crisis watch

Discussion in 'Economics' started by man, Sep 17, 2008.

  1. man


    it is difficult to say where things are heading from here.
    it is definitely not over. we start year two of the crisis
    with the collapse of 3 major players, FNM, FRE, LEH.
    plus just in time sale of MER. plus AIG bailed out.

    two questions: who is next? i would suppose there will
    be a small series of small players going belly up and
    firesold to competitors in both banks and insurers. not
    because of recent bancruptcies, but for the same reason
    they got caught. i believe many insurers will be forced
    to show what is going in their hold to maturity portfolios.
    and their will be plenty of structured credit.

    second the oil price plays a crucial role in everything
    IMO. it is the only thing that can keep inflation low and
    the tools for the central banks in place.

    i am astonished by the strong dollar and relatively weak
    gold. and if there was any way to short the fed, i'd
    love to do that.

    what was missing in the crisis so far was the infamous
    blood on the street. now there is. on wall street itself
    it can get hardly worse. a new order of things is coming
    there. i could believe that the current levels make banks
    an attractive buy. the insurance sector might have
    the worst still ahead.

    broad index wise the next two years are at (very) best

    the VIX seems to find a center of peace pretty sharp
    at 20, with some unrest lifting him to 25 and anxiety
    to 35.

    just some thoughts. please share yours, but stay at
    topic if possible. thnx.
  2. What I find interesting is that the major calamities in recent weeks - unlike 1990 - seem limited to big cap financials/banks/brokers. The KRE (regional bank) ETF is up 61% from its July panic lows and now down a mere 0.8% YTD.
  3. Kap


  4. man


    puzzles me too. i can't believe we will not see a chain
    of reactions. maybe even months from now. defaults
    in smaller caps must go up IMO. weird, if this was a
    big-cap-crisis only ... yet i am not sure if we necessarily
    see all the activity that is going on. we saw different
    regional US banks belly up and swallowed by others.
    it could be that in other sectors, which were not so
    much in the spotlight, we (at least) simply don't know.
  5. man


    great link. the article perfectly illustrates the difference
    between LEH and AIG. the interesting thing with AIG
    is that on the one hand nothing has happened. i wonder
    what their rating will be since they are now a public
    institution ... cant be any less than AAA i guess. so all
    the pressure on this side has evaporated. needless to
    look at anything AIG related anymore. this is now a
    branch of the US government.

    the real issue who is next, since the AIG problem is
    the first big question mark behind a whole bunch of
    insurances, who (at least i guess so) have tons of weak
    credit on their books.

    i am not an expert, but the impact of insurances on
    the consumer is different from a bank. privates
    will not stampede into the offices. nevertheless the
    indirect effect, as pointed out in the article, could be
    even worse. but that is probably limited to the top
    houses, which by no means must go belly up.

    governments around the globe will save the major
    insurance corporations, but will not care about small
    and medium ones. that means big increase in public
    debt. if all this does not spell world wide recession
    what could?
  6. man


    the market gets rid of wall street. the end of capitalism
    as we know it. will not happen. just happened.
  7. man


    question is who should buy morgan or goldman? not
    so many candidates out there ...