U.S. Markets In For Another Lashing

We don't buy this baloney that now, the subprime mess is "contained" just because Countrywide Financial Corpse (CFC) has been bailed out.

The brighter people know that nobody has a clue about the extent of the damage done by subprime. Neither in the USA nor in Europe. In some ways, what is going on in Germany's banks with such exposure is just about scarier than events in the far more transparent US...

And even if the Fed were to cut rates: how on earth can this solve the subprime issue? Certainly, a fed funds cut has to imply that the Fed is deeply concerned about things. Besides, the subprime mess has been building at least for a year - so how can it be "switched off" like a light bulb with an interest rate reduction "wand"?

We remain optimists on China and are re-building positions.

Comments

[Kevin Hooge...:]

WHAT A BUNCH OF BALONEY

2007 Aug 23 05:21 PM

[Blue collar...:]

"The brighter people know that nobody has a clue about the extent of the damage done by subprime."
Precisely! so what are you worried about? a year ago this time, relatively few people knew there was such a thing. Banks had a lot of money to loan, demand had dried up .......so they decided to feed the monster. The monster is not regurgitating a little and all the financial pundits have to have something to write about, thereby stiring the pot. "Much adieu about nothing" in the words of the immortal bard.

2007 Aug 24 09:41 AM

[wixeywaxy:]

The Fed wasn't directly bailing out the lenders. What it was doing was making loans available to credit worthy investors who were buying the portfolios of the mortgage lenders at firesale prices. The mortgage lenders staved off bankruptcy by giving away equity and the providers of new capital were offered funds so that they could make these investments without having to sell other assets to enjoy the feast. W. Buffett is reputed to be one of the fat cats vulchers who are feeding on their corpses. Vic

2007 Aug 24 10:57 AM