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

To: ild who wrote (34232)	6/9/2005 10:41:26 AM
From: ild	Read Replies (1) \| Respond to of 110194

Date: Thu Jun 09 2005 10:23 trotsky (Greenspan on the bubble) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved most significantly, he said ( not verbatim ) : "it is unlikely that a fall in home prices will have a big macro-economic impact. the diversity of financings ( i.e. the degree of securitization etc. ) ensures that financial intermediation will not be significantly hampered." almost needless to say, i couldn't disagree more. true, the complex and diverse structure of the mortgage credit bubble is to some degree working as a 'shock-proofing device' , but it is erroneous to think that the financial intermediation process won't be hampered by a bursting of the bubble. this is because 60% of the US banking system's assets are tied to real estate lending these days - and lending standards have fallen dramatically concurrently with a lowering of loan loss reserves across the board. the system has in short rarely been more vulnerable than it is now - the effects of the coming bursting of the bubble will be widespread imo, and engulf a number of completely unrelated sectors of the economy as well as the credit creation machinery battens down the hatches.