It looks like the late summer/early fall-off of the global markets has come and taken additional victims, large and small.

As the tide receded, it would be 3 more years before we would see the truth of what  Warren Buffett analogized to naked swimmers hidden by the high tide from the waist up.  The denials and bottom seeking began all those years ago, but by the time a national network began to air a comedy about sexy lady realtors (including our favorite Sofia Vergara), the top was already set in that sector. It would be two more years before we saw the "top" in the Dow in  October 2007, but you only know those things looking back.

Soon after our suspected turning point, the mortgage brokers would go bust, particularly in California, after making hay like gangbusters, giving away mortgages to anyone who wanted one, thanks to the Greenspan/Bernanke "printing press/cheap money" regime, and an asymetrical risk mode that promoted fee revenue without any risk sharing (even if they did, the risk models would prove to be all wrong as a string of "100 year" storms have erupted with regularity). Mortgage-related securitization, the slicing and dicing of paper into tranches would be transformed into AAA rated paper (with ratings liberally assigned by Rating Agencies who are paid by the very same firms that would benefit from number-crunchers wearing rose-colored glasses). The alchemy of turning dubious mortgages into risk-managed, high yielding, higher rated investments would mystify anyone inspecting some of the increasingly distressed Main Street properties which shouldered the task of the actual mortgage repayments that would trickle through ultimately to Wall Street's investment banks, hedge funds and institutional hedge funds and some unfortunate retail investors.

 The denials flew, which at first stated the problems were minimized, and characterized as over-heated geography,  low-rated asset classes and that the problems would pass.  Someone forgot to tell underwriters, traders and investors in derivatives, going "all in" with 10, 20, sometimes 30 to 1 or more leverage, and no reserves set aside for some of the writers of this "non-insurance" insurance-like instruments, and those folks who thought they could buy a McMansion with a McDonald's budget.

 As the tide rose, and liquidity sloshed around and yields nose-dived by all those dollars, euros and fiat chasing returns, futures awoke from its slumber post late 1970s/early 80s peak and became another way to manage risk and diversify away from equities, post 2000 dot-com bust.  While the demographics and underinvestment of past decades had finally ground down raw material prices, allowing for the luxury of low input costs and low inflation during a period of credit easing, that would end as well, and the rollercoaster ride now had crude oil, grain traders jumping on board for the wild ride after the end of the 2001-2002 recession.

 Firms began to fail, first in homebuilding, in mortage-brokerage, in mortgage banking, in mortage repayments, which would lead to increasingly distressed mortage-related securities, and investment firms underwriting and investment.  What was an isolated problem was revealed to be a more pervasive credit overhang and excessive borrowing and spending from Main Street to Wall Street. This was also not a regional problem, isolated to some hot-spots in California or Florida, but was also found in Europe as well.

 As the noose tightened, it tightened on everyone.  Investments failed, firms with too much leverage couldn't handle the increasing losses on their books, investors began to pull out, and fear began to build and take on a life of its own.  Meantime, the authors of moral hazard, the policy makers, legislators and government leaders were caught unprepared, and a slow assembly of a fire brigade to stop fires stumbled from one emergency to the next.

 The solution would be to throw taxpayer money at bad mortage paper, now known as "toxic" debt, and to take over publicly traded companies.  With memories of the 1930s spurring on some, it was understandable, and it maybe resolved, but it will be sloppy, inefficient, corruptible (as firms appointed to work on this were also purveyors and part of the problem already) and ultimately inflationary in impact. 

 Right now the fire sale continues, people are still terrified and we have been knocked back many years in terms of investment gains.  Cash is King, and everyone else is not just running blind, but without our heads, like headless chickens. We see that even the safehaven of gold and silver took knocks as we saw redemptions, margin calls and really fear driving sales of all assets, just as exhuberance and optimism lifted virtually all asset prices higher.

 We see non-U.S. dollar fiat, like Swiss Franc, Gold, Silver and U.S. Mega-cap Blue Chips (with great balance sheets, franchises, and increasingly higher yields due to sell-offs) as a basket to build for a refuge. Next up, for the adventurous will eventually be emerging markets, courtesy of long, long-term demographics in favor of future growth.