Crisis or No Crisis?

[#1]

i would like to hear the forum's opinion on the current financial situation. there is lots of talk about the current rally that we are seeing, but is this just a bear market rally or has the markets made some miraculous turn around? unfortunately i still do not think that we have seen the end of this beast yet. i think that the equities are artificially inflated at the moment and we will be seeing the bear coming back soon. the second concern that i have is that the fundamentals of the banks have still not changed and as such the original concern for the liquidity of the banks are still a real concern?

[jack12]

SuperTramp

[richardw]

No idea of the short-term jiggles, but I think there's a serious shock waiting for us. Not a bit of a retrace - a big drop. Could be this year, could be next.

[PaulC]

People are blaming the current crisis on toxic subprime securitised leverage bets. Well the Alt-A morts start resetting in Q1 of next year so we could see a similiar story all over again. The consumption boom in the western world over the past 7 years has been caused by low interest rates easy credit and people drawing equity from their homes. Now we have no equity rising interest rates (soon to prevent inflation) I dont see how things are getting better when layoffs are still rising (albeit at a slower rate) and people are already burdened by high debt levels. Again my 2c - P

[richardw]

Yeah. Alt-A, Option ARM:
http://www.calculatedriskblog.com/2007/10/imf-mortgage-reset-chart.html
And commercial real estate, and tons of other things. So trade with your eyes open. Read David Rosenberg's daily PDF, he'll keep you from betting the farm :) http://gluskinsheff.com/