For those of you who were kind enough to follow me through CDO's in my series of posts (as well as those by Calculated Risk), you are not surprised, and more importantly, you are knowledgeable about the issues being discussed. I know that I feel better prepared to understand the issues. And if you are hearing "this is contained to BSC" that's BS of the lowest sort. HSBC already had a hedge fund in this area blow up and now BSC. These are hedge funds attached to very well-capitalized firms.
There are hedge funds with bank, insurance, pension fund and other private-held funds that are certainly exposed to these areas. The insurance companies, AXA, HIG also have exposure. Will this be the great unwinding? I don't know, and I'm not trying to engage in hyperbole. But remember the housing recovery? It ain't happened yet--but like the second coming of Jesus (no offense to the devout--my Armenian grandmother predicted every year for that event) it has been oft predicted to be just around the corner. Sub-prime contagion contained? Nope. We later found that Alt-A had similar problems.
I'm out now to enjoy the weekend. It's been three weeks since I've felt well enough to have some fun.
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