Diversify with banks
CR has a post on the number of banks at risk and on a watch list.
There were 3 bank failures in 2007, and now there are 76 banks with $22 billion in assets on a "problem list."
Lending construction is creating a growing problem. There are 2368 banks with construction loans exceeding capital, out of 8500 institutions.
On another point, there is yet another debt problem, VIEs,vehicle interest entities, which were also known as special purpose vehicles before the Enron collapse.
"Citigroup, which has incurred $22.1 billion in losses from the subprime crisis, has $320 billion in "significant unconsolidated VIEs," according to a Feb. 22 filing by the New York-based bank. New York-based Merrill Lynch & Co., which recorded $24.5 billion in subprime writedowns, has $22.6 billion in VIEs, according to CreditSights. "
Well, I am starting to get a picture as to where all these "derivative" things are hiding, a small picture. I think I only know about 10% of what they comprise.