Posted today on Jim Sinclair's website, jsmineset.com:
People do not have a clue what is really happening. All the talk everywhere, even by well placed people without a bone to grind politically and economically, keep calling this a failure in sub prime loans.
This is not the case. What is worthless is a the mix of credit and default derivatives that make up the vast majority of many instruments held by financial and commercial paper dealing entities, both private and public.
If it was simple mortgages it isn’t apparent because as bad as the mortgage market is they have not all failed simultaneously as if all sub prime mortgage holders have been foreclosed on at once. That alone should give you a hint that the problem is not the advertised, but much larger.
The Fed altering their banking regulations has to give you a hint that the problem is not the advertised problem, but much larger (see article excerpt below).
The financial difficulty going global has to give you a hint that the problem is not the advertised problem, but much larger.
When you see bank after bank needing liquidity in substantial amounts, this has to give you a hint that the problem is not the advertised problem, but much larger
The hope for every central bank is that the real problem can be kept from public view. The truth is the public, even professionals in Wall Street, have no clue what the problem is.
[end snip]
---
Fed bends rules to help two big banks
If the Federal Reserve is waiving a fundamental principle in banking regulation, the credit crunch must still be sapping the strength of America's biggest banks. Fortune's Peter Eavis documents an unusual Fed move.
By Peter Eavis, Fortune writer
August 24 2007: 5:09 PM EDT
NEW YORK (Fortune) -- In a clear sign that the credit crunch is still affecting the nation's largest financial institutions, the Federal Reserve agreed this week to bend key banking regulations to help out Citigroup (Charts, Fortune 500) and Bank of America, according to documents posted Friday on the Fed's web site.
http://money.cnn.com/2007/08/24/magazines/fortune/eavis_citigroup.fortune/index.htm?postversion=2007082417
