Date registered: Apr 2004
Location: The BlueGrass State
Mentioned: 0 Post(s)
Quoted: 3 Post(s)
I did underestimate the extent of the sub-prime mess. But I knew a couple years ago that when the housing bubble burst the shit would hit the fan. I just didn't count on the credit markets bursting w/ it. Kind of a double-whammy, the likes of which we have never seen before--and hopefully never will again.
The thing with Sub-Prime, Housing, the credit markets and the Finance Sector is they are so tightly intertwined since Greenspan built all these Hedge and derivative and CBO and leveraged instruments that have polluted the entire spectrum.
It used to be [before this deregulation and elimination of federal oversight] that banks would hold paper as their own asset. NOW most institutions simply act as a facilitator and package the paper to a widespread number of hedge and leveraged derivative funds. When it worked it worked well for everyone but it only took one tripcord to bring everything down since there has never been a fiscal foundation for that system. It was basically designed as a "this works when it works" system.
Much of the worldwide system of non secured securities are going to be redesigned to get this cleared up. There will be much less leverage in the future so when there is a trip, it won't cascade at 35 to 1 again.
Being smart is knowing the difference, in a sticky situation between a well delivered anecdote and a well delivered antidote - bear.
Last edited by mcbear; 01-12-2008 at 11:42 AM.