I mean the Rich Man's Panic of 2007?
But the end game is unfolding rapidly before us now.
BAC invests $2 Billion in CFC in a convertible preferred stock. Hmmm, shades of Warren Buffet - he did a similar thing in 1987 for Saloman Brothers. That's his signature security. And Buffet owns a big chunk of BAC. Hmmmm. Interesting.
Wilbur Ross looking for subprime investments. Hmmm.
This track is following the script of the commercial real estate bust of the early 1990s, but about 10 times faster. That's not surprising, since then people were having to figure out the solutions. Now, they all have first hand experience on how a real estate credit bubble gets busted and mopped up. So they can move ultra-fast.
The beefers & investors holding the subprime debt are getting a bigtime haircut. Investors buying subprime paper at huge discounts can restructure the homeowners' debt and still make money - since they are buying the debt at huge markdowns. Political pressure against foreclosures and their huge costs will motivate this scenario, too. At the mortgage loan level, I think the combination of a big lender haircut & re-writing the homeowners' debt (as described a few days ago here) will do the job.
NYSE short interest dropped 3% - not really much. Some bears covered. The WSJ doesn't publish the full table now - cheapskates! Trying to save paper? Grrr. Maybe Barron's will publish the full table this weekend.
I'm still following the time diversification process. Be patient. Get good entries. The bears will keep hitting the market, so wait for dips.