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Mortgage Lenders In Subprime ‘traffic Jam’ - Ft

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what a mess.

It's the same in every boom.

When the money's rolling in everyone's happy. Look at Enron, they were cooking the books, yet no-one cared, the share price rocketed, everyone was happy.

Then the share price tanked, and suddenly all the worms came out of the woodwork.

You can go back and read the history of numerous speculative bubbles, as long as they go on people just don't care.

Take mortgage fraud, this has already been uncovered, but as long as house prices rise, the mortgage broker gets their cash, the estate agent gets their commission, the homeowner is happy and the bank has collateral to cover the loan. Nobody has any interest in stopping the party.

But once those prices start to fall, well you just have to look at what's happening in the USA...

Edited by BandWagon

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It's the same in every boom.

When the money's rolling in everyone's happy. Look at Enron, they were cooking the books, yet no-one cared, the share price rocketed, everyone was happy.

Then the share price tanked, and suddenly all the worms came out of the woodwork.

You can go back and read the history of numerous speculative bubbles, as long as they go on people just don't care.

Totally true. I've started reading "Devil Take the Hindmost", and the parallels between today and bubbles as long as 400 years ago is totally stunning. There have been times when I've literally stared at the page with amazement at the similarities. The keyword is "mania". When this one comes to an end we will look back with utter incredulity at some of the tactics used to keep it going - and the way they were lapped up by the blinkered speculators.

Edited by Crash Gordon

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Totally true. I've started reading "Devil Take the Hindmost", and the parallels between today and bubbles as long as 400 years ago is totally stunning. There have been times when I've literally stared at the page with amazement at the similarities. The keyword is "mania". When this one comes to an end we will look back with utter incredulity at some of the tactics used to keep it going - and the way they were lapped up by the blinkered speculators.

It's amazing isn't it, I think most of us look back in history and somehow think that people were less intelligent, less sophisticated, less able than we are. In fact they were just the same as us, maybe even better without their minds filled with the constant garbage we are fed.

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It's amazing isn't it, I think most of us look back in history and somehow think that people were less intelligent, less sophisticated, less able than we are. In fact they were just the same as us, maybe even better without their minds filled with the constant garbage we are fed.

Exactly - just last night I finished a chapter which culminated in a series of bank runs in the 1820's, and the Bank of England being reluctant to intervene for fear of "moral hazard" (exact phrase, taken from texts of the time). Sound familiar? And in that instance, nobody was branding the anxious depositors as "irrational".

BTW - STF, I thought you'd got yourself banned? :P

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Guest Shedfish
Totally true. I've started reading "Devil Take the Hindmost", and the parallels between today and bubbles as long as 400 years ago is totally stunning. There have been times when I've literally stared at the page with amazement at the similarities. The keyword is "mania". When this one comes to an end we will look back with utter incredulity at some of the tactics used to keep it going - and the way they were lapped up by the blinkered speculators.

just reading that one - should finish it tonight.. the chapters on 1929 and Japan are chilling. a good overview!

..but i find myself wanting more depth, to drill down on those two booms - ordered a couple more off Amazon the other day, just got to wait til the brothers at the Royal Mail finish their late summer leave

Calverley's book is good too - his bit on behavioural finance is compelling

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Do you see what this site has done to us? :huh:

The other day, a girl at work asked me what I had done the night before. I proudly proclaimed that I had spent the evening reading a book on the history of finance and speculative mania. It was a short conversation - I never even got the chance to tell her that this weeks "Money Week" ends up with the lovely Ms Merryn bellowing at some bull across the drinks table. :lol:

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There are a number of economic classic's written on the subject of speculative bubbles.

Galbraith has written a 100 page book called "A Short History of Financial Euphoria", that describes exactly what we're seeing now, but his classic was on the 1929 Crash. It's regularly in top 10 lists of best economics books written.

Along with that you'll find "Extraordinary Popular Delusions and the Madness of Crowds", and Kindleberger's "Panics Mania's and Crashes".

