Home > The Insolvency Crisis: How we got here, and what to expect
The Insolvency Crisis: How we got here, and what to expect
by Open-Publishing - Sunday 12 August 2007Written by Garrett Johnson
“For these ten marks I sold my virtue.”
- written on the back of German banknote, 1923
The news of the Federal Reserve injecting $38 billion into the mortgage-backed securities market didn’t get a lot of attention yesterday, but it should have.
Since a third injection is unprecedented, as such infusions typically only occur during a crisis, investors are again left wondering just how bad the subprime situation is and questioning whether or not an emergency rate cut would even be enough to avert a possible true credit crunch.
It was the largest infusion by the Fed since the 9/11 aftermath. But it paled in comparison to the European Central Bank’s two day infusion of 155 Billion Euros.
What does it all mean? To answer that we must dig deeper than the headlines and take a look back in time .../...