The Dow dropped 387 points on Thursday, August 9th, signalling that liquidity shortages in Europe concerned investors around the world. Earnings may have peaked in some parts of the market while subprime issues spread to other parts of the market. One primary problem is fear of the unknown. Nobody knows where subprime mortgage backed securities actually are. Said another way, the assets were packaged and sold around the world, but at this point nobody wants to admit to holding subprime assets.
President Bush spoke today, saying there is enough liquidity in the markets. Obviously there was not enough liquidity overseas and huge amounts of capital was required. Liquidity evaporates, as does confidence. While some companies will get out in front of the situation and admit to involvement with subprime, others will stay silent while hoping for a turnaround.
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This article, Rolling Recession Hits U.S. With More to Follow, is just one of our articles from our Mortgage Crisis Daily
The Subprime Mortgage Crisis Before, During, and After
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