Jim Cramer says that there is “Armageddon in the fixed income market.” Kind of harsh words to be using. Is he exaggerating? Or is there something really behind what he is saying?
Completely losing his cool, Cramer screamed that Federal Reserve Chairman “Bernanke needs to open the discount window… Bernanke has no idea how bad it is out there. He has no idea. No idea. I have talked to the heads of every one of these firms in the last 72 hours. My people have been in this game for 25 years and they are going to lose jobs, firms are going to go out of business. This is a different kind of market and the Fed is asleep. They’re nuts. They know nothing. They have no idea what it is like out there. 14 million people took mortgages out in the last 3 years. 7 million of those were based on teaser or piggy back rates. They will lose their homes. This is crazy. I worked at fixed income at Goldman Sachs. This is not the time to be complacent. We have Armageddon in the fixed income market.”
Tokyo shares open sharply lower amid fears of global market meltdown
Japanese share prices opened sharply lower Friday amid fears of a global meltdown in markets after French bank BNP Paribas announced that it was halting withdrawals from three funds that had invested in US subprime mortgages, sending stock prices in Europe and the US plunging.
BNP Paribas’ Funds, Other Global Woes Renew Credit Fears
Citing troubles in the ailing U.S. mortgage sector BNP Paribas (OOTC:BPRBF) , France’s largest bank, halted withdrawals from three of its subprime-related funds that had fallen sharply in value recently.
BNP said the funds couldn’t be properly valued because of the “complete evaporation” of liquidity in some parts of the market.
Europe slammed by U.S. credit crisis
Still, the bank’s extraordinary response – its first since Sept. 12, 2001, the day after the terrorist attacks in New York and Washington – deepened the sense that the markets had entered dangerous territory.
“The ECB ignited a fear that there is something really bad going on that the markets don’t yet know about,” said Jacob de Tusch-Lec, a fund manager at Artemis Investment Management in London. “It will take time until investors are sure that this is not the case.”
Risky Mortgages Turning Into Toxic Mess
The conditions have deteriorated so much that Angelo Mozilo, chief executive of mortgage lender Countrywide Financial Corp., recently described the current real estate slump as the worst since the Depression ended nearly 70 years ago.
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Mortgage meltdown contagion
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