I find it suspicious in the extreme that this isn't the lead story on CNN CBS NBC FOX CNBC MSNBC FBC, ABC and Drudge!
Market only wants good news. Sorry this is bad news and must be ignored. How oh how can CDOs or any similar debt for that matter be rated at AAA equivalent to sovereign debt. At least with sovereign debt they own the printing presses to print more $$$. Heads will roll. Hell if Martha can be locked up for taking her brokers advice to sell, wait until they start looking for the scape goat for the subprime mess.
'Safe' funds like this one are only allowed to invest in 'safe' investments. The rating agencies took these crappy, idiotic loans and called them AAA. This was not just a few people at one company. This was a classic, collaborated Wall Street Fraud to the tune of hundreds of billions of dollars. They knew very well that a high percentage of these loans would go into forclosure. Why is our federal government not prosecuting with at least the same intensity as they do California pot growers or Tommy Chong bong sellers? Surely this is a worse crime than Barry Bonds doing steroids and lying about it. Or Michael Vick fighting dogs. But these guys in charge of the companies that committed the fraud are the top campaign contributers, dinner buddies and golf partners of our politicians. In time when more people become angry we will see a few perp walks on TV, but only a few. This article sums it up nicely. http://www.nytimes.com/2007/07/25/opinion/25rosner.html
Bloomberg has been on top of this since October. Its just the beginning, and proof of the spider web of trouble that you will continue to hear about over the next 12-36 months.
BINGO. Its the same old story, been going on since the Street came into existence. Take a product, slice and dice a million ways, charge fees coming and going, and NEVER hold the final product. Rinse and repeat. Unfortunately, the fixed income markets are notorious for this kind of chicanery.
Bingo AGAIN....the top of the chain is the Street selling it. AAA credit and high yield do NOT go hand in hand, that's risk vs reward 101 for fixed income portfolio management. S&P, Moodys, Fitch, Duff & Phelps etc.....do you know how they make money? By the fees they charge the very client's bonds and companies they rate. They are in bed with Wall Street. Ever hear of a rating downgrade BEFORE a blowup? There's a reason for that. Fixed income portfolio managers have a fiduciary responsibility to their clients....unfortunately, yield hungry PMs didn't look behind the Wizard of Oz's curtain on the subprime based product. To be fair, the PM's didn't really make out....but IBs sure did.
It´s always about risk distribution...futures markets = risk distribution....option markets = risk distribution....CDO´s = risk accumulation...
If you've got that much dough, call the Fed, send them the dough, and buy bills. You'll feel better. No point in testing thesystem to see if it works.
Thanks, but if I do something like that, I will move my money north of the boarder, Canada. Their country is flush with budget surpluses, not debt, for now. I am just looking around now.