European Tribune - The Crash is past. Comes now Inflation.

Financial institutions have also been disappearing, especially a number of hedge funds, the most recent being this past week: Peloton, a London-based hedge fund specializing in asset-backed bonds.

This is actually very interesting.

FT.com / In depth - Peloton Partners in $2bn assets sale

Rumours of the crisis at Peloton's ABS fund, named best new fixed-income hedge fund last month, helped drive the high-quality mortgages in which it was invested to all-time lows this week as traders prepared for $9bn of assets to be dumped.

The losses are particularly striking because Peloton ABS was one of the big winners from the US subprime crisis, gaining 87 per cent last year after betting against low-quality mortgages.

But last month Ron Beller, co-founder, told the Financial Times that the firm had begun investing in "good-quality assets that are trading at deeply discounted prices" - including a large position in AAA-rated mortgages.

So, Peloton correctly was long high-quality assets and short subprime, and made a killing last summer. But then the high-quality ABS market also collapsed and they lost their shirt. Ouch.

We have met the enemy, and he is us — Pogo