Credit Crunch
On Friday, August 3rd, the stock market fell 281 points in one afternoon, after a bad week to begin with. What's going on here?
At 2 PM EST, Standard and Poor, the rating agency lowered Bear Stearns credit rating from stable to negative. The Chief Financial Officer held a conference call and admitted the turnoil in the bond markets was as bad as he had ever seen in 22 years. This sent the market into free fall, the only thing that stopped it was the end of the day of trading. It should be interesting to see what happens this coming week.
Bear Stearns has another hedge fund about to go belly up.
Also, several high profile home lending institutions are going out of business because they can no longer get any funding. This is shaping up to be a severe credit crunch, I.E. nobody will lend any more money on mortgages because of the poor quality of buyers in the past who are now defaulting. The rating agencies must now reprice all the junk out there at their real value which is much less than currently stated.
Several big banks are on the hook for billions is bad loans. If worse comes to worse, they will be screaming for a bail out like the savings and loan debacle .
Meanwhile, the stock market is developing a bad case of Irritable bowel syndrome!
At 2 PM EST, Standard and Poor, the rating agency lowered Bear Stearns credit rating from stable to negative. The Chief Financial Officer held a conference call and admitted the turnoil in the bond markets was as bad as he had ever seen in 22 years. This sent the market into free fall, the only thing that stopped it was the end of the day of trading. It should be interesting to see what happens this coming week.
Bear Stearns has another hedge fund about to go belly up.
Also, several high profile home lending institutions are going out of business because they can no longer get any funding. This is shaping up to be a severe credit crunch, I.E. nobody will lend any more money on mortgages because of the poor quality of buyers in the past who are now defaulting. The rating agencies must now reprice all the junk out there at their real value which is much less than currently stated.
Several big banks are on the hook for billions is bad loans. If worse comes to worse, they will be screaming for a bail out like the savings and loan debacle .
Meanwhile, the stock market is developing a bad case of Irritable bowel syndrome!
