Blackstone, Carlyle, KKR, Nordic Capital, Goldman et al have all bought crap businesses for very high out of the market prices and offloaded the loans to incredibly stupid bankers who have secruitized them and flogged them on to unsuspecting institutions and individuals.
Huge fees were generated all down the line. Who is going to pay when the loans hit the fan?
Macquarie a big bank in Australia is already cracking because of these loans that have nothing to do with sub-prime other than they are very high nutso risk.
Other banks are sure to follow. Does your bank have enough reserve to survive a run?
This could get real ugly real fast.
"If it seems to be too good to be true it usually is" and " a sucker is born every minute" are truisms that are coming in to play now.
Gordon Gekko Jr.
Thursday, August 2, 2007
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