lemnwezl ([info]lemnwezl) wrote,
@ 2007-11-13 06:29:00
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Current mood: blah

this amuses me for some reason:

The credit markets are frozen because of uncertainty and lack of information.

No one knows how much mortgage-backed securities are now worth, and no one wants to sell them to find out.

(...)

Another measure of potential losses is how much Tier 3 capital the banks have - these are risky loans that cannot be valued except by a model because there is no market for them..

From a particularly informative article at BBC News here.

The overall sense I get is that the more layers placed between the source of the actual money for loans, and the end recipient of those loans, the more likely the loan situation is to become unrealistic.

I am also disturbed by how interesting I found this lengthy article on financial markets. I think that means I am now officially old.


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[info]artificialpuppy
2007-11-13 04:30 pm UTC (link)
That depends on how you define old. Twenty to thirty something is the usual window for Yuppization, the time to get rich so you can afford to get old.

I find it interesting when greed compounds with sorites paradox to cloud the line between profitable and unprofitable practices. Especially when separation from the source allows for extra layers of deception.

Near the bottom of the article there is an explanation for the sub prime root, brokers who exaggerated the value of houses and the incomes of borrowers, to increase their own fees. In the short term and in moderation this might have made them a little more money, but in the long term it meant their clients had debts they could not pay, at rates they could not afford and even foreclosure could not cover the losses. Now those brokers are unemployed.

The real winner should however, be the private owners, of the banks. In the end they borrowed from themselves, to pay themselves, for houses they will soon own. Of course the damage to the system as a whole, clearly is going to have a much wider fallout. These may not be causally related, but they are symptomatically related. High American Buying Power, has been a direct result of inflated credit, credit inflated by empty promises of a growing economy, an economy that more resembled a serpent swallowing its own tail, with no new money actually coming in to the system.

Now the whole house of cards is crashing down and everyone is getting an unpleasant feeling that none of it, is really worth anything. Only physical property that you can load in to a truck, store in a box or drive someone off of with a shotgun, is really going to be worth anything.

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