Thursday, May 28, 2009

Non Quant Indicators

that the credit markets are close to deconstructing again. Not sure if they mean anything. But two salient factoids are being systemically forced down the throats of those who trade:

1. The U.S. housing market is continuing to deteriorate, and the deterioration, so far, has no end point.
2. The financial services sector, and the debt instruments generated over the last decade, cannot survive point 1, and so it, its equity and its contractual obligations are valueless.

Given enough time, which it has had, the federal government can step in to sponsor a utility-like financial services sector that will meet the needs of the general economy (point 1), but the consequences of point 2, over the intermediate to long term, are quite opaque.

Vive l'opaquace!

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