Dear Investor,

In these troubled times ‘solidarity’ is more than a word the French bandy about during unemployment rallies. It is a clarion call to stand firm, shoulder to shoulder as the credit barbarians bear down upon us. They demand redemptions; but I ask you to stand pat and trust us although for all intents and purposes matters are entirely out of our hands. God, Buddha, Muhammed, Joe Smith Jnr and whatever it is the Scientologists want - the entire deity community and its acolytes really - will prevail for we are all on the same side here (yes, their Earth-living reps tucked a little something away with us too). Faith, please.

In this scenario you may get your cash back and we may not go bust (there’s no telling). But let me remind all our investors that there is no foundation for the assertion that panicking and bawling like a banshee for your cash is the only way to avoid being stitched up like a kipper. Remember all the warnings from our regulatory friends - historical precedent is no guide to current or future events when it comes to investing (whatever your customer service rep implied on this when soliciting you was probably exaggerated).

Alternatively you may keep bansheeing for your cash like some of the unreasonable whinertards we invest for. That appears to be your legal right (pending reply from our lawyers). But we believe if one investor breaks rank, the floodgates will open and we will be in turn broken. More importantly, of course, so will you. We would certainly be forced to liquidate and you will catch a baby grand from a great height. Still, you would get something back but I do not think there is any reason to share our scary data on that front now. Just bear with us and assume zero. We need to stay in business to protect ourselves – and more importantly, of course, you the very, very highly esteemed client. That’s why we have frozen your money. For you.

Rest assured we've communicated the situation to all our investors. Except management insiders of whose choices and actions we may or may not inform you of at a later date depending on how active regulatory bodies show themselves to be in the coming months.

Please do not write us about guarantees that we may or may not have implied, made or suggested. Ditto on prevailing legislation binding us to respect client wishes regarding withdrawals. Ditto on how much we've made in the last 5 years when you were not really paying attention. We are aware and discussing with our legal department.

Kindest regards,

ANO Financial

PS/Bestest to the wife and kids.

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  1. "Cassandra" // 8/15/2007 05:25:00 PM

    Frank Zappa once said: (speaking of religion) -

    "There's a big difference between kneeling down and bending over...."

    Credit Agricole is still AAA, no? For yield-oriented, offshore investors, check out some of the NYSE reinsurance co. preferred's (PRE, ACGL, XL, ENH, RE etc. ) all yielding 250 to 300 bp over comp Treasuries with (no witholding). The YTC's are even higher in the event we see some deflation and they decide to pay 'em down in 4 or 5 years. There are also quality, low-leverage net-lease REITs that are priced at 10% (or better) forward-looking cap rates.

  2. RJH Adams // 8/15/2007 05:52:00 PM


    yes, believe some of the US equity REITS hold value as you've repeated at your place. Tchenguiz the Elder is a convert too (some Bloomberg interview I came across recently) which may also be a decent sign. Not that you need support on this...

    However, hesitate on the re-ins partly on in-bred fear of hurricanes (despite downward revisions from forecasters). Upbringing experiences and, yes, pathetic I realize. Also I never come away from their BS's convinced I understand the business (at least those of Max Re & Re). Accounting booster course doubtless req.

    CAgricole happens to be favourite strangely enough, as is RBS (though I cannot quite believe the ABN story they are spinning).


    PS/Re: Zappa - just how old are you?

  3. Charles // 8/15/2007 06:13:00 PM

    But Zappa also penned 'Dynamo Hum'... buns up, kneelin'.

    Old? Has time begun to flow again? Please advise.

  4. "Cassandra" // 8/15/2007 09:22:00 PM

    Sufficiently aged and seasoned to have seen his Zoot Allures tour live, and a reasonable number of shows thereafter, mostly in NY.

    There is great irony in that, by far, the lion's share of his audiences were hippies and other really non-conformist "edge" folk. But musically speaking, in terms of texture, sophistication and avant-garde complexity, it was haute-couture in comparison 99% of anything else popularly produced to-date. That doesn't detract from the best of archetypical "pop", but so much of it is so rich and musically fascinating that classical orchestras are doing arrangements and performances that finally do justice and recognize innovative genuis of his compositions. His popularity allowed him to use his lyrics as a platform for his uber-libetarian and highly-skeptical point of view.

    I saw the Tchenguiz interview too. And as much as I respect him, I do not think he really appreciates the the fallout and criminality in US residential. Here is real-life example: 15yo lux House 5500 sf on 2ha near Sunnyvale CA. In early 2005 it sold for $1.8mm. in late 2006 it was "sold" for $5.2, appraised at $5, and financed on something like a near 95% jumbo mortgage. Owner "defaulted" in very early 07. Mortgage co. listed for $4.5 for 6mos with no takers, now offering at $3.2mm (with a finders fee), and still on the market. Now, one must question whether the appraisal was genuine, whether the "sale" was in fact arms length, but the fact is a lender got stuffed/de-frauded, and the workout re-coup will be luckily to be 50c on the dollar all said and done. And this of course is multiplied throughout (irrespective of local markets) and is currently hitting Fla., NY, Las Vegas and other speculatively-supplied markets really hard (before the collateral is even banged out).

    The same day I listened to Tchenguiz effectively say UK Price levels are insane (he prefers the stable groundrents and service agreemnts), I had to stomach a fmr BoE MPC member (can;t remember who) spew (like the Japanese in 1990) rubbish about "supply-demand imbalance", "not at all unaffordable", "might double again", "international demand" blah blah blah, all sounding incredibly like ex-post justifications for why its done what its done, without any real justification for why the probability for such an occurance continuing is anything but remote.And THAT was from one of the alledged MPC wise-men!

    OK so the French Fisc ARE so all-over the Russians, that the closest they'll go is a holiday home in Megeve or Antibes, making the Chelskea-Prospekt the capital flight destination of choice. But its only a matter of time before Croatia or other locale figures out that paying these people to come and not taxing them leaves a huge long trail of $$$$$$$ for anyone and everyone.

    Sterling's o/v, UK prop (both commercial and residential) are o/v, and these remain two of the best shorts out there, full stop. And like I said the other day, so long as this de-leveraging continues, USD/Eur returns to mid 1.20s, with a risk of more.
    As for the bias of change in corporate earnings, perhaps the prime determinant of trend....

  5. RJH Adams // 8/16/2007 08:16:00 PM

    OK - Zappa comment an idle jibe. Checked out his Crossfire appearance on Youtube: I don't recall feeling the US media members were that conservative at the time (and I was an undergrad in the South then).

    Re criminality in US property appraisals, the NYT had something on this a couple of months ago (in Georgia)but I had not taken on board its nation-wide pravalence. Hmm.

    Not sure on the MPC person. Both Bootle, Nickell and a couple of others whose names escape me now have consistently been warning voices on property prices / sustainability since leaving the committee. One voice the other way should not colour the group that way too. Been pretty sane lot I think.

    On shorts, main indicies look pretty certain candidates too...

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