But you love to get scared!
Your innocent Coconut scared me, actually. The vortex game she played put me in mind of the meltdown we may very well see.
I think your blog captured things very well.
Surprised to note that your gold allocation is almost exactly the same as mine. I will probably buy more as the IMF sale depresses the price temporarily.
I do not understand the reasons for the sale.
Reliable sources say that CDOs are not being picked up at fire sales by vultures because it takes too much effort to well and truly determine their value now. They are too complex. Some CDOs even own part of other sister CDOs. Due diligence therefore requires analysis of more than one hugely complex CDO to determine the value of one. Why bother? As each CDO is unique, the manpower involved is daunting. The vultures therefore abstain.
If they are too complex now, were they any less complex when issued? Nope, collective madness ruled the buy side. If they are too complex even for the vultures, how can FASB 157 be used to mark to market? And that is a big reason why I think we'll see more writedowns from the banks and more profits for SKF. The banks will simply say "I don't know" and use some more or less positive number which does not reflect reality to delay writedowns, IIMO.
Liquidations, 'events of default', claims on insolvent bond insurers, ratings downgrades, huge ARM re-sets in 2008, the next blast [commercial real estate], CDS counterparty default, recession, G7 twiddling thumbs, & the IMF selling gold all are very scary, all reminiscent of Coconut's vortex game. All laden with juicy opportunities.
Not scary, however, if the correct offensive and defensive measures have been taken: gold, USTs, SKF and SRS [I took profits on FXP, which were substantial and earned in a fortnight, to fund more SKF and SRS].
All obvious, preordained, signed, sealed and to be delivered in the fullness of time. |
