The Financial Tsunami: The Next Big Wave is Breaking

The announcement by US Treasury Secretary Henry Paulson together with Federal Reserve chief Ben Bernanke, that the US Government will bail out the two largest guarantors of housing mortgage debt—Fannie Mae and Freddie Mac—far from calming financial markets, has confirmed what we have said repeatedly in this space: The Financial Tsunami which began in August 2007 in the relatively small “sub-prime” high risk US mortgage securitization market, far from being over, is only gathering momentum. As with the Tsunami which devastated Asia in wave after terrifying wave in December 2004, the financial Tsunami we are witnessing is a low-amplitude, long-wave phenomenon of trillions of dollars of financial securities being unwound, defaulted upon, and dumped into the market.