CREDIT BUBBLE BULLETIN

http://prudentbear.com/creditbubblebulletin.asp Doug Noland

Fair playing field?

October 27 – Bloomberg (Shannon D. Harrington): “Derivatives traders may be profiting from inside information on leveraged buyouts and other takeovers, a study by Credit Derivatives Research LLC suggests. Credit-default swaps based on the bonds of 30 takeover targets, including four of the five biggest LBOs of 2006, rose before deals were announced or news reports said transactions were likely, according to the New York-based independent research firm.”

It’s not only the resurgent corporate debt Bubble that has me recalling 1999/2000. It was no coincidence that NASDAQ went parabolic about the time deterioration in underlying fundamentals was gathering pace. A spectacular short squeeze, flight into perceived safer corporate bonds, and liquidity creating securities/derivatives leveraging were prominent aspects of that period’s Monetary Disorder. Today, an extraordinary confluence of factors including the housing downturn, economic vulnerability, destabilizing Credit excesses being “recycled” back to U.S. securities markets, and a major shift of speculation into riskier Credits is fueling a corporate debt Bubble with a present scope and future consequences that greatly exceed anything from 1999. The tech Bubble was only a warm-up…

Dr. Issing is absolutely correct: “… Excessive liquidity world-wide is fueling asset prices and is something which has to be taken seriously by central banks.” Tonight I’ve focused on U.S. Credit system dynamics. But our massive Current Account Deficits have as well spurred lending, liquidity and speculative excess around the world. Our degraded currency has certainly unleashed systemic global Credit inflation, with profligate domestic Credit systems no longer disciplined by the (dollar-anchored) global marketplace. It’s more aptly described as “Global Wildcat Finance,” with Credit and asset inflation readily condoned by a speculating community that has come to wield incredible power and influence.

Please read entire post by Noland. ALL you have to understand is how the markets asset inflation is coming about, and like the tech bubble this will burst and be 10X worse, for now? enjoy all boats floating

Duratek (I am currently short the NAZ with stop loss previous high, which was NOT taken out Fri, and when I think any correction due is done? I am long