit Crunch

By: Marty_Chenard

The trickle down of sub-prime problems are now accelerating across the world. France's biggest bank (BNP) stopped withdrawals from investment funds because it can't determine a fair value on their holdings. As this happened, credit default traders are now saying that the risk of holding corporate bonds increased as well this morning.

The Fed and European Central Banks are now planning to increase liquidity in an effort to stem what appears to be a deepening financial crisis.

Where does that leave Bernanke?

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Stock-Markets

Thursday, August 09, 2007

Mortgage Backed Securities Monetization and the US Dollar / Stock-Markets / Credit Crunch

By: Jim_Willie_CB

Fannie Mae is being groomed to be the central clearing house for mortgages and their bonds, sponsored by the USGovt and the US Federal Reserve. Fannie Mae (FNM) just requested permission to take on much greater volume of mortgages, in order to alleviate the secondary market flow of capital funds. Since the accounting scandal which peaked in September 2004, a limit was imposed on FNM on its holdings at $727 billion. In today's climate, marred by credit seizure to some degree, FNM is deeply missed in its former prominent centrifuge role.

A key question arises on the general inflation impact, if and when FNM expands its role and is the nexus (surely a hidden basement) of grandiose illicit monetization of mortgage bonds. If the banking maestros undertake to put a secretive floor on mortgage backed securities (MBS), a solid bid to prevent further breakdown, then vast amounts of new printing press money will enter the system. The mortgage finance sector desperately needs a bid on subprime MBS bonds so as to clear them upon liquidations. The bank wizards could start monetizing them, and work their way up the quality ladder toward Alt-A loans which are also in trouble.

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Stock-Markets

Sunday, August 05, 2007

Dow Jones Stock Market Meltdown - It's a Bloodbath! / Stock-Markets / Credit Crunch

By: Mike_Whitney

On Friday the Dow Jones took a 280 point nosedive on fears that that losses in the subprime market will spill over into the broader economy and cut into GDP. Ever since the two Bears Sterns hedge funds folded a couple weeks ago the stock market has been writhing like a drug-addict in a detox-cell. Yesterday's sell-off added to last week's plunge that wiped out $2.1 trillion in value from global equity markets. New York investment guru, Jim Rogers said that the real market is “one of the biggest bubbles we've ever had in credit” and that the subprime rout “has a long way to go.”

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Stock-Markets

Wednesday, August 01, 2007

Holding the Toxic Debt Bag as Credit Crunch will Shred Investment Portfolios to Ribbons / Stock-Markets / Credit Crunch

By: Dr_William_R_Swagell

"Credit crunch will 'shred investment portfolios to ribbons.'

When creditors led by Merrill Lynch forced a fire-sale of assets ( of two Bear Stearns hedge funds in danger of collapsing) , they inadvertently revealed that up to $2 trillion of debt linked to the crumbling sub-prime and “Alt A” property market was falsely priced on books… The banks halted the sale before “price discovery” set off a wider chain-reaction.

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Interest-Rates

Tuesday, July 31, 2007

Hedge Fund Subprime Credit Crunch to Impact Interest Rates / Interest-Rates / Credit Crunch

By: Nadeem_Walayat

The ongoing crisis triggered by the subprime mortgage defaults continues to spiral into new directions, making it difficult for even experienced market watchers to comprehend the complete picture and its implication for the financial markets. Therefore this article attempts to explain the crisis and what it implies for future interest rate trends.

What are Subprime Mortgages?

These are Mortgages made available to those of subprime credit risk (poor credit histories), hence called sub prime mortgages.

Why would financial institutions lend to people with poor credit histories ?

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Interest-Rates

Friday, July 27, 2007

Central Banks Print Money Whilst Money Market Interest Rates Fall / Interest-Rates / Credit Crunch

By: Submissions

KEEPING OUR EYES PEELED FOR THE SILVER AND GOLD BASIS

Setting up the trip-wire

Gamblers shorting the dollar and bonds beware. Rumors about the imminent demise of the dollar and the bond market are grossly exaggerated. Bear in mind not only that the casino owner rigs your odds. He is also rigging the value of chips in which payoffs are made, thereby confusing the issue further.

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Interest-Rates

Monday, July 23, 2007

Bear Stearns / Subprime Crisis - Looking for Contagion in All the Wrong Places / Interest-Rates / Credit Crunch

By: John_Mauldin

This Week in Outside the Box we Join Bill Gross of Pimco in his July 2007 Investment Outlook as he strives to address the implications of the Bear Stearns hedge fund debacle, the toxic waste that is Wall Streets' innovative derivative products and their respective valuation, rather, lack thereof.

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Stock-Markets

Sunday, July 22, 2007

Trouble in Hedgefundistan: “Its gonna get a lot worse” / Stock-Markets / Credit Crunch

By: Mike_Whitney

Two columns of black smoke can be seen rising over Wall Street and disappearing into the ice-blue New York sky.

Terrorism?

Not quite. The plumes of smoke are all that's left of two major hedge funds which blew up just weeks ago leaving nothing behind but a few smoldering embers and a mound of black soot.

