Comments on Fund My Mutual Fund: Tomorrow Could Be "One" of Those Days

I thought something significant happened the last ...

2008-03-07T13:45:00.000-05:00

I thought something significant happened the last couple of days. There seems to have been a trigger to a massive deleveraging. You got liquidations, margin calls, forced mark downs, all the stuff the FED was trying to buy time for. But I guess things have just been building up to this situation. Thanks for taking the time to "break it down".

No I dont have any 1 article for you to break it a...

2008-03-07T10:51:00.000-05:00

No I dont have any 1 article for you to break it all down in easy form. I'd recommend reading up on Minyanville.com, Nouriel Robini's blog, and/or look up William Fleckenstein's article on MSN Money - he's been talking about this situation for a decade (always early but finally right).

In a nutshell, the world global financing system is based on packing debt, and selling it off to customers the world over. Huge profit centers for investment banks and money center banks. Well they got greedy and sold some terrible stuff for huge fees and packaed it with AAA rating to call it safe... now those customers have been beaten to a pulp, as have the middle man. Now there is little taste for such securitized stuff and even the best stuff is looked on with huge suspicion. What is alarming is the past few days it appears even what is basically government backed paper from the 2 GSEs is now not being trusted. Thats new. It's all been a progression since last summer. So one thing on top of the other and essentially the system seems to be completely frozen.

Essentially banks used to lend. Now they package crap and sell it, so they dont have to take much risk. Now they are being asked to take the risk, and they are freezing up or acting rationally - i.e. crazy things like actually checking the borrowers... making sure they can pay back the loan (what a concept!). But as always they will overshoot - we go from greed to fear. Now they will be freezing out even worthy candidates because they are walking on eggshells and assuming anyone will default. Where even a year ago they would loan to anyone who didnt prove a job or income, because they could sell it off to some sucker in Germany, Japan, a hedge fund, or some fool anywhere in the world who believed in the AAA rating that was a complete joke.

Fed seems intent on getting to a point (as predicted) where they will take on any junk off the banks hands so they can use that capital for lending. They are buying time, and hoping the system unfreezes. They've been trying this since August.

Oh I forgot to ask. I've been trying to get a gra...

2008-03-06T22:14:00.000-05:00

Oh I forgot to ask. I've been trying to get a grasp of whats been going on in the credit markets lately. I don't quite understand why the credit market has been in shambles and the REIT's are failing. It seems the same old news but somehow it has gotten to critical levels. You know of any good articles expanding on this?

I lightened up my short positions by a hair at the...

2008-03-06T22:02:00.000-05:00

I lightened up my short positions by a hair at the close today as I'm thoroughly convinced Bernanke is hiding in one of my closets setting me up for a rude awakening of surprise rate cuts tomorrow morning.

I might have to take Charlie off the PPT squad just because of what he said on Fast Money last night. http://www.cnbc.com/id/23484466

I think we are close to a near term bottom as Joe Lavorgna was actually bearish on the economy today. He's been my favorite economic indicator as of late. I do the opposite of what he says.
http://www.cnbc.com/id/23502802