Monday, August 13, 2007

Don’t Do It, Ben

excerpts from this week's report

"$400 trillion.

That is the estimated notational value of over-the-counter credit derivatives. It is the iceberg that lies beneath the surface of the increasingly (yet not fully) visible sub prime tip. And it represents a potential force that could precipitate a massive financial, and ultimately economic, contagion. Yet, it remains largely beneath the surface in both actuality and in investor’s consciousness. But that is sure to change.

With each passing week, it is becoming increasingly evident to many investors that there is much that lies beneath the surface – unseen and little known. Gradually, however, in drips and drabs, the risks taken during the now deceased era of the “Great Moderation” are ever so slowly revealed through corporate bailouts and hedge fund blowups. And, in the process, bit by bit, the market discipline of the Bernanke Fed does its work. Despite the howling from the mansions in East Hampton..."

also in this week's report

• Current Blue Marble Research Fed Valuation Model
• 2Q07 Earnings Update
• Blue Marble Research ETF Model Growth Portfolio
• Key Economic Indicators

Note: To gain access to this week's report (and all previous reports), please click on the Blue Marble Research Services link to your left for info.

1 comment:

Bob said...

Paul Volcker was the last Fed Chairman to have the cohones to do what needs to be done, which, at the present time, means sitting patiently on the sidelines monitoring but leaving this current fiasco to play out on its own. Is anybody even conscious of the fact that some hedge funds have made huge returns by taking the other side of the sub-prime bet? It’s bad enough that they injected liquidity by buying sub-prime loans instead of treasuries. This is where we find out what he’s made of.