We called for continued economic growth in our June newsletter, albeit at a slower pace, with stubborn inflation. We also believed that the risk of a financial accident was high due to the very speculative behaviour in the credit markets which might move the Fed into rate reduction mode. Our prime candidate for impending financial trauma was the institutionalized stupidity of collateralized debt obligations and the U.S. mortgage market. This was no surprise to our readers, as we have been concerned at what we termed the “inanity” of these thoroughly modern credit fashions for some time.
Read the full newsletter at the link below.Canso October 2007 Market Observer