The Voice of 'Risk Reduction' Speaks
Long-Term Picture

When investors want to reduce or minimize their risk, the bond and fixed-income markets are where they turn. No one expects to "double their money" by owning AA-rated bonds or a money market fund, yet everyone does assume they won't lose money in those vehicles.

But these days it seems like almost no assumption is safe, especially when it comes to not losing money. "Subprime" mortgages have been sliced, diced and repacked into markets and vehicles that are supposed to be free of high-risk debt. No one has a clue about how much of the bad is mixed with the good – estimates between $100-to-$200 billion are common, but it could be much higher.

Was Henry Ford Stupid About History?
An Important Question

As the bubble bursts, let's remember that overpriced real estate was the effect, while psychology was the cause. Housing became a bubble when buyers, sellers, and lenders all thought they could ignore history -- if they gave history any thought at all. And anyone who supposes that the public has lost its appetite for shortcuts, can perhaps explain why A&E's "Flip This House" remains on the air, now in its third season. Or why, when I type subprime mortgage loan into Google, I get 1.98 million results -- including 10 "sponsored links" on the page, two of which sit atop the search results proper...

What's the Solution for Overborrowing? Borrow More!!

A late rally ensured a higher close in the stock indexes (Aug. 22).

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How crazy have things become? Good question. Let's see if I can give a one-sentence answer.

Ponzi Enters the Money Markets

In August of 1919, 37-year old Charles P. Bianchi of Boston received a piece of mail that included a "postal reply coupon." He had never seen one before, though at the time such coupons were widely used to simplify the pre-payment of return postage for mail sent abroad. Recipients would trade the coupons for postage stamps, according to an established currency exchange rate.