S&P shot the Bear … what’s now?

Another piece out of the never ending series …

STUPIDITY RULES!!!

Here we go …

Brainless rating agency S&P, just a day after wanting us to believe their unbelievable story that we could see the end of the tunnel.

The light they say was a bullet train

Bear Stearns had a confidence crisis and the FED stepped in via JPMorgan.

So far so good … but what now happened was a mixture between stupidity and ignorance …

S&P downgraded Bear Stearns to BBB … and not long after Moody’s and Fitch followed …

By doing that, they sealed the fate of Bear Stearns as now all the money of the FED is USELESS!!!

Why?

First … as this rating means that they are only one step away from bankruptcy … EVERY CLIENT on this planet has to dash for his money to avoid later legal struggles to get it back …

Second … nobody will trade with them as nobody has counterparty limits for this case …

DONE DEAL … THE BEAR IS GONE!!!

Even worse … as nobody might really be willing to take them over immediately … who is willing to touch nuclear waste?

The rating agencies’ move could trigger big waves in the already problematic credit markets.

Why?

The bond insurer timebomb was left ticking as all parties agreed, NOT to downgrade them to avoid a possible financial meltdown by triggering forced unwindings of derivative structures as they all have rules of “must be unwound if” specific ratings fall below so called trigger levels … often A- or B.

Now one of the most involved marketplayer is downgraded, which means that many deals are not “hedged” or closed anymore because the counterparty imploded.

MEANS … MARKET will look for coverage or has to SELL it …

AUTSCH!!!

Let’s wait, what will be the trick of the FED to avoid the UNTHINKABLE …

The first domino is down … who is up next?

NOBODY is safe … this thing is far too BIG …

Lehman, Merill? Or even Citibank?

If you take a look at Level 3 holdings, not EVEN Goldman is SAFE …

The mess gets bigger ANY SINGLE DAY!!!

The only reason … at least so far … why equity markets are not crashing …

RECORD PESSIMISM and RECORD LIQUIDITY INJECTIONS by the FED …

It is like a rubber boat with a big leak … but so far the FED keeps pumping air to keep it afloat …

Tags: Bear Stearns, FED, S&P

This entry was posted on Sonntag, März 16th, 2008 at 19:51 and is filed under FDAX. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.