Its malignant & its spreading...
There are starting to be signs that the ongoing, seemingly US centric, credit & real estate downturn (collapse) is triggering a similar or even worse situation in many European countries. The foriegn leadership is acting in coordination with the US fed & treasury, in order to get the situation under control, while telling the public that all is better...its clearly not.
Further herculian central bank & govt interventions will be tried, but as they have to date, will probably fail.... This ongoing credit contraction is triggering a global financial collapse... its going in slow motion because of all the fed & congressional & EU supports, and still the equity Mkts worldwide are making new cycle & longer term lows.
Banks & financials continue to require fresh capital... even after raising more than $500billion & cutting billions of $$'s in divividend payouts, and downsizing the businesses. US banks & financial stocks have lost market(shareholder) value of some $1.2 trillion!!! Yes, thats real money... even to a Goldman, Merrill, Citi, Bear, JP Morgan, WaMu, Wachovia, NatCity, Thornburg, blackstone or blackrock, Lehman, etc... career man, managing partner, inv banker, research analsyst, account exec, inst salesman, etc... Its all their money in stock & options that's disappearing.
Avg Joe investor is losing money in the banks & financials for sure, but the huge wealth that has been lost in the canyons of wall street & other financial centers around the country, i.e. Charlotte NC, Greenwich CT, etc... by a concentrated segment of the workforce(high wage earners) bigtime financial execs, is enormous & probably life changing.
But I digress... The credit crisis is undoubtedly still evolving, the deleveraging is happening, albeit at a interupted pace due to the artificial non-mkt forces that are being employed by the central banks that are now holding nearly $1 trillion of the bad & impaired securitized paper the inv banks have swapped for treasuries.
The revaluation process is trying to happen, but the supports are slowing that as well. Yet, the banks & financials are still raising round after round of fresh capital & cutting dividends & business operations, and selling the valuable pieces of their enterprises that are still worth good money.
JPM stock is below where it was when they got chosen by the FED to get BSC. MER is considering selling one of its crown jewels, either Bloomberg or Blackstone interests, C is selling anything it can as well. MS credit rating is being downgraded. And LEH is undoubtedly still in the throes of its own problems.
The financial leadership is continuing to proclaim their expertise & forecasts of the worst is behind us, & things are gonna be alright, especially if they can keep raising new capital to repair their balance sheets. What's also happening is that European financials are breaking down. The world stock markets are coming to terms with the reality & severity of the situation.
The next phase of the credit implosion seems to be upon us.
The credit cancer is malignant & its spreading.
