Further on sheepdogs biting sheep

Well, the damage across the Asian and European markets could be seen today.

Tomorrow, we will see further damage across not only Asian and European markets, but much more across American markets (assuming that Euro exchanges don't freeze first - if they do, the damage worldwide will be catastrophic).

The reason for anticipating a huge American hit is that the majority of bank sued by the FHFA are American.

Someone in the financial markets responds to me: "But I think the FHFY case is week. The banks are professionals underwriting mortgages, and are saying they didn't know the risks. So it will be settled".

I agree that it will be settled, but not because the argument above is valid, rather because of the damage being caused to markets will be unbearable.

So the question is: how damage the FHFA action will cause to markets before the settlement is reached - whenever it is reached.

My view is that the FHFA was totally right to want to launch a suit, but totally irresponsible in launching a suit of this magnitude at this stage in the global crisis. Sphere: Related Content