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Credit Derivatives and the Great Avalanche
Hannah Montana and The Peloponnesian Wars
What will it take to push the "Hannah Montana's Nekkid Back" story out of the headlines? I don't pretend to know -- but it does sound like a formidable task, especially since Google news offers 980 articles on the topic (the most by far among entertainment stories, or for that matter in sports, health, or technology).
Yes, fans may be heartbroken... and yes, the story may be trivial. But this only means that "trivial" on a large enough scale somehow still amounts to "news." The formula obviously does not apply to non-trivial heartbreak on a grand scale, because nowhere in today's news did a headline appear to declare, "Another 7,000 Home Foreclosure Notices Filed" (the running daily average for such filings). Put another way, some 259,000 home foreclosure notices have been filed in the five weeks since Bear Stearns blew up.
Click here to get more facts and analysis you won't find elsewhere regarding the credit and debt market crisis.
The foreclosures will continue to increase by the day, that is unless the media defines your reality -- "out of the headlines, out of mind," etc. By now, even the Bear Stearns blow-up sounds about as current as "The Peloponnesian Wars." The thing is, the conditions that led to Bear Stearns' demise (and to the scale of foreclosures) are growing worse, whether the media draws attention to the numbers or not.
And even a cursory glance at the debt market math suggests that yonder Great Avalanche hath barely begun to move. For all the problems created by the subprime debacle, there remains at least one large corner of the debt market that is still in the midst of over-the-top growth and extreme psychology -- namely in credit derivatives contracts. This market amounted to $62 trillion (with a "T") at the end of 2007, up 44% from the previous year and greater by a multiple of 10 over 2003.
An author with a book currently on the best-seller list says that these derivatives could lead to a crisis that dwarfs the subprime debacle, a point made years ago by Bob Prechter in Conquer the Crash. The May issue of The Elliott Wave Financial Forecast examines this market with detailed analysis and charts, in the context of the larger trend in the debt and credit markets. For more on what the financial media is missing, click here.
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