"AmeriCredit Raises $750 Million in Subprime Auto-Loan Bond Sale" (Bloomberg)

It is very good to read this. Perhaps a harbinger of better things to come. When subprime debt can again be bought and sold, then it may be time to revisit some of the asset writedowns. Such upward revaluations could be seen by the markets as a significant positive, of course.

Bloomberg.com: Worldwide

Extremely Important Read: Mahalanobis' "Estimating exposures in credit derivatives"

He says it better than I can. How's that for humility? I have been of the opinion that some of the subprime-related asset writedowns have been ludicrously exaggerated. When the dust settles, and the writedowns get adjusted to reality, will the markets suddenly get rather happy? Will heavily-impacted financials get wind in their sails? I suspect they will.


Mahalanobis

Bloomberg's strangest headline of the day, "It's Time to Meet the Subprime Devil We Don't Know: Caroline Baum"

Is this perhaps a slightly awkward headline? I always figured she was perfectly nice. (Just kidding now.)

Seriously, she has a very substantial point: Is the lack of transparency which goes with certain investments such as some mortgage-backed securities, sufficient to make it very difficult to evaluate the risks present in the financial markets? Sufficient to render problematical proper evaluation of the risk present in heavily-leveraged, quantitatively-driven portfolios of such investments? Evidently.

Sufficient even perhaps to alter the "riskiness", i.e., volatility, of even other asset classes? In the short run, apparently. Did Stephen King ever write anything as scary as that?


Bloomberg.com

IHT: 'Size doesn't keep Goldman fund from gyrating with market' -- Or is it, gyrating the market?

So, is it a fair question, if your portfolio was down last week, was it largely Goldman's hedge fund's selling to raise cash that did it for you? Presumably, anticipating big redemptions, with Global Alpha now down something like 33 percent, perhaps more, over last year and this YTD, and since there is now rather limited demand for subprime-"backed" debt, needing to sell genuinely marketable securities, down, down, we go.


Size doesn't keep Goldman fund from gyrating with market - International Herald Tribune

Bear Stearns Warns Hedge Fund Investors of Total Loss -- Bloomberg

Yuck. Total. Loss. Well-hedged, all right. Let's see. SPY, which is about as "plain vanilla" a thing as there is in an investment, is up 27.56 percent over 1 year, according to MarketWatch. Well, I'm sure that the reps who sold these funds to the clients really feel for them. Perhaps they'll take up a collection out of their bonus checks to send out a card. Not to be too negative all the time, but something just stinks about stories like this.

Do not buy investment crap. Perhaps, if you are being pitched a hedge fund soon, you should just write the preceding sentence one hundred times.


Bloomberg.com: Worldwide

A few thoughts on Ben Stein's latest column.

Ben is someone I would describe as a grand old man of personal finance, who usually retains his perspective when looking at things. You have to like the guy. So what's he saying?

"First, I'm not at all worried about the stock market despite the recurrent panic about subprime mortgage problems and resistance to some loans by lenders in private equity deals (which used to be called, appropriately, leveraged buyouts, or LBOs)." Neither am I. The economy is still just too good, and not looking like 2000 (for example).

Ben rather politely throws verbal ice-water on the hysterical financial media types for all the cat-fits they have had over the sub-prime lending industry's return to sanity: "Subprime is a small sector of the mortgage market...If all [distressed sub-prime loans go] into foreclosure (which is unlikely) ... the real loss might be about .9 percent, or less than 1 percent [of mortgage loans]." He provides enough detail to back this up. The financial media gets awfully lathered up over almost everything. It gets viewer attention but lessens their credibility.

He talks about how traders work, and how he sees their antics as not affecting the market in the longer run. Nicely done, Ben.

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