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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: average joe who wrote (70548)	10/7/2008 2:15:57 PM
From: Maurice Winn	1 Recommendation Read Replies (2) \| Respond to of 74559

Paying $1 for a house was not the cause of the financial relativity theory acceleration towards the event horizon [which we might have reached]. The cause of the problem was people bidding $0.5 million oor $1 million for little houses using OPM to pay for them, with no prospect of paying the loan when interest rates inevitably increased and they lost their jobs. The contagion was because the mortgagees didn't simply manage a portfolio of mortgages but paid insurance fees to guarantee the mortgages or sold the mortgages to other companies which used them as collateral for further loans and financial gerry-mandering. Bidding $1 is what happens as the whole menagerie comes back to Earth as reality becomes real. I didn't cause the housing crunch or financial crunch but I will be happy to bid $1 for many houses and many companies. We need MORE speculators, not fewer. Speculators doing their job would have been selling houses short at the peak, keeping the prices at reasonable levels. They'd have been naked selling the financial institutions to ensure ridiculous bonuses weren't paid for over-inflated share prices to ruinous CEOs. Short sellers are falsely seen as the problem, so much so that the government banned them. It is another example of government error and that we should not depend on them for effective rescues. Blaming "the shorts" is an old game. All shorts can do is correctly price things, or lose their money. The government theory is that short selling became a self-fulfilling prophecy leading to institutional collapse due to unreasonable fear and loss of confidence. The old theory that we have nothing to fear but fear itself. Try shorting QCOM or MSFT - but prepare to lose money. They have warehouses full of money and selling their shares doesn't affect their financial viability. Note that in a sea of red today, QCOM is UP in price. There is something nice and safe and profitable about having a pile of cash, a booming market for an essential product and high margins with an excellent competitive position. Mqurice