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Strategies & Market Trends : SiliconInvestor All Stars Forum -- Ignore unavailable to you. Want to Upgrade?

To: Dale Baker who wrote (1119)	8/1/2007 11:38:19 AM
From: $Mogul	Read Replies (1) \| Respond to of 1718

Dale, it's caleed greed in search of increasing global profits. Everything is a cycle and obviously due to cheap int. rates and cheap money, good money was borrowed chasing bad assets. Typical for every cycle. The banks have lots of younger people working there making decisions now who never lived through or witnessed what happened in the 80's when the banks were stuck with all this real estate. Now they hope to just amoritize the loans out 40 and 50 years, but unfortunatly these folks will not even be able to qualify to afford the payments. Same movie, multiple endings.

To: Dale Baker who wrote (1119)	8/1/2007 2:17:48 PM
From: SouthFloridaGuy	Read Replies (1) \| Respond to of 1718

The problem is that these quant jocks are so enamored in their models, they lose sight of the bigger picture. Just because it's "A" rated paper trading 100 bp higher, doesn't mean there is "value". It's all about the collateral. And housing collateral is sh!t. In all these instruments in the past, present and future, nobody ever analyzes the collateral properly. The question is what is the collateral on the corporate debt side? There is a lot of sh!t there too, but it's not as bad as the housing debt, IMO. So it would take a really nasty global recession to cause the same longer run panic in CLO's as you have seen in CDO's. Right now a nasty global recession is years off, IMO, because it's still early from a cycle perspective...borrowers are flush with cash, the problems will come a few years down the road when those who need to can't go back to the pond.