Investoid

The Wall Street Journal has reported that PIMCO is starting a $2B fund to purchase distressed debt on the cheap. To me, this is a very good sign that the capitalists are coming out of the woodwork and are taking advantage of the collective fear out in the credit markets. I expect we’ll hear more such announcements in the coming weeks.

Hopefully the Fed is looking at such actions and will take into account the vast financial sums still on the sidelines, which can do a far better job of fixing the issues out there than a rate cut would. For years we’ve been hearing how much cash has been sloshing around looking for investments to fund. For awhile the private equity groups were receiving this money, but now that cheap credit is drying up I suspect that distressed debt funds and other vulture funds will start to get attention. The market will work through this, provided the structural monetary issues are handled by the Fed. Hopefully they will tighten money supply and keep the dollar from collapsing by holding rates steady.

Let’s see what Tuesday brings!