Real Estate, Subprime CDOs and Bear Stearns

The real estate market is about to hit the hedge funds with their collapse. The connection is the Bear Stearn's little hedge fund, and the $3 billion bail out of it. Why the desperation? Because, the CDOs are about to hit the market. That, plus the housing market collapse is going to be another black hole for the financial system. You can see why they need a Nazi dictatorship and endless war and genocide. That's how to keep in "business". Right now, they seem to be caught with their pants down. Then there is the BAE (British Aerospace) affair...

Peter Schiff, president of the Connecticut-based Euro Pacific Capital, warned about a potential "catastrophe" in the CDO (collatoralized debt obligations) markets, due to the Bear Stearns hedge funds collapse. "As long as these CDO bonds stay off the market, as they universally have, asset managers have the luxury of 'marking them to market,'"
Schiff wrote in a research note, reported by Dow Jones. "Not surprisingly, using this method the vast majority of these bonds are valued at par or greater." But if the Bear Stearns bonds were auctioned in the open market, their real values would be exposed. "This would force other hedge funds to similarly mark down the value of their holdings. Is it any wonder that Wall street is pulling out the stops to avoid such a catastrophe?," Schiff wrote. Worse than the impact of hedge fund losses, would be the impact of an open market auction of subprime CDOs. "Their true weakness will finally reveal the abyss into which the housing
market is about to plummet," Schiff wrote.