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Credit Crunch Unravelling?

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Guy just on Bloomberg arguing the crunch could be easing

His main arguements were:

1) mortgague backed commercial paper was estimated at 300 billion. This is apparently how much the CP market has now shrunk.

2) He said that CP has rolled over 6 times during the present crisis. Which means people are still willing to buy it.

Anyone more qualified than myself care to comment?

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Well I'm certainly not more qualified than you, but I look at the headlines on Bloomberg, and the articles are either touting armageddon or stating that everything is just peachy. I think somewhere in the middle probably lies the truth ;)

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There is some liquidity in CP, but not enough. Some estimates are about 50% of what is rolling.

ABS is still shut down and retail banks are hoarding cash to pay for drawings on liquidity lines.

Broker banks and investment banks are toast.

It will take until next year to sort itself out.

Until then, very little lending at all by the banks.



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Its not just the 300bn dollars of bad debts- its the way the hedge funds have "leveraged" this debt into many times this figure thats the problem, Ive read this in money week months ago- they reckoned 3TRN dollars are at risk over the year to come I beleive

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