"The market was so leveraged, and the instruments so complicated, that no one seemed understand what would happen if it all began to unwind." - Economist
David Seaton's News Links
That is the key phrase, everything.... and I mean EVERYTHING, revolves around things that nobody understands. DS
The conundrum of America’s economy - Economist
Abstract: There are plenty of ominous signs. The housing market, long the mainstay of America’s economic boom, is sagging. Defaults in the subprime lending market grow ever more worrisome. The core inflation rate, which excludes food and energy, is not exactly subdued: consumer prices were up by 2.2% in May from a year ago. Add in the tepid GDP growth and the mix is making consumers nervous.(...) As vexing a concern is the effect that a slowing housing market will have on the mountain of debt and debt-related instruments that were issued to finance the boom. The most frightening aspect of the problems at two hedge funds run by Bear Stearns, both heavily exposed to the subprime-mortgage market, was not that a big bank had been plunging into risky assets; it was the revelation of how little anyone knew about the risks involved. The market was so leveraged, and the instruments so complicated, that no one seemed understand what would happen if it all began to unwind. READ IT ALL
That is the key phrase, everything.... and I mean EVERYTHING, revolves around things that nobody understands. DS
The conundrum of America’s economy - Economist
Abstract: There are plenty of ominous signs. The housing market, long the mainstay of America’s economic boom, is sagging. Defaults in the subprime lending market grow ever more worrisome. The core inflation rate, which excludes food and energy, is not exactly subdued: consumer prices were up by 2.2% in May from a year ago. Add in the tepid GDP growth and the mix is making consumers nervous.(...) As vexing a concern is the effect that a slowing housing market will have on the mountain of debt and debt-related instruments that were issued to finance the boom. The most frightening aspect of the problems at two hedge funds run by Bear Stearns, both heavily exposed to the subprime-mortgage market, was not that a big bank had been plunging into risky assets; it was the revelation of how little anyone knew about the risks involved. The market was so leveraged, and the instruments so complicated, that no one seemed understand what would happen if it all began to unwind. READ IT ALL
1 comment:
A recession is when you are out of work. A depression is when I am out of work.
Right now jobs are going begging here in the Great Northwest. The immigration debate is conjuring good news/bad news. Racism vs. frustration.
I am a general contractor. I hire subcontractors to do about 50% of the work I am engaged in. [My inability to speak Spanish is a draw back]. I also like the fruits and vegetables that grow here locally.
Everyone seems to be whistling past the graveyard. [The 300lb. gorilla].
My own take is that when the sub-prime was making money for Wall Street, there was no problem. When , [if], the shit hits the fan, speaking Spanish could become a drawback.
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