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Politics : Formerly About Advanced Micro Devices
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To: i-node who wrote (833939)2/3/2015 6:21:12 PM
From: combjelly  Read Replies (1) of 1579830
 
Even if that were true, and it isn't, that was just the fuse. The bomb was the vast, unregulated market of derivatives and other creative instruments that flood the global marketplace. Along with the ability to get a CDO against anything by anybody means that once a big economic event occurs, the whole system melts down. So we are primed for 2007 to happen periodically. It is the way the system has evolved. The shady practices that the big banks routinely engage in makes things even more unstable.

So, it was mortgages in 2007. It could have been consumer credit, which is also routinely bundled into securities like mortgages and sold off. Of business debt, which has gone global, bundled into securities and sold off. That one has the neat quality of often being lent in different currency than the country where the loan is taken so changes in the exchange rates make those securities even less stable. Given that rental units are being securitized also to fuel a building boom in rental properties, well...

We have a global financial system that has been optimized to maximized profits at the expense of stability. And when things go sour the whole thing is primed for collapse. Like what happened. My guess is that rental-backed securities will be the next fuse. The operating companies no longer get income from those properties and already are getting lax on maintenance. Complaints are spiking for those properties. Sooner or later those properties that have been securitized will be difficult to lease, resulting in those securities dropping in value, triggering their CDS' and the whole house of cards collapses...
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