You mentioned in a previous post about the excess liquidity in the marketplace.

Interestingly, the same pool of cheap funds driving private equity, hedge funds, etc is (was) driving the mortgage funds market.

However, Scruffy and his ilk don’t seem to see this and insist that the housing bubble is built on solid fundamentals (i.e. “they’re not making any more land!”) and is not being fueled by that easy jingle.

I have heard the same catcalls about private equity guys and venture capital (vulture capital) honchos in particular. I worked with a high tech venture out of LA that was seeking angel investment and dealt with quite a few VC people (mainly out of the SF Bay Area).

The ROI/ROE calcs they were demanding for funds invested, as well as the equity participation for same, were astounding. You basically were being asked to hand the keys over in exchange for funding.

I definitely get the feeling that the funds are starting to dry up, though. Whether this is a bellwether for a full-blown credit crunch is anyone’s guess, but the wind seems to be blowing in a different direction.