Saturday, October 06, 2007

As long as it lasts

If you can't sleep, then get up and do something instead of lying there and worrying. It's the worry that gets you, not the loss of sleep. Don't worry about things that you have no control over, because you have no control over them. Don't worry about things that you have control over, because you have control over them. This seems to be the credo of global markets that are either behaving as if the worst is over for credit and housing problems or they remain convinced that the central banks can offset whatever bad news may unfold.

I say the credit squeeze is much centered around mortgage finance that resulted from subprime crisis in the US. Other sectors are pretty much insulated. After strenuous effort, banks have managed to find buyers for $9.4 billion of the $24 billion needed to finance the takeover of First Data, a payments processor, by Kohlberg Kravis Roberts, a private-equity firm. According to JPMorgan, even the structured products that caused so much disquiet during the summer are moving again—$6.2 billion of collateralized-debt obligations were issued in the last week of September.

Somehow that flies against other theories that float around. Who knows? Markets have their own logic.

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