Surprisingly though milken, to date in terms of share price...

Surprisingly though milken, to date in terms of share price decline, CIY is faring only mildy worse 5-15% than the major banks since the October highs, and no worse than Macquarie, which is a very solid investment with quality assets and first class management. I would have expected the price to have been absolutely hammered already -- but it has not.

While purchasing MFS income fund appears suicide, CIY is only after the funds and not any of the loans which the funds were designed to support. CIY is being cagey and only offering nominal consideration with not much besides if redemptions are such as to make the purchase uneconomical.

I agree with you though as to the risks to the downside. It is a very risky time to hold. CIY will need to keep conservatively geared, keep bad debt to a minimum, ensure it is able to maintain funding for loans not covered by deposits, avoid significant redemptions and above all realise positive cash flows based on its underlying business and not property revaluations (such as in the h1 07 result). If it can manage all of these things, then it will survive. But if only one of these things fail, there's a chance it won't.

Alan Kohler has rated as a "buy". That's a brave call. I'm not tipping any more money into this stock, but not selling just yet either.