Because you are in the middle of a classic bank run. People run for the exits, so everyone runs for the exits. Right now, I’m looking a little foolish because I’m standing here saying that there isn’t major to worry about while everyone else running past me.

The Time magazine article didn’t mention why junk gets rated as AAA. What happens is that you have lots of junk, that junk gets split into the really bad parts, but if you take out the really bad parts, then the rest of the stuff is not so bad.

Don’t know. Who could be a source of demand, yet not considered a direct or indirect buyer?

beautifully clear diagrams in time magazine show or nearly show how B junkfood investment slices get rated AAA.

we are coming close to the core of the bubble. if the time magazine reader knows that there is nothing there – there is nothing there. financial complexity requires time and study to understand, but recognition of an empty bubble is both simple and instantaneous. it is also tends to be self fulfilling.

so i am buying into nouriel roubini’s compelling imagery -

indeed, you don’t know who has been swimming naked until you meet zombie corpses floating in toxic waste.

http://www.richmondfed.org/news_and_speeches/presidents_speeches/index.cfm/id=102

As usual, the Fed is the exclusive source of reasoned articulation and adult supervision in a time of lemming market panic. The equity market has swallowed the discount rate pill with the glee of a child on a lollipop. There’s little change in the Fed’s outlook for the real economy as of yesterday. A fed funds rate cut is becoming increasingly ‘uncertain’ in the mind of ‘Mr. Market’, whose brain was destroyed by the volatility of perceived ‘certainty’ a long time ago.

blunt adj., blunt·er, blunt·est. – “Slow to understand or perceive; dull.”

rhetorical, hysterical, obscure and therefore potentially misleading and unhelpful to those seeking meaningful insight – ‘intelligent thinking’ in your view?