I recommend market watcher John’s Mauldin’s astute observations on the derivatives implosion and the tremendous downside risk in sub-prime Collateralized Debt Obligation (CDO) trading, titled “Where is the Real Risk in the Subprime Debacle?” It can be found in this PDF. (BTW, I highly recommend subscribing to John’s free weekly E-letter.) Meanwhile, Bloomberg has more news on troubled derivatives: United Capital’s Devaney Halts Hedge Fund Withdrawals
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Commodities market signs of the times: Keg Thefts Rise with Metals Prices, and Power line theft leaves South Africa in dark
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From a recent Daily Reckoning e-newsletter: “And here’s the latest mortgage scam – ‘equity stripping.’ Of course, equity stripping is what homeowners have been doing themselves for more than 10 years. Until the early ’90s, the typical homeowner owned nearly 70% of his house, free of debt. Now, the figure is only 52%. But now, as the housing slump deepens, more and more homeowners are faced with losing their houses. The American Bankers Association says that 19% of sub-prime mortgages are either delinquent or already in foreclosure. This has created a whole new mini-industry – helping people save their homes. Fast-moving finance companies read the published lists of houses entering the foreclosure process. They visit desperate owners, offering to restructure mortgages in order to prevent foreclosure. Then, they get owners to sign the houses over to the finance company, which strips out any remained equity – and then some. When the homeowners finally realize what has happened, they find themselves even deeper in debt…and the finance company no longer answers its phone.”
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We note the latest entrant in the Blogosphere with a penchant for preparedness: SHTF Daily. Check it out.