SUB-PRIME MARKET - what it spells for the future

Alot is currently being written about the recent "blow-up" of 2 Bear Stern hedge funds that have been baled out of a dramatic collapse by their parent BS.

What has been brought to light is the fact that alot of these strucutres do not trade regularly enough for a mark to market valuation to be applied. Because of this artificial valuations and profits are being expressed to the market.

In order to avoid a market price to be used in the market BS has "saved the day" or have they? I believe they have just put off the inevitable. As sure as night follows day there will be an aftermath and the chances are the effect will not be pretty.

It will start slowly (it already has) and day by day the problem will start to manifest, once it is out in the open (FULLY) it will start to fester, and spread all the way up the risk spread curve until its impact is felt by everyone.

This combined with a general re-rating of residential property will start the spiral that will eventually lead the US into the depths of DEFLATION.

By year end everyone and the hairdresser will know about the sub-prime lending market and its ills.