In a alarmist post Fortis, amid a raise of capital to cover itself, warns of a US meltdown within weeks.
The original article in Dutch was removed from the website but coverage in the blog-o-sphere is everywhere. Here is an english translation.
They predict 6000 banks going under and ... GM, thereby starting the "meltdown" of the US economy. It is coming! next week!
He he, I don't know what to make of the gloom and doom. I stick by my numbers analysis... the subprime meltdown is 50-60% done. Sure we haven't seen the last part of even the worse of it but this too shall pass. Just batten down the hatches.
For me all numbers will derive from the further decline in house prices. A further 10% down would be good news. 15% would be normal, stretching the FED shock absorber. 20% would deplete it. 30% could be serious problem. As in banks are bankrupt without a hope of federal bailout. It may be the trigger for the partial socialization of the banking system. Far from such radical legislation, the clowns on capitol hill are debating another public handout in the form of "a bill to save the housing market". One way to read it is "if your neighbor defaulted on his loan and you didn't, he gets rewarded". Moral hazard has metastasized. Another way to read it is "there will be pain but let's stage it, too much pain at once can kill a patient". The Japanese lost decade comes to mind of many commentators as the right dosage of pain is a tough balance to strike.
Stay tuned, in the meantime, I will keep remixing music as that keeps me steady, it keeps me focused.
May we live in interesting times, i think chuck norris said that once.