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|User Info||Friday Financial Roof Fire; entered at 2007-08-04 01:12:47|
I don't see a market "crash" (defined as a 30% loss of value over a relatively short period of time - weeks to months) as a "crisis" that the Fed would respond to in the fashion many want to see.|
Now a true credit lockup, perhaps. But exactly what is being locked up here? The non-agency "stupid" mortgage market, yes. The LBO market? Yes. Commercial construction loans on subprime-style terms? Yes.
None of those are "systemic risks." They are overleveraged and stupid things that people have done in the last few years, and I don't believe the Fed will come to the rescue of that party.
Now if GENERAL liquidity all disappears to the point that rational debt issue cannot go forward on any sort of real terms, that's a different matter. But there's no evidence of that - at all - nor is it likely.
Last modified: 2007-08-04 01:13:13 by genesis