Default swaps intensify credit crunch

February 11, 2008 (Rob Roy) – Over the past several years my firm has highlighted the risks in the sub-prime sector, the lax lending standards, and the housing bubble that peaked in 2005. The residual effects of these have been vast and continue to support our view that the unraveling of the debt issue is [...]

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Greenspan to blame

As in our previous post “Alan Greenspan should be jailed,” this is a great quote from Professor Anna Schwartz in the January 14th edition of the Telegraph:
“As rebukes go in the close-knit world of central banking, few hurt as much as the scathing indictment of US Federal Reserve policy by Professor Anna Schwartz.
“The high [...]

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Sachsen Bailed out as Credit Crunch Widens

August 17, 2007 (FT.com) — Sachsen LB, the German publicly-owned bank, on Friday night became the latest victim of the current credit crisis when the Landesbank had to be bailed out because of its exposure to the US asset-backed securities market.
The bank, which is based in and owned by the German state of Saxony, said [...]

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European Commission Jumps on Rating Agencies

As we have been posting, the rating agency blame game is only beginning. Moody’s and S&P are the big names that will continue to get hit by regulators, investors, and investment banks.
August 16, 2007 – LONDON (MarketWatch) — The European Commission will investigate the role played by credit-rating agencies in the recent crisis over [...]

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Suckers’ Rally

Over the past year, Bernanke, Greenspan, Bush, Paulson, National Association of Realtors, Mozillo (Countrywide), Cramer, media, investment bankers, rating agencies, and many other players have claimed “containment” of the subprime/credit crisis. As we know from all previous bubbles, those involved in the fraud want to continue the fraud.

Like all bubbles, it takes time for [...]

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Gold Bullion (GLD) is Looking Solid

Make sure you are buying bullion and not gold mining stocks.  Unlike the last run up in gold, this one will be in bullion.
“I’m expecting an explosive move for gold any day now.”
– Peter Schiff, Euro Pacific Capital
Aug. 13 (Bloomberg) — Gold is going nowhere.
Dollar-priced bullion, a traditional haven for investors in times of [...]

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Where we are in the Liquidity Crunch

This is a great article from the New York Times which points out:

lowering interest rates will not help if they won’t let you borrow in the first place
lower housing prices will lead to a wave of defaults (there are 2,500+ CMBS pools)
the continued “run” on the banks is impossible to fix given that banks have [...]

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“Largest Injection of Liquidity in the History of Man”

“On Thursday and Friday of this past week you have witnessed the largest injection of liquidity in the history of man in only two days.”  — Jim Sinclair
Read full article…

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Crisis Spreads from US Lenders to UK Hedge Funds

August 11, 2007 (The Independent) – Ben Bernanke was cast yesterday in the role of firefighter, called to the scene to tackle wildfires that are springing up all over the financial system.
All sorts of companies are feeling the heat, not just at the source of the blaze – the market for home loans to low-income [...]

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Australian and Japanese Central Banks Step in

Aug. 10 (Bloomberg) — The Bank of Japan added 1 trillion yen ($8.5 billion) to the financial system and the Reserve Bank of Australia lent the most in more than three years, joining U.S. and European central banks in responding to a credit crunch.
The Japanese central bank’s largest provision [...]

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