lombardstreetresearch: Daily Notes

Bear-faced Wall Street denial crumbles:liquidity crunch Financial sector to be pummelled, aggravating US economic hard landing; misconceived recent Treasury sell-off to be reversed.Bear Stearns hedge fund rescue arose because banks not prepared to bid over 85% of face value for CDOs generally rated A or better.lower-rated,"toxic tranches" of CDOs largely held by banks US commercial have $750 billion of CDOs, versus $850 billion of capital. Major losses of banks' capital would force credit shrinkage,and could implode recently soaring liquidity. (Charles Dumas)Think Dambusters.The huge growth in M4 money supply which is running atan annual pace of 13.8% in the U.K. and 10.4% in the eurozone has been disproportionately driven by other financial corporations" ie hedg