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In Sea of Debt, Are We Waving, or Drowning?


What's needed to make refinancing possible.


Hello Minyans! Sorry I've been a bit out of the loop lately, but trading and money management responsibilities have most of my full-time attention.

But here goes on the credit market - a topic I have covered extensively for Minyanville, particularly in A Tale of Two Markets.

I have been saying for years that I "earned" my gray hair by seeing prior credit crises. And as they say, there's no substitute for experience. Furthermore, I've stated that, just as the build-up of debt was unprecedented, so would the fallout be unlike any we'd seen before.

And now it's here. The credit markets are in disarray, and they aren't functioning anything like normally. We're surrounded by Dead Banks Walking, just as I feared we would be.

But we have 4 major problems facing us as the de-leveraging continues. Hundreds of billions of dollars of debt need to be re-financed by the end of the year. But how does one do that when we're trading in a "dollar price" or "integer" market in credit?

It ain't easy. As I said in No Credit for Financials, the door has shut.

The 4 issues are:

  • September 30: Quarter end.
  • October 30: Mutual fund fiscal year end.
  • November 30: Fiscal year end for many brokers.
  • December 31: Year end.

So expect pressures to continue. And until the credit market stabilizes, don't expect a meaningful rally in equities - despite what the "pundits" say.

Is there another Bear Stearns out there?
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No positions in stocks mentioned.

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