How Tight Is Money Getting?
It appears that there were a number of failed municipal bond offerings between Friday and today. If our cities can't get funding, well not much more need be said. Banks are making it harder to get a mortgage. Credit cards are being revoked. HomeEquity Lines are being shut down. Defaults keep growing and forclosures still in full swing.
And now, AIG's auditors are saying that there is a "material weakness" in Credit Default Swap accounting. AIG has about $500 Billion of notional value on the books which could be an issue for a $100+ Billion dollar company. If AIG is having issues, who is next?
SoGen, the key bank in France, raises $8 Billion dollars in equity today at 40% OFF Friday's closing price? Imagine being someone who bought shares on Friday? How desperate must they be to offer a 40% discount for an important bank?
It is definitely crazy times. Who knows what the capital base is in our financial system if the Auditors and companies can't agree? Without the reserves, banks can't lend money.
At least we are getting our checks for $600......assuming investors still buy our treasuries.