The Beginning of the End of the Credit Crisis?

May 14, 2008

David Gaffen
is watching the VIX decline to levels well off its March highs, and
back towards its lowest point of the year to date. Meanwhile, Alea
is watching financial-instution credit default swap spreads decline to
levels well off their March highs, and back towards the lowest point of
the year to date. Could it be that we really are at the beginning of
the end of the credit crisis? Has Ben Bernanke been successful in
averting disaster?

“For the most part, investors appear to view the credit crisis as
having passed over,” says Gaffen - and this of course is one of the
areas where investor sentiment has a tendency to become
self-fulfilling. Of course, it helps that the Fed has turned the
faucets wide open and is likely to keep them that way for the
foreseeable future: if Ben wan’t dropping money from helicopters,
things would surely be very different.

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