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• Are we really addicted to credit? 7 Signs

  Posted Jun 27 2008, 10:07 AM by Todd Harrison
  Filed under: Banking, economy, Credit Crisis

  Are we really addicted to credit?  Let's take this simple quiz and find out.

  1) Have we ever substituted one form of credit for another, thinking that one particular type of credit was the problem? You mean, like, buying corporate junk while avoiding mortgage-backed-securities?  Cause corporate junk is "ok."

  2) Have we ever manipulated or lied to a lender to obtain credit? Hmm, like overstating our income on a loan application, or if loaning money, overlooking reasonable lending standards?   Read More...

  Discuss ( 10 comments) 4,686 Views Digg this | Email this | Link to this

• Waddle be next for the Financials?

  Posted Jun 02 2008, 04:32 PM by Andrew Horowitz
  Filed under: Merrill Lynch, Morgan Stanley, Lehman Bros, JPMorgan, Credit Crisis, Andrew Horowitz
  Rating:

  What took them so long? S&P finally trimmed their outlook on Lehman Brothers Corp and other key financials today. It has become clear that the problems facing the financial sector is far from over. Financial stocks and the markets in general were hit hard as investors were spooked after S&P announced that they would be lowering ratings and their outlook on these companies. Is this any surprise to anyone?

  So now, the long term ratings on these three went from A+ to A and the short term rating went to A-1. The concerns seem to be focussing in on residential mortgage loans and residential construction slow downs. Timely, hey?

  According to the S&P release shown below, “The downgrade primarily reflects our concern that the pace and extent of earnings improvement could be considerably more muted than we previously assumed.” And "muted" is codeword for....?   Read More...

  Discuss ( 2 comments) 877 Views Digg this | Email this | Link to this

• Why debt collectors are a hot buy now

  Posted May 22 2008, 10:30 AM by Jon Markman
  Filed under: Investing, Credit Crisis, Jon Markman
  Rating:

  

  It’s a sad commentary on our times when the strongest growth in the financial sector is coming from companies that specialize in debt collection.  But what do we expect when wages are flat, inflation is rising, mortgages aren’t being paid and people are forced to decide being paying their Best Buy bills or buying gasoline for the commute to work.
  
  We’ve got something like 6,100 debt collection companies in the United States now, and they are rapidly adding more Americans to their speed-dial lists. In the past year, companies in the industry have bought something like $140 billion worth of delinquent debts, which is more than double the amount they bought as recently as eight years ago.   Read More...

  Discuss ( 214 comments) 36,901 Views Digg this | Email this | Link to this

• Is there a case for buying Citigroup?

  Posted May 12 2008, 10:09 PM by Matt Koppenheffer
  Filed under: CAPS, Citigroup, Credit Crisis
  Rating:

  If Citigroup were a Hollywood actor, right now we'd be seeing pictures of a rumpled star donning sunglasses to cover up bloodshot eyes, and assuring the press that he made some mistakes, but that his troubles are behind him. Some press would decry a waste of talent and a bad example for the kids, while others would say that they feel sorry for him and hope he gets the help he needs.
  
  Citigroup the bank isn't far from that. It had the global reach, the brand, and supposedly the talent. Now its new CEO is trying to pick up the pieces and the company is finding itself the butt of jokes. Oppenheimer analyst Meredith Whitney thinks there's little hope for a turnaround and quipped that "even Stephen Hawking could not pull this off" (kudos to Meredith for the very quotable moment). Douglas McIntyre at 24/7 Wall St. thinks that a pessimist case puts the stock at $10 by year end.   Read More...

  Discuss ( 17 comments) 8,811 Views Digg this | Email this | Link to this

• Is Citigroup setting up to FAIL ?

  Posted May 12 2008, 10:27 AM by Andrew Horowitz
  Filed under: Citigroup, Credit Crisis, Andrew Horowitz
  Rating:
  The saga for Citigroup continues and rest assured that it is not going to subside anytime in the near future. In an effort to bring in capital, it is now planning hoping to sell its Japanese consumer finance unit. The move is intended to plug another hole in Citigroup's very leaky dam. In doing this, there are two results that Citigroup is likely trying to achieve:

  1. Keeping the parent alive by selling off the child, at least for the time being;
  2. Stopping any drag from the Japanese division which is reported to have over $400 billion of assets, approximately 20% of the total value of Citigroup's assets.
     

  The problem is that the valuing of these assets has become difficult as it is now a moving target since many of the traditional metrics have been tossed out during this historic market condition. Knowing that, it is interesting that Citigroup would  consider selling at a time when the price could be at its lowest.   Read More...

  Discuss ( 6 comments) 4,454 Views Digg this | Email this | Link to this