Sunday, 28 October 2007

There's a panic in asset backed securities!

Investors use this market to hedge against these assets. It looks as if the underlying asset values are collapsing, particularly recently. It's a shocking chart.


This article helps explain that chart.


Is it any wonder that a number of banks in the US and around the world are having to write off huge chunks of their net worth. It looks as if they are only just beginning this process! Merrill Lynch had to admit to having to write off over $8 billion dollars the other day. Is that just the tip of the iceberg for this and other US and European banks?

Are these devices(derivatives) a clever way to disperse risk or are they as Warren Buffet has said, “financial weapons of mass destruction”,that are poorly understood and perilous boosters of credit? "The Economist" print edition 19/4 2007

Gold and silver will be the main beneficiaries here.

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I teach Film, Media and English Lit.