Category: Industry Analysis

The subprime mortgage crisis keeps getting worse and claiming more victims.

The list of firms in serious trouble from the subprime mortgage loan misadventure just keeps on growing. Today E-Trade, the online stock brokerage firm, was downgraded by a leading rating firm’s analyst who warned of a possible forthcoming bankruptcy. E-Trade owns a FDIC insured bank that has exposure to the mortgage market meltdown.

The downgrading of E-Trade almost immediately cut the price of the stock by more than half, from about $8.50 a share prior to the announcement, to a current price of 3.89. E-Trade traded above $27 a share as recently as 2006.

The list subject to downgrades and billions of dollars in losses is growing from the A-Team list of stock brokers and investment banks. You find firms like Merrill lynch, Bank of America, Citigroup, J.P. Morgan Chase, and Goldman Sacks, taking multi billion Dollar writedowns with more, perhaps much more, to come. The implications for the stock market and for the economy are not pretty.

An excellent article written for Fortune Magazine has been posted at CNN Money. A couple of short excerpts from the article appear below.

For the past several years I have subscribed to The Daily Reckoning. Edited and owned by the talented Bill Bonner, The Daily Reckoning has established itself as an entertaining yet informative read for those who enjoy investing and in following world events.

Bonner himself often writes the feature article. You can get a good favor of his writing style from the recent article below.

I have added The Daily Reckoning web page to the Stock Trading Pro blogroll. You can subscribe to your own email delivered copy at The Daily Reckoning website. The email delivered service is a true bargain, it’s free.

Here is your sample article.

“There is nothing like a long spell of good luck to ruin a man. He begins to think he can get away with anything. The next thing you know, he is wagering big money in Las Vegas and chatting up stewardesses.

Right now, the whole world economy is enjoying a spell of catastrophic prosperity. That is to say, things are going far too well…for far too many people.

With global peak oil rapidly approaching the world wide interest in nuclear energy as an energy source is more intense than ever.

While there are still concerns about the safety of nuclear energy power plants the new designs are considered to be vastly improved and are considered safe enough for construction to move forward as it is in many locations around the world including Iran, China, France, and Russia.

There are also concerns about the disposal of waste materials from nuclear power plants. However, again improvements in disposal technology have lessened these fears and the operation of nuclear power plants is now considered safe enough.

Of course, the need for energy sources other that from fossil fuels and oil have perhaps in themselves lessened the concern about the safety of operating nuclear power plants.

With a golden age for nuclear power plant operators approaching those companies that produce a most necessary material in nuclear power production, Uranium, will do well.

Buying for the long term shares in leading companies that produce Uranium should be a most gratifying investment over the next ten to twenty years and beyond.