Liquid Sky

There sure is a lot of liquidity out there!

That is the lesson of the past two months. Just look at China. Shanghai had an 8% drop which kicked the selling off, but now its at new highs. The press was and is still beating the drums about how sub-prime defaults spell doom for the US consumer, and yet the Dow and S&P are closing near new highs on the year.

Fremont and others have had their stocks decimated, and yet within two months they have found bidders for their toxic sub-prime portfolios.

Quite simply put: IF YOU SNOOZE YOU LOSE. Its not like 2002 when you had all the time in the world to bid for damaged goods.

My hypothesis still stands: China is the fountain of liquidity, and we're going to keep rocking until 2008.