Credit crisis to worsen

Hang on, folks. It's going to get bumpy. According to the Financial Times, Standard & Poor's and Moody's have issued 'technical' default notices for $5 billion worth of CDOs, which means that holders of the senior debt now have the right to sell assets. And that is prompting fears of a fire sale. We have long feared mass defaults on CDOs. Even a trickle of subprime-backed securities hitting the market in search of whatever some "greater fool" is willing to offer would turn into a flood quickly. That is now possible. Some would say likely. Subprime defaults, let's face it, are only going to skyrocket. There will be some tough repercussions. As of now, the so-called SuperFund is stuck on the drawing board. Many banks could be forced to invest in more SIVs and related vehicles. More losses may be inevitable. Stay tuned.  

For more:
- here's the Financial Times article

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