Although John Authers seems calm and assured by the movement of the financial markets, do not be so naive
Vikas Bajaj Of the New York Times recently wrote an article titled " Housing lenders Fear Bigger Wave of Loan Defaults". Bearing in mind that the financial crisis is supposedly over as uttered by numerous financial pundits considering the subprime loans have began to level off ( meaning less rate of default), Now the ALT- A loans are beginning to reset, unfortunately for many Americans, they are finding themselves in a position of negative equity, adding to the crisis, are CDO's and other securitized debt associated with such loans. Bajaj further writes in his article " While it is difficult to draw parallels among various segments of the mortgage market, the arc of the crisis in subprime suggests that the problems in the broader market may not peak for another year or two". SO much for the crisis being over soon. Perhaps the greatest statement in the article is a comment made by James Dimon (Chief Executive of JP Morgan Chase),Bajaj writes "he said he expected losses on prime loans at his bank to TRIPLE in the coming months and described the outlook for them as Terrible ".
http://www.nytimes.com/2008/08/04/business/04lend.html?_r=1&scp=1&sq=Housing%20Lenders%20Fear%20Bigger%20wave%20of%20Loan%20Defaults&st=cse&oref=slogin
With the SEC limiting shorts on various financial institutions,Many are wondering the true value and worth of such affiliated stocks, knowing that their value is being artificially maintained. The sheer fact that the SEC is placing bans on shorts on certain companies in itself indicated the vulnerability of such companies. Be sure to read the articles and be sure to look over the mentioned companies, because those companies are will surely make headlines in the coming days and months
http://www.streetinsider.com/Insiders+Blog/SEC+Extends+Naked+Short+Selling+Order+On+Financial+Stocks,+Looks+For+Permanent+Solution+For+Broader+Market/3860370.html
2.http://www.bloomberg.com/apps/news?pid=20601103&sid=a2TrS9t34oao&refer=news
Further compounding the matter are reports of numerous banks borrowing record amounts from the emergency Fed window (Which is exactly as the name implies, emergency), one should be incredibly concerned. What still surprises me is the apparent gross negligence of numerous economical pundits who still claim the worst is over (Paulson and Bernanke included)
Read the article for yourself-
http://www.reuters.com/article/ousiv/idUSN3163777720080731
Baja, Vikas "Housing Lenders Fear Bigger wave of Loan Defaults" Aug 4, 2008 NEW YORK TIMES NYTIMES.com
http://www.nytimes.com/2008/08/04/business/04lend.html?_r=1&scp=1&sq=Housing%20Lenders%20Fear%20Bigger%20wave%20of%20Loan%20Defaults&st=cse&oref=slogin
http://www.reuters.com/article/ousiv/idUSN3163777720080731
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