De-leveraging that what "credit crises" is called

When yesterday I wrote about how current lending standards are becoming normal rather than lax, the correct technical term for this is "de-leveraging". Here are some of the results of this de-leveraging:

• Thornburg Mortgage Inc defaults on margin calls, actually some 233 mortgage operations failed since last year.
• Focus Capital, a $1bn New York hedge fund, has been forced to liquidate its portfolio after missing margin calls from banks
• Peloton Partners, a $3 billion hedge fund run by former Goldman Sachs star traders, was forced to liquidate its two investment funds
• And margin calls at the Bank of Montreal recently went unanswered from its SIV units.
  
• Carlyle Capital received a notice of default from one of the banks that helps finance its portfolio of Freddie Mac and Fannie Mae securities and it expects to receive at least one more default notice after falling short of margin requirements with four lenders.
• Many other hedge funds have liquidated holdings after facing margin calls from their banks, actually 31 hedge funds have completely imploded.
  

Before the credit crisis began, 4-5 times leverage was the norm rather than the exception for many hedge funds. Some estimate that most have now reduced their leverage to 1-2 times, some even lower.

Banks are now calling on their clients to pay back loans and to reduce credit facilities, which forces may of them to sell their holdings. Many of these operations typically will liquidate the most easy to sell positions first despite their quality and potential returns. So the selling can be indiscriminate.

The good news is the level of selling and depressed prices is related to technical factors of margin calls rather than fundamental reasons. The bad news is this can go for quite a while. That's why, as I wrote before, I think some areas of the debt market is attractive and offer good opportunities. I have wrote about bank and corporate loans. Many big hitters like Bill Gross and others have actually made big bets in the billions on the muni markets.