Explaining the Financial Markets Crisis

A great segment from the Long Johns explaining Structured Investment Vehicles -- an integral part of the sub-prime mortgage debacle.

Scary Financial Views: Fed has given up on the dollar

Jim Rogers is not happy that the Fed is apparently now in the business of buying Mazeratis for Wall Street traders.

Fed makes emergency move

The Federal Reserve, in emergency decisions aimed at containing a crisis of confidence in the U.S. financial system, cut the rate on direct loans to commercial banks and opened up borrowing at the rate to securities firms.

The moves, coming in an announcement timed for the start of trading on the Tokyo Stock Exchange, included commitments to encourage JPMorgan Chase & Co. to buy Bear Stearns Cos. after a run on the firm threatened the stability of global markets. The Fed also extended the maximum term of loans to commercial banks to 90 days from 30 days.

World Credit Crisis -- Northern Rock

People with accounts at the English mortgage lending firm Northern Rock have withdrawn almost £2bn since Friday. This represents about 8% of the £24bn deposits held by the firm.

And the firm is bracing itself for more withdrawals in the coming days.

The issue facing the firm is that although profitable, no one wants to lend into the mortgage market in the wake of the US sub-prime market collapse. "All banks are having greater difficulties than normal getting funding from the market but as a specialist mortgage lender, no-one really wants to lend to Northern Rock." In the first six months of the year, Northern Rock made pre-tax profits of just under £300m, barely changed from the previous year.

However it massively increased its share of the mortgage market, taking 18.9% of all net mortgage lending in the UK against its previous peak of 14.5%, seen in the second half of 2006.

The firm's shares have almost halved in value this year and talk that it may be in further trouble left it as the biggest loser on the FTSE 100 on Thursday, closing down 4.9%.