ajtj99's Market Pulse

[jdaasoc]

Long rates may skyrocket due to need to build in risk premium on less then prime credit.
Also, bankers will look to new loans at higher rates, variable rate resets etc, to recoup all the bad debts to be repudiated in the sub prime and corporate junk bond world going forward.

I base my doom and gloom on yesterday's inability of MER to sell even a small aliquot of sub prime CDO's. The rest of multibillion market in sub prime would have had to quickly "mark to market" based on MER prices yesterday. They just pulled the plug on the sale and everyone is holding their crappy paper at artifically marked up market price rather then having whole house of cards get repriced now and have risk premium built in.

30 year bond would have to go up at least a full point in order to have any effect on stocks.