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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: Don Earl who wrote (11476)	9/21/2008 12:52:35 PM
From: JBTFD	Read Replies (1) \| Respond to of 71475

As I see it the difference between the good old days and the new days of securitization is the now someone with $500 can get in to the market. I have bought paper in the past and it was very clear what you were getting. If you were prudent you looked at the property, assessed it's value for yourself and and then looked at the borrower and loan to value and could tell what the risk exposure was. Nowadays they take the loans, combine them together and for all intents and purposes put them in a blender. It becomes damn near impossible to assess the risk. You have to take someone else's word for it how risky the investment you are buying is. And of course because the less risk there is the more valuable the investment there is a built in conflict of interest and incentive to fraudulently assess the investment to be less risky than it actually is. That these things were so widely dispersed throughout the economy reminds me of the book "Extraordinary Popular Delusions & the Madness of Crowds". It's the modern day equivalent of the tulip mania, and now the music has stopped. Another big problem is that the players in this game are so leveraged.