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TeddyBear

This Subprime Excuse Is Getting Over Used Now Isn't It?

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Most journalists of course don't understand about finance and economics, and indeed why should they? Most of them have arts degrees.

The last couple of weeks we see them comfortably trotting out the lines that volatility etc in the markets has been caused by collapse in subprime mortgage market in US.

While this is important, surely there must be so much more to it than this? World stock markets sliding because a bunch of working class Americans coupled with a bunch of fraudsters aren't paying back their loans? What about the way the corporate world has been merrily buying up companies on debt and 85% of M&As are judged to have destroyed value according to one US business school report that I read. Is this subprime failure just a small part of a much larger picture? When are we going to see the real culprits indentified?

The other shocking thing I've heard this morning is old Hunk Potts going on about, it's just a cloud as everyone is a bit confused about what's going on, it will clear soon. How, have we got again to the point again where the financial world's left hand doesn't know what the right hand is doing? I was working in IBs after the Leeson debacle and management, compliance and risk were all over every department, closing down areas that they didn't understand. Yet here we are again, massive losses in hedge funds, people confused about who owns what and why.

I hope as many greedy financiers lose out as possible but sadly, so many others will suffer. I'm currently working with a company that has been bought up by what I consider to be a few cowboys who have raised massive debt to buy up around a dozen companies in the space of 2 years. If their credit lines are stopped our cashflow will go negative and company will be no more...

Edited by TeddyBear

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I hope as many greedy financiers lose out as possible but sadly, so many others will suffer.

It's always the way when bubbles burst - it gets messy for everybody, not just those who were trying to make a quick profit. I'm watching this whole thing unfold like a slow motion train crash, it's going to be very unpleasant but I'm kind of enjoying the show...

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I hope as many greedy financiers lose out as possible but sadly, so many others will suffer. I'm currently working with a company that has been bought up by what I consider to be a few cowboys who have raised massive debt to buy up around a dozen companies in the space of 2 years. If their credit lines are stopped our cashflow will go negative and company will be no more...

This is the tragedy. Companies that are sound and profitable could be hit by external forces that cause them to fail. If this is the case and it leads to unemployment, then there will be a risk to house prices.

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