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alstry (36.08)

The Defaulting Crisis Spreading

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August 21, 2008 – Comments (3)

Is anyplace safe?????

First it was SubPrime Residential Mortgages, than it spread to Alt A, Jumbo and now Prime Mortgages are seeing rapidly growing default rates.

Not to be left out, the Municipal Auction Rate market collapsed and soon followed by rapid deterioration in the Commercial Mortgage Market.

Then the Junk Bond corporate market and now:

In recent days, price declines among investment-grade bonds have pushed their spreads -- the gap between their yields and those of ultrasafe Treasury securities -- to a multidecade high, according to Merrill Lynch data. These bonds now yield 3.11 percentage points more than Treasurys on average, exceeding their recent March peak at 3.05 points.

Financial institutions can't put off their fund raising forever. They have $660 billion of U.S. dollar-denominated long-term corporate bonds coming due in the next 12 months, the highest volume ever for such a period of time, according to J.P. Morgan Chase & Co. research.

"The market this August is as thin as we've ever seen it, and borrowers have had to pay very significant premiums to get investor focus," said Therese Esperdy, head of global debt capital markets at J.P. Morgan, adding that there's been a bit of a "downward spiral in valuations."

http://online.wsj.com/article/SB121935477139961543.html?mod=hps_us_whats_news

Multi Decade Highs for INVESTMENT GRADE corporate debt????

As the credit markets continue to deteriorate, the avenues for funding are going to get much more expensive.........with the trailing 12 month PE of the DOW already at nil.....what do you think it will be with much higher capital costs?

3 Comments – Post Your Own

#1) On August 21, 2008 at 11:30 PM, lquadland10 (< 20) wrote:

CEO's won't take a pay cut and give the lowest paid employee's the raise they need to buy things. Just one of my theories. The American people are getting smarter so they are not buying as much. They are saving..... so no there is no end in sight. You are now helping to make history. You and I and all of America are going to experience the next great depression. We don't have an honest market. We don't have an honest government or election or judicial system so no there is no end in sight. Buy gold and put it in a safe place because you will need it to live. I have talked to people who went through the great depression and the one thing they say is will be 10 times worse because at the time we didn't have social security and Medicare. That debt they say is doing us in because the trust fund has been raided so much over the years there is nothing left. And the fact that a rich person who receives 5k a month does so much better than one who receives 500 a month. Why the 3% for 5k is so much larger than 500. Even they say it is not fair for the poorer. PS. The ones I talk to are the ones who get the 5k. Most of all these people tell me that this is just like the great depression and not the S & L crises and that they have gold and silver stashed in safety deposit boxes for the big one. Yea it is real bad out there.

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#2) On August 21, 2008 at 11:30 PM, lquadland10 (< 20) wrote:

CEO's won't take a pay cut and give the lowest paid employee's the raise they need to buy things. Just one of my theories. The American people are getting smarter so they are not buying as much. They are saving..... so no there is no end in sight. You are now helping to make history. You and I and all of America are going to experience the next great depression. We don't have an honest market. We don't have an honest government or election or judicial system so no there is no end in sight. Buy gold and put it in a safe place because you will need it to live. I have talked to people who went through the great depression and the one thing they say is will be 10 times worse because at the time we didn't have social security and Medicare. That debt they say is doing us in because the trust fund has been raided so much over the years there is nothing left. And the fact that a rich person who receives 5k a month does so much better than one who receives 500 a month. Why the 3% for 5k is so much larger than 500. Even they say it is not fair for the poorer. PS. The ones I talk to are the ones who get the 5k. Most of all these people tell me that this is just like the great depression and not the S & L crises and that they have gold and silver stashed in safety deposit boxes for the big one. Yea it is real bad out there.

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#3) On August 22, 2008 at 1:02 AM, jahbu (84.76) wrote:

Is anyplace safe?????

Apparently not Mexico, unless you have a chip.

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