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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 375.93-1.8%Nov 14 4:00 PM EST
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To: carranza2 who wrote (43752)12/11/2008 6:37:23 PM
From: energyplay2 Recommendations  Read Replies (1) of 217764
 
Besides the greed and stupidity, a key factor is many people believed in something that was not true, or even close to true.

I refer to the modeling of markets and prices.

Another idea that wasn't true - you could loan money to people with marginal ability to pay, and they would not default in significant numbers. This was dressed up in a lot of politically correct verbiage, so it was much harder to question with out seeming prejudiced.

There was the idea that with modern risk controls, I-banks could run at 30:1 leverage instead of 12:1.

Third idea was that you could hold rates near 1% for a few quarters without major distortions. This was like a mis judgement of the degree of problem.

If you believe that "bad air" causes malaria instead of insect bites spreading the disease, why have a mosquito net or use DDT ?
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