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Strategies & Market Trends : John Pitera's Market Laboratory

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To: pogohere who wrote (8636)	1/8/2008 1:32:09 PM
From: Hawkmoon	Read Replies (1) of 33421

Good article.. And I see that Moody's is laying off 2400 people, which is indicative of just how much their credibility has suffered due to over-rating CDO/CMOs.. I can see a difference of opinions regaring securitization and reselling of collateralized debt. And maybe there's a strong argument for keeping banking and stocks separate so that even in the midst of a stock market panic traditional lending remains as a solid and credible foundation. Securitization/reselling of debt has essentially submitted it to the vagaries of market panics. Of course, pre-FDIC, people made runs on weak banks out of fear, and it sounds like buyers of CDO/CMOs are looking for the same guarantee. Thus, will it require some federal intervention similar to the FDIC to guarantee these loans? I don't know if that's the best solution.. But we've seen what has happened to the mortgage insurers, and also that Buffett is seeing an opportunity there. Don't want to be bearish.. But the more I learn, the more I yearn for some kind of clarity that will restore confidence in the banking system. And I'm not sure that current measures I'm hearing about will be sufficient. Hawk

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