Wednesday, August 1, 2007

Disclaimers



The sub prime mess is so un-contained it is laughable if it were not so tragic. Moody's along with the other ratings agencies are in Defcon 5 damage control mode. That they are beholden to their benefactors (re: Wall St.) and are only capable of locking the barn door after the horses are gone is not subject to debate. Further for those unaware, Moody's disclaimers on their work( if you can call it that) read like this, "Moody's has no obligation to perform, and does not perform, due diligence." Now compare this to S&P's disclaimer of “Any user of the information contained herein should not rely on any credit rating or other opinion contained herein in making any investment decision.”



My question is this, if that's the case, what the heck is anybody using you for.
We get word the cockroach theory is alive and well with another Bear Stearns fund in trouble. This one is loaded with mortgage backed securities, no sub prime, but remember its contained!
American Home Mortgage imploding and they were not in the Alt-A arena. Again you must remember its contained.
Fed Governor William Poole was quoted yesterday as saying the Fed won't bail out the market. Amazing that a Fed Governor even needs to say that but that is the widespread believe even conviction(with good reason based on past history) out there that the Fed will in the future step in to bail everyone out. THIS bailout mentality is the major reason why the fallout from all this is going to be much worse than any of us anticipate.
The bulls can paper this over with good consumer confidence numbers(polls which we taken over a month ago), talk about how great the global economy is and rants of how important current profits are. I have a newsflash for Larry Kudlow, markets roll over when profits are at their zenith just like they turn upward when profits are at their nadir.
Everyone is now going to come out and say we saw this credit issue coming a million miles away, these concerns are well known and documented. Well if that's the case why didn't you tell every one to sell. Oh yeah, I forgot on Wall St. sell is a bad word, as in bad for THEIR profits. They keep repeating everything will be okay, my question is, what if it's not ? Are you prepared for that. Good trading to you all.

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