1, from Doug Noland's Credit Bubble Bulletin.
http://www.prudentbear.com/creditbubblebulletin.asp
(it is the bottom section on A Run on Wall Street Finance that's the best bit to read. This is from last Friday and some time this evening US time will be replaced the latest edition - bound to be a good read).
2, from Satyajit Das, a consultant and author of Traders, Guns & Money
3, and, in a parochial Australian context, my own take on the underlying themes (admittedly, one year old):
The third article cited above is is also an indirect response to the post by Mike Beggs earlier this week (under the topic of "The Big One") on the habit of Australian media making use of "second hand Minsky". In my case there's a lot of Minsky, and followers of Minsky, informing my study of capital markets. (I will point out I make a living writing on banking, though mainly only in respect of Australia and New Zealand).
And then just to sum up the last week or so on the market:
The current phase of the credit crisis began on Thursday last week when French bank BNP Paribas owned up to an exposure, through a managed fund (and thus indirect) of exposure to the US sub-prime mortgage market only one week after saying they had none. Not that BNP were on their Pat Malone in having little idea in what assets they owned, what the value of those assets might be and thus what the credit risks faced by themselves and their investors really are.
It is this event seven or so days ago that triggered a huge loss in confidence - by banks in the quality of the credit of other banks - and as a result corporate and asset-backed borrowers galore have been stiffed.
The commercial paper market (very short term loans) in most markets is pretty much stuffed. That's why Countrywide in the US is in the spotlight and, to be parochial once again, so is Aussie mortgage funder Rams.
Canadian pension funds, for example, have in the last day agreed to convert 30-day loans into much longer term loans.
To link to another thread on what media to read, sad to say none of Pearson/Dow Jones/Thomson Reuters and many others are doing anywhere near a good enough job in reporting the details this latest phase of the credit crisis. It is all too easy to take note of the persistent falls and rising volatility on world stock markets. It is much harder to make the hundreds and thousands of calls to find out from bankers and traders and investors the ugly details on which banks are stiffing which other banks, and the extent to which banks collectively are stranding even A1+ rated borrowers without access to short term funding.
So it is really the escalating banking crisis that is the central issue of the day, rather than day 150 or whatever it might be of the US mortgage market mess.
And while these things tend to pass (think of the credit pause of about April 2005 connected to slide in profits at General Motors), and while global growth is still very high, it seems more relevant that the sub-prime mess is already the catalyst of an emerging recession in the US, or so it seems to me. Doug Henwood's referred to some of the data in recent days. One detail that fascinated me late last week was that remittances from immigrants via Mexcian banks was stable 10 or so years of growth at around 10 per cent a year. The US labour market is obviously shedding jobs and property prices look pretty crappy, so I am expecting things to get a lot worse. That's a drag on the global growth story.
I'll leave it there.
After more than 10 years of reading LBO - an important source of news leads on some topics, I find - g'day all.
Ian Rogers