Quaker

The AHM Meltdown: Symptom of a Much Larger Problem

I thought the Bear Stearns release was even more bizarre. They said the portfolio was destroyed by "subprime." Then they went on to say these losses were concentrated around AAA and AA and that only 5% of the portfolio is subprime.

The problem is, investors really don't give a shit about the nuances between Sub and Alt-A. They just want their friggin money back.

These "funds" are crashing because they're scams, just like the long littany of scams Wall Street produced over the year. eg, real estate partnerships, equipment leasing, oil depletion allowances, yada yada.

They were designed to pay maximum up front commissions and maximum fees. No one ever stopped to think that the only way to generate a 20% fee on a mortgage and still promise the client a 20% return was to hyper leverage junk debt.