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Interest-Rates

Friday, July 20, 2007

The State of the Credit Markets / Interest-Rates / Credit Crunch

By: John_Mauldin

In this issue:
Hot Fun In The Summertime
Collateralized Loan Obligations
The Economic Outlook for Leveraged Credits
The New Mickey Mouse Club
Planes, Trains and Automobiles

This week I am already in Maine and getting ready for a weekend of fishing with my son Trey, so I am going to take off a week from writing the letter. I spoke this morning to the Maine chapter of the Chartered Financial Analysts in Portland. The question of the day was about the subprime markets, private equity and the debt markets in general. And these are the right questions, as this is the part of our economic world with the most risk.

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Interest-Rates

Tuesday, July 17, 2007

Bear Stearns Yet to Report Mortgage Bond Losses - Bish, Bosh, Loads of Dosh! / Interest-Rates / Credit Crunch

By: Adrian_Ash

"...Wasn't Bear Stearns supposed to report the losses at its two mortgage-bond hedge funds on Monday this week...?"

"BEAR STEARNS Investors Await Tally on Losses," said the Wall Street Journal two weeks ago. The two-week deadline, set by America 's fifth-largest securities firm itself in an email to investors, came and went yesterday.

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Interest-Rates

Friday, July 13, 2007

When Bad Debts Attack - Japan a Warning to the US Fed / Interest-Rates / Credit Crunch

By: Adrian_Ash

"...Memo to the US Fed: When the Dollar collapse comes, you might not get chance to even give money away..."

BEN BERNANKE has his helicopter. John Maynard Keynes had old bottles buried in coal mines.

And the Japanese government? How can Tokyo dish out free money and put an end to deflation, that horror of falling prices and wages?

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Interest-Rates

Saturday, July 07, 2007

Where is the Real Risk in the Subprime Debacle? / Interest-Rates / Credit Crunch

By: John_Mauldin

In this issue:
Honey, I Bet the Farm
Five Cents on the Dollar
Not Your Mother's AAA
Five Cents on the Dollar
Credit Default Swaps? Who Is the Counter-Party?
So, Where's the Problem?
La Jolla, London, and Denmark

This week we continue to look at an alphabet soup of problems: RMBSs, CDOs, Alt-A, BBB and - a new acronym to put on your radar screen - the very useful CDS. When does an AAA rating not mean an offering is ready for prime time? What type of contagion are we seeing from the Bear Stearns blow-up? I survey my friends in the hedge funds space, trying to find some evidence of cracks in the foundation, and let you know what I hear. We will again look at a wide variety of items and see if we can discern some connections.

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Stock-Markets

Thursday, July 05, 2007

Wall Street Firecrackers and Picnics / Stock-Markets / Credit Crunch

By: Andy_Sutton

When the Fourth of July rolls around, thoughts generally turn to picnics, pools, and fireworks. Ok, you know I didn't check in this week to write about picnics and pools. However, I am going to talk a bit about fireworks, but probably not the same ones you'll see in the skies above many American cities tonight. I am talking about a cache of fireworks that Wall Street et al are trying desperately to keep under wraps.

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Stock-Markets

Monday, June 18, 2007

Global Credit Cycle Crunch / Stock-Markets / Credit Crunch

By: Captain_Hook

Is a credit cycle crunch about to befall global finance? There are those who would argue that although mature Western economies could certainly feel the pinch if credit trends begin to reverse, Eastern economies are immune from such considerations with growth prospects for the area still so robust. And you need to realize a great many investors have their portfolios aggressively positioned with this belief in mind, having thrown all sense of caution to the wind. What's more, it should be realized what we will call ‘complacency' has now gripped the investing public and their professional money managers like never before, primarily predicated on the belief portfolio insurance schemes disingenuous bankers sell them will actually protect assets in the end.

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Interest-Rates

Thursday, May 10, 2007

Credit Collapse - May 10th / Interest-Rates / Credit Crunch

By: Paul_Lamont

On May 10 th 1837 , the banks of New York suspended gold and silver payments for their notes. Fear ignited bank runs throughout the United States . The young country fell into a 7 year depression. How could two decades of prosperity end so suddenly? According to America : A Narrative History : “monetary inflation had fueled an era of speculation in real estate, canals, and railroad stocks.” Cracks in the dam were visible much earlier, as the stock market peaked in inflation-adjusted value three years prior. According to Rolf Nef, debt levels in the private sector rose to 150% of GDP. In late 1836, the Bank of England concerned with inflation raised interest rates. As rates rose in England , credit tightened, and U.S. asset prices began to fall.

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Economics

Thursday, March 29, 2007

How Blind can they be? Poor state of the US Economy and Housing Slump being ignored / Economics / Credit Crunch

By: Peter_Schiff

As our phony economy begins to unravel before our eyes, it is amazing how few people can actually see it. The collective wisdom of stock market pundits, economists, and Federal Reserve officials gives the impression that everything is just fine.

Although some acknowledge that housing is slowing down a bit, that there are isolated problems with subprime mortgages, and that inflation is not moderating as quickly as they hoped it would (let's ignore surging oil prices), few can see any grave threats to continued economic expansion, or the bull market in stocks, bonds or real estate. 

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