Tuesday, July 29, 2008

The Credit Crisis is Far From Over

From Bloomberg:

Merrill Lynch & Co., the third- biggest U.S. securities firm, will sell $8.5 billion of stock and liquidate $30.6 billion of bonds at a fifth of their face value to shore up credit ratings imperiled by mortgage losses.

Note the phrase: Merrill is selling their bonds for a fifth (that's 20%) of their face value. Can you say fire sale? Or -- and here's the really scary part -- is that what things bonds are actually worth on the open market? Is this the best deal that Merrill can get for them?

Those figures alone should tell you there are some serious problems out there -- as ini systemic issues that will not be easily resolved.

Let's add one more Tums inducing statement. There was a blurb on Bloomberg a few days back that showed where these writedowns were coming from. About 90% are from the US and Europe, with about 10% (roughly) coming from Asia. Think about that for a minute.

Finally, go to the Big Picture right now and read this story and this story. Barry lays it out as only he can.