Friday, August 15, 2008

Level Three Asset Analysis

Level 3 assets, the "difficult to trade/value/sell junk" have created the following environment per Marc Faber (hat tip Credit Writedowns):

A lot of banks are already bankrupt. A lot of monoline insurance companies are bankrupt and financial institutions hide their rotten assets in level three asset categories where you don’t really need to value them.

Take a look at Freddie's level three assets on a relative basis... yikes!

Source: Bloomberg