The Epic American Credit and Bond Bubble Laboratory Message Board

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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: glenn_a who wrote (90873)	1/27/2008 4:35:23 PM
From: benwood	Read Replies (1) of 110194

I appreciate your lucid and thoughtful posts today. I also don't agree that rising interest rates caused the problem. Something had to occur to end the heroin party. Without rising rates, it would have persisted for another few months before blowing up, at best (with even greater damage, I might add). I've read Doug Noland off and on for more than nine years. I believe nothing would have given him greater joy than the adoption of sound financial policies. He warned time and time again about the credit bubble and the likely outcomes, not because he wished them on anyone but because he believed that they would happen and thus affect people adversely. He and Russ Winter and and a couple others were a few who did much to 'warn' about the approaching and inevitable chaos, in my universe at least. There simply was no way to keep the bubble alive. The only game was to keep inflating it (exponentially faster) until it popped or some exogenous event pricked it. Doug and many others argued that the longer the bubble was fed, the greater the damage. From my perspective, the serial bubbles were fed for at least 10 years, a time frame that has got to be the longest and greatest in history. Correspondingly, the pain will be ... So far, the only surprise to me is the magnitude of the damage, and we've only seen the tip of the iceberg, imo. If I'd better understood how the extensive writing and repackaging of phony mortgages had morphed into the modern day equivalent of 'tally sticks' then I'd have had a greater inkling of just how huge the problem would become.

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