"Devil Take the Hindmost" should probably be regarded as a classic in years to come, written by Edward Chancellor, who writes for "The Economist", one of the few publications to call this bubble correctly.

Each of these will show how generations before have exhibited the same mass dementia, but a book which describes more specifically the current UK situation is called "The Secondary Banking Crisis 1973-75" by Margaret Reid.

To give a quick picture, in the ealy 70's the goverment relaxed credit, and a number of banks started eaggressive lending against property.

Then the bubble burst, and the BoE was forced to bail out Natwest and numerous secondary banks.

History doesn't repeat, but it sure rhymes...

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Guest Shedfish
There are a number of economic classic's written on the subject of speculative bubbles.

Galbraith has written a 100 page book called "A Short History of Financial Euphoria", that describes exactly what we're seeing now, but his classic was on the 1929 Crash. It's regularly in top 10 lists of best economics books written.

Along with that you'll find "Extraordinary Popular Delusions and the Madness of Crowds", and Kindleberger's "Panics Mania's and Crashes".

"Devil Take the Hindmost" should probably be regarded as a classic in years to come, written by Edward Chancellor, who writes for "The Economist", one of the few publications to call this bubble correctly.

Each of these will show how generations before have exhibited the same mass dementia, but a book which describes more specifically the current UK situation is called "The Secondary Banking Crisis 1973-75" by Margaret Reid.

To give a quick picture, in the ealy 70's the goverment relaxed credit, and a number of banks started eaggressive lending against property.

Then the bubble burst, and the BoE was forced to bail out Natwest and numerous secondary banks.

History doesn't repeat, but it sure rhymes...

hehe, they're stuck in some sorting office somewhere already, with my name on them. another one i thought was 'on the money' was 'The Dollar Crisis: Causes, Consequences, Cures' - until i got to the 'cures' bit. spoiled a perfectly good book by losing the plot towards the end

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Guest Shedfish
Do you see what this site has done to us? :huh:

The other day, a girl at work asked me what I had done the night before. I proudly proclaimed that I had spent the evening reading a book on the history of finance and speculative mania. It was a short conversation - I never even got the chance to tell her that this weeks "Money Week" ends up with the lovely Ms Merryn bellowing at some bull across the drinks table. :lol:

:lol: i have to stop myself sometimes. eyes glaze over... you know the score

any way, this subprime securitisation thing... now they've realised belatedly that the 'unlikely' event of default, presidential intervention, and some kind of Spreadsheet Jedi shortage, WTF are they going to do? and i mean they. i can barely do my monthly exes

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It's amazing isn't it, I think most of us look back in history and somehow think that people were less intelligent, less sophisticated, less able than we are. In fact they were just the same as us, maybe even better without their minds filled with the constant garbage we are fed.

My mate, works in IT and earns about 100K a year. ( I divulge that, to illustrate he's not thick). However, he thinks that because we can now monitor the economy in 'real time' then we can iron out the problems in the economy. What, they couldn't do that in 1990? Yes, those people were thick and didn't have enough technology!

Most people are thick. And even the intelligent ones, don't have a really good back ground in finance.

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CATFLAP

Good find.

Can anybody verify this as being the case? If so it is nothing short of staggering, especially considering what has been sliced and diced and re-sliced again in orer to gain itself AAA status.

http://www.safehaven.com/article-8412.htm

At long last, the financial system is being marked to market. The virtual cycle of credit evolution has been broken. As this contagion spreads, political pressures on central banks will allow the reliquification of the markets by the slashing of rates and the opening of the liquidity floodgates.

But, here is the rub

Today's investment banks have less than 10 percent of their liabilities backed by the assets. Many of those assets are triple-A rated US treasury bills. Under the Basel Accord for every $100 of AAA securitized assets, a bank need only hold $0.60 of equity, to back up that debt. The theory is AAA assets are among the highest rated and thus the risk of default is virtually nil. However, for every BBB securitized asset, a bank would have to hold almost $5.00 of equity for every $100. The higher the rating, the lower the need for capital.

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