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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (33516)	5/30/2005 12:59:58 PM
From: CalculatedRisk	Respond to of 110194

That quote ("We've produced a new class of lenders willing to take on riskier and riskier borrowers at a very high price. Many of the products are nothing more than time bombs") reminds me of the quote Russ has in the header: "A sound banker, alas, is not one who forsees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him". - John Maynard Keynes

To: John Vosilla who wrote (33516)	5/30/2005 6:02:38 PM
From: mthomas	Respond to of 110194

re: "We've produced a new class of lenders willing to take on riskier and riskier borrowers at a very high price...snip <<>> This is precisely what developed in the several years leading up to the Grande Finale of the S&L debacle. The S&L thing had been seen coming for a number of years by astute "conspiracy theory" players and written about in many places (but not in the NYT nor LAT nor WSJ nor FT) and there was no Internet then, either. Those rags were tough to read, skinheads, biggots, racists, and you name it, those rags printed it; but some of their financial insights and political predictions were spot-on...and continue to materialize precisely as written. The S&L thing was written about for a lonnngggg time before it finally blew itself up. I bet few people here know how it ended up, other than the then-$450Billions the citizens paid for the "bailout". That ending in itself is worthy of a short novel. But not now. You can see the results, half a dozen major banks is all that is left so you can figure the plan was to engineer something that would leave the fewest players possible. And so it is. <<<<<>>>>> To make up for lower revenues, the bets are placed on riskier and higher yielding projects. To see this in print is scary, just like seeing the shoeshine boy story Ramsey told (ca. 2000) about the waitress that served he and some companions in a diner who had bought one share of QCOM and it went down $5 and she was bummed because "that was enough for a lunch". So now we have "produced a new class of lenders"....eh? And are these lenders using money from derivatives activities, whose final, end of the line holder of responsibility is a little shell in Cayman Island? Or Caicos or Gran Turks? Put the shell to your ear and you will hear the ocean......or the Black Hole of Calcutta. We saw the sovereign-states of EU who were holders of FNM et.al. begin to bail in October of 2004. Risky borrowers getting money from risky lenders not underwritten by the USA but by a shell on Gran Cayman? I want that bridge you promised to sell me too, please, pronto. Regards, Martin Thomas