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The TED Spread

The TED Spread






Note: This post is from April 2008 but is updated from time to time to reflect charts of the current market conditions The TED spread is a common measure of fear and risk in the capital markets. Judging from where the TED spread is now (see chart below), there’s a lot of fear and risk to go around. Updated chart […]

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Commercial Real Estate bust






The bubble built in residential housing is quickly moving to commercial real estate. It stands to reason that commercial real estate should suffer if residential real estate does. Yet, those same financiers who brought us the housing bubble went into commercial real estate (CRE) loans en masse when things started to slow in the residential arena. Those chickens are coming […]

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China’s bubble has popped






I f anyone doubted it, China’s bubble has finally popped. The Shanghai Composite Index is down 50% from its highs in 2007. That is a massive downswing that must have broader consequences. Moreover, this is likely the result of a realization that Chinese equities were overvalued in a world where the U.S. consumer is under siege and inflation is rising. […]

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Liquidity trap of a different sort






As the Fed Funds rate gets close to zero, pundits have been worrying about a pending liquidity trap. While I think these worries are well placed because the Fed is running out of bullets, I am more concerned about inflation right now. We are in the midst of a credit crisis. Banks are having to write off hundreds of billions […]

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RBS takes an enormous hit






RBS, the second largest British bank behind HSBC, has finally come clean on the credit crisis. The price? An enormous $24 billion in new capital needed. This is a huge story because this does not even begin to discount the credit problems British banks are likely to suffer when the UK market starts seeing foreclosures en masse. Stay tuned. See […]

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Finding a bottom






As the writedowns at global financial institutions near $300 billion in capital lost as a result of the sub-prime crisis, the question as to when we reach a bottom is ever more urgent. Market history tells us that the severity of the bust after an economic upswing is usually related to the size of the original upswing. This mortgage and […]

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We need humility






Today, as I write this blog entry, the U.S. Economy is in crisis. We have a massive consumer and mortgage debt problem. Gasoline and food prices are going through the roof. The U.S. dollar is plunging. People are losing their jobs and their homes. All of this is pretty nasty stuff. How do we get our economy back on its […]

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Panic Time at the Fed






Steve Hanke, a libertarian economist who writes for Forbes, argues that the Fed is panicked about the economy in a piece that came out today. He believes they have lowered the Fed Funds interest rate to where inflation is now a problem. His suggestion: buy gold! (read article here) He is right. The Fed is repeating the awful Depression era […]

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Worst Housing Markets in America






Forbes just published a piece today that finds ten markets that are the worst in which to sell a home. Take a look. Two weeks ago, they published a list of America’s riskiest markets (here).

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Obama sees Bush behind weak dollar






Barack Obama, speaking at a gathering in Gary, Indiana, made some very accurate comments about the dollar’s weakness and its causes (see Reuters story). “We are spending all our money, spending overseas and spending dollars and nobody is buying things from us,” Obama told a town hall event in Gary, Indiana, in response to a question. “What happens is Saudi […]

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All Clear?






We are months into the credit crisis that began last summer, triggered by the meltdown in U.S. sub-prime lending. The crisis has been much deeper, much wider and longer than most market participants have expected. Yet, until the failure of Bear Stearns last month, no major financial institution had suffered. This crisis and the concomitant recession have been marked by […]

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Articles: Bank Writedowns & Failures






I am now updating the information on my Credit Crisis Timeline here: http://pro.creditwritedowns.com/credit-crisis-timeline There have been a tremendous number of economic dislocations during the present financial crisis. Initially written off as a sub-prime crisis, leading policy makers said the crisis was contained. It has since spilled over into Jumbo mortgage rates, Collateralized Debt Obligations (CDOs), all asset backed securities, High […]

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