Archive - Dec 30, 2009

So, what does it mean if we get another significant downturn? Well, not only are the 2003 to 2007 vintage mortgages in trouble, but those 2008 and 2009 mortgages are at risk as well. What are the chances of this happening? Fairly significant. For all of those guys who swear we are on the brink of a booming economic recovery, recall that it was housing depreciation that set all of this off to begin with.

• Here comes Spain: Spanish banks start to unload property portfolios (WSJ) Some brilliant insight: "Accumulating properties also stopped a sharp drop in prices, avoiding
  the painful write-downs banks are required to book when the value of
  their assets falls." The FHA will not be reading this article
• How uou like your strong euro now Europe? After two years of crashing banking systems and economic recession, the euro zone enters 2010 with a full-blown debt crisis (WSJ)
• Treasuries set for worst year since 1978 as U.S. steps up sales (Bloomberg)
• First Brazil now Russia: Finance Minister Alexei Kudrin says Russian stocks "too expensive", nobody cares (Bloomberg). In the meantime Templeton's Mark Mobius, who after a 104% rise is still down relative to 2007 (56% decline in 2008) says "If you compare Russian valuations now with
  other major countries, it’s not overpriced. There are still
  opportunities there" One wonders who is pitching their book
• E-mails inside AIG reveal executives struggling with growing crisis (WaPo)
• Just in case you thought the "recovery" was for real, GMAC to demand $3-$4 billion more from the Obama endless bailout fund (Bloomberg)

As the 'naughties' come to a somewhat anti-climactic close, it is important for those of us in the investment community to take stock of what new lessons have been learned, what immutable laws have been reinforced, and what changes in policy, strategy and execution need to occur in order to avoid a repeat of the booms and busts of the last decade.

While everyone is scared to death of the next Black Swan event, they're totally ignoring the Black Sloth event in the making...