If I Had Money

If I had any money I would invest it in shorting corporate debt at the moment. The melt-down in the sub-prime mortgage market offers a clear analogue to the private equity boom fueled by mis-priced and loose debt. I don’t think there has to be a crash just some recognition that lending money to folks to take over a company whose cash flow barely pays for the interest payments is inherently more risky than investing in treasury debt. Steve Rattner of the Quadrangle Group had a great article in the Wall Street Journal that explains the dynamics perfectly. Just a shame I don’t have any money.