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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Tunica Albuginea who wrote (55150)	6/23/2000 11:22:00 PM
From: Stcgg	Respond to of 99985

The Credit Bubble.. Snatched from the new Clown-Free Zone compliments of patron anejo por favor.. Doug Noland, in Credit Bubble Watch from today's Prudent Bear (good read on "credit arbitrage" and where the dominoes are likely to start falling first). Careful with those money market deposits!: 216.46.231.211 "We certainly see the potential for much less bullish perceptions to have a major impact on these asset-backed "funding corporations", as well as the securitization marketplace generally. Actually, we see such structures as boom-time phenomena, now acutely vulnerable to what we perceive as a marketplace increasingly sensitive to risk. Such a development becomes even more consequential because the commercial paper and securitization markets have been forced to play such a major role in the credit creation process. This prominent role became necessary after previous egregious credit creators (notably the hedge funds and GSEs) came under heightened market discipline. If market sentiment turns against these vehicles of "New Era Finance", the U.S. credit machine will quickly sputter. The bottom line remains that tens of trillions of interest rate derivatives and trillions of dollars of credit insurance have dramatically increased the quantity of credit created. This, combined with the gross deterioration of loan quality, creates an enormous increase in risk for the U.S. financial system and economy. Most unfortunately, our largest financial institutions have been among the most aggressive to adopt "New Era" concepts, instruments, vehicles, and strategies. As market confidence in such things wanes, the ramifications are quite dismal for the U.S. financial system, the U.S. economy, and the U.S. dollar. We certainly sense serious chinks in the armor." >><<