Headline of the Day: The Greenspan Putz
How can you not love this Alan Kohler guy?
This is the issue at the heart of the heart of the financial crisis now enveloping the world. Loans were securitised and turned into investments rather than assets of institutions that have a regulated capital buffer and, in extremis, government support.
Government backing is never explicit, but everyone knows that banks are almost never allowed to fail, especially big ones.
Investments in mortgage securities are an entirely different matter. The trouble is that the differences have not been made clear to the investors.
As Alan Greenspan said in his testimony to Congress last night: “With … home prices rising, delinquency and foreclosure rates were deceptively modest. Losses were minimal. To the most sophisticated investors in the world, (mortgage securities) were wrongly viewed as a ‘steal’.”
Unsophisticated investors didn’t stand a chance.
Indeed . . .
Source:
The Greenspan putz
Alan Kohler
Business Spectator, 7:48 AM, 24 Oct 2008
http://www.businessspectator.com.au/bs.nsf/Article/The-Greenspan-putz-KPS7Y
Tuesday, October 28, 2008 | 02:30 PM | Permalink
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i would disagree. (this relates to individuals not in the financial industry and with half a brain) i would call them unsophisticated investors and i would say they could not believe how completely ridiculous things were getting with regards to mortgages. in my opinion people on wall street are not all that smart they just think they are
Posted by: harold hecuba | Oct 27, 2008 2:11:55 PM
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