Are we at the peak of another credit cycle?

Accredited Home Lenders Holding Co., a subprime mortgage lender that agreed in June to be acquired, said its survival is in doubt and that bankruptcy is possible, sending its shares down as much as 52.5 percent.

Accredited Home (down $2.93 to $5.28) shares plunged 38 percent in early afternoon trading on the Nasdaq, after earlier falling to $3.90. They traded as high as $47.82 last Aug. 4, according to Reuters.

The decline raised speculation that Accredited might need to renegotiate its June 4 agreement to be acquired by private equity firm Lone Star. That transaction valued Accredited at $400 million, equal to $15.10 per share.

The crisis continues. Will the market ignore these problems? Is there enough liquidity in the system to cushion the credit problems becoming increasingly more visible?

A few astute observers maintain we are at the peak of the credit cycle, as the S&L-based real estate boom and bust in the late 1980s and the tech bubble and bust in the late 1990? The high yield bond market, meanwhile, is tanking because of the selling pressure.

Beware of the Ides of August.

More on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977