Are all the chickens coming home to roost? at FinGad.com

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Are all the chickens coming home to roost?

Categorie: Equities
Submitted 4 months ago by

Ziad , President & CEO at Blackhawk Partners, Inc

The announcement by US Treasury secretary Henry Paulson, together with Federal Reserve chairman Ben Bernanke, that the US government will bail out the two largest guarantors of the country's housing mortgage debt - Fannie Mae and Freddie Mac - far from calming financial markets has confirmed that the financial tsunami that began in August 2007 in the relatively small "subprime" high-risk mortgage securitization market, far from being over, is only gathering momentum. As with the tsunami that devastated Asia in wave after terrifying wave in December 2004, what we are witnessing now is a low-amplitude, long-wave phenomenon of trillions of dollars of financial securities being unwound, defaulted on, and dumped on the market. The scale of the latest wave to hit, the collapse of confidence in the two government-sponsored entities, Freddie Mac and Fannie Mae, is a harbinger of worse to come in what will be the most devastating financial and economic catastrophe in United States history. The impact will be felt globally. I personally expect the S&P-500 index of US stocks, one of the broadest stock indices in Wall Street used by hedge funds, banks and pension funds, to lose around 25% by September as all the chickens come home to roost from the excesses of the US-led securitization revolution that took hold after the dot.com bubble burst and then Fed chairman Alan Greenspan lowered US interest rates to levels not sustained since th... More...

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