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Credit Hurricane
- Thread starter r2d2
- Start date
Is the Credit Crisis Really Over? Minsky Would Say No.
http://www.nakedcapitalism.com/2008/05/is-credit-crisis-really-over-minsky.html
http://www.nakedcapitalism.com/2008/05/is-credit-crisis-really-over-minsky.html
Is "The Credit Crunch is Over" Talk Premature?
http://www.nakedcapitalism.com/2008/05/is-credit-crunch-is-over-talk-premature.html
Excerpt:
"I had dinner last night with a very senior Japanese buddy fresh off the plane from Tokyo. He mentioned in passing several Japanese banks' writedowns of subprime paper, and in all cases, they marked it down to ten cents on the dollar. That isn't to say the Japanese are right, merely that different institutions have very different views of what conservative pricing amounts to. But the seeming consistency says regulators pushed for deep haircuts.
The issue is that the credit crisis being behind us is not the same as the credit crunch being over (and note I am not convinced we won't have a resumption of worries about systemic risk, given the possibility of an eventual GSE bailout, a CDS meltodown, and a downgrade of MBIA and/or Ambac, any of which would create turmoil). In the dot-com bust, the economic recovery preceded an improvement in credit spreads by nearly a year. And unlike the last downturn, this time credit officers have been badly burned, and they tend to remain overly cautious long after the worst is past."
http://www.nakedcapitalism.com/2008/05/is-credit-crunch-is-over-talk-premature.html
Excerpt:
"I had dinner last night with a very senior Japanese buddy fresh off the plane from Tokyo. He mentioned in passing several Japanese banks' writedowns of subprime paper, and in all cases, they marked it down to ten cents on the dollar. That isn't to say the Japanese are right, merely that different institutions have very different views of what conservative pricing amounts to. But the seeming consistency says regulators pushed for deep haircuts.
The issue is that the credit crisis being behind us is not the same as the credit crunch being over (and note I am not convinced we won't have a resumption of worries about systemic risk, given the possibility of an eventual GSE bailout, a CDS meltodown, and a downgrade of MBIA and/or Ambac, any of which would create turmoil). In the dot-com bust, the economic recovery preceded an improvement in credit spreads by nearly a year. And unlike the last downturn, this time credit officers have been badly burned, and they tend to remain overly cautious long after the worst is past."
Scholes, Nobel Laureate, Says Credit Crisis May Not Be Over.
http://bloomberg.com/apps/news?pid=20601109&sid=a8AZRX5LUMYE
http://bloomberg.com/apps/news?pid=20601109&sid=a8AZRX5LUMYE
The Credit Crisis is just beginning, the reason is that the underlying problmes are still there mainly in the form of a lot of RE that still has to reprice to lower levels before it finds a bid, the foeclosure delay tacitics will soon run out of time. What has happened the last couple of months is simply that the Fed has cut rates and made credit cheap again, the same thing that got people in trouble in the 1st place. People are borrowing again when they should be divesting themselves of all leverage and I am talking about institutions and individuals (individuals likley have no choice but to switch to credit). I'm not sure how long all this Fed stimulus in terms of free money to banks and lower rates will be able to keep the economy from were it should be realistically with oil where it is and all the rot in the credit markets that has yet to reprice but it is coming. Every intervention is making the inevitable washout worse.
I am not short yet beyond some June Bear Call spreads (148-150) but will be looking to get short as soon as the current uptrending is broken by a lower low,
I am not short yet beyond some June Bear Call spreads (148-150) but will be looking to get short as soon as the current uptrending is broken by a lower low,
Debunking five myths:
http://www.realclearmarkets.com/The%20Market%20Economist%2005%2009%2008.pdf
Excerpt:
4. The credit crunch is over
Is that a fact? So why do you think the Fed has added asset-backed securities to the list of eligible collateral? To be accepting student loans less than a week after President Bush addressed the issue in his recent address speaks volumes. The real kicker is the Fed accepting credit card ABS â seemingly in response to the difficulty the banks are experiencing in terms of securitizing their card loans â and because of the nature of credit card ABS, old deals âreturnâ to the balance sheet unless the related loans can be re-securitized. None of these banks can afford the capital hit (both balance and loan loss reserve related) of additional balance sheet loans â especially credit cards with 4%+ provisions.
So, what the Fed has managed to do in its latest intervention is to come up with a way for the banks to keep securitizing credit card loans at a time where there is no securitization market. How the markets and the media treat this as a positive is a true mystery â the Fed is basically degrading its balance sheet in these rescue operations.
http://www.realclearmarkets.com/The%20Market%20Economist%2005%2009%2008.pdf
Excerpt:
4. The credit crunch is over
Is that a fact? So why do you think the Fed has added asset-backed securities to the list of eligible collateral? To be accepting student loans less than a week after President Bush addressed the issue in his recent address speaks volumes. The real kicker is the Fed accepting credit card ABS â seemingly in response to the difficulty the banks are experiencing in terms of securitizing their card loans â and because of the nature of credit card ABS, old deals âreturnâ to the balance sheet unless the related loans can be re-securitized. None of these banks can afford the capital hit (both balance and loan loss reserve related) of additional balance sheet loans â especially credit cards with 4%+ provisions.
So, what the Fed has managed to do in its latest intervention is to come up with a way for the banks to keep securitizing credit card loans at a time where there is no securitization market. How the markets and the media treat this as a positive is a true mystery â the Fed is basically degrading its balance sheet in these rescue operations.
We have lower rates, stimulus package, relaxed requirements for conforming loans, repos converting to rentals, the exporting sector is growing, banks are marking to model and............. it still might be like 1929 timewise but not as brutal. We might be having this same poll a year from now......
worst is over
no one cares about the writeoffs
no one cares about the subprime
no one cares about the writeoffs
no one cares about the subprime