 INSTITUTIONAL ADVISORS - JUN 21, 2007
Subprime = Subpar
Bob Hoye
Institutional Advisors
Jun 25, 2007
"La-La" attitudes
prevailing in some lower grade credits seem to be turning rather
quickly.
- Wednesday's Pivotal Events
briefly reviewed the problems that eventually arise when valuing
securities by agreeable conventions, rather than by realistic
market trade.
- We used the example from around
1980 when the big banks were lending to sovereign nations. Valuations
were set at par because conventional wisdom "knew"
that countries "always", using taxpayer money, would
meet their obligations.
- Under the pressures near the
end of that bond bear market, sovereign loans were marked
to market.
- The following two links are
important. The first one was in Bloomberg on Wednesday [Jun 20] and provides a surprisingly realistic
appraisal from the investment establishment. In this case, Mark
Kiesel at Pimco.
- The other link is from Bloomberg
today [Thu
Jun 21] and reports that
on the Bear Stearns issue the initial clearing of the problem
will set a market price in a sector that may have relied too
much on pricing by convention.
[Rate Rise
Pushes Housing, Economy to `Blood Bath']
http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=akV2sasSGUY8
[Bear Stearns
Fund Collapse Sends Shock Through CDOs]
http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=ahWfhEJ7dra4
-Bob Hoye
Institutional Advisors
email: bobhoye@institutionaladvisors.com
website: www.institutionaladvisors.com
INSTITUTIONAL ADVISORS - JUN
21, 2007
Hoye Archives
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