Dive! Dive! DIVE!!

So how about that market huh?

The ASX 200 starts last week at 6,422.3 and at today's close is sitting at 5,941.2 (-7.5%). Today alone it was down 3.3%. Key factors (in the Aussie market at least) look to be continued uncertainty in the US market due to the subprime debt fallout, and increased risk of another rate rise from the RBA next week.

The subprime debt crisis is the slowest-moving crisis I've seen in my (admittedly short) life. I compare this to watching "House of Wax". Paris Hilton is in the movie. Ergo, she will die. It's just a matter of time. But it doesn't happen fast enough so that you can get over it and get on with the rest of the (crappy) movie. I feel the same way about this subprime thing. I think it will (and in some ways, already does) have a contagion effect. I know it will be bad. Others think it will be bad - the point of contention is the degree of severity. But it just won't happen fast enough so everyone can have a good cry over it and move on to buying up the decent scraps left in the crash.

Notwithstanding some potentially profitable trades now made available to me, the whole situation poses an interesting chicken-and-egg financial conundrum. So whose fault was it - the low-income high-risk borrowers who, in pursuit of happiness or the Great Aussie Dream or some other noble variant, thought it's worth mortgaging everything they own (and then some), lying on their forms, and buying overpriced houses, cars and goods? Or is it the fault of the banks who, seeing an opportunity for profits, went out and met the demands of these high-risk borrowers? Is it those baby boomers who, as they approached their twilight years, demanded ever-higher returns from their investments? Or is it the institutional investors who promised they could deliver it by investing in "safe" packages of loans to risky borrowers?

I'll continue to ponder those thoughts while I await approval for my margin loans. Surely, surely, this approval is a done deal - my job in leveraged finance means I'm a low-risk borrower. Right?