All eyes are turned towards the credit markets as the bears wait for the wheels to come off. It is the subprime mortgage markets that have drawn most attention, but other bad news may be waiting in the wings.
In the wake of subprime woes in the US, one after the other, the three major rating agencies cut their ratings on hundreds of collateralised debt obligations backed by mortgage loans. Last month, Bear Stearns, supposedly one of the smartest players in the subprime market, had the uncomfortable task of admitting that two of its hedge funds, heavily invested in subprime bonds are now practically worthless.
