Carlyle Folds

Leveraged at 32:1?! 2:1 is getting out of hand. What sane financier would ever try it? It would be prima facie evidence of fraud, and it would just beg someone like Elliott Spitzer to investigate it. Carlyle Group has failed and now a slug of mortgage backed securities will hit the open market, at which point they will be priced at what they are worth. And if this "tranche" is priced to market, it will imply the true price of the nominally 4 trillion so far left unpriced. That could lead to blood in the streets.

This is dangerous since the powers that be are doing heavy lifting to keep the securities from seeing the light of day, get priced, and thus bring down the entire house of cards. The Fed's 200 billion facility announced day before yesterday, which caused the market to shoot up 400 points (all gone two days later) is an example of just how desperate they are trying.

What a strange thing. The Bush regime is arrayed to keep a lid on the mortgage mess, and then a Bush controlled business runs a lance at the balloon. Rather like selling oil to the Nazis. Inexplicable. In economic chaos, people clamor for war.

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