A Critical Note on the Crisis
So many wonderful explanations of what went wrong...starting with Bill Clinton's idea that banks should give mortgages to people who couldn't pay their rent. Banks thought this a great idea - with property prices rising they didn't care that much about ability to repay. They could repossess and get their money back plus plus. Alas, when everybody stopped paying at once the system couldn't cope: big supply of property on the market, prices fall, banks lose their money, borrow from other banks only to realise all are in the same boat so stop lending, borrowing. From free market to free-fall market. And of course it spread because as we've been seeing, football clubs and pension funds, conglomerates and insurance companies, all own bits of each other.
I remember the theory fashionable in the eighties, or was it the nineties, that a butterfly flapping its wings in the rain-forests of Brazil creates vibrations affecting a squirrel on the steppes of Siberia...what was that theory called, now? Ah yes, the Chaos Theory.
Hey ho, now I remember another idea - buy when there's blood on the streets!
In the late eighties when I was part of that buck-based world we all thought the banking system was going to collapse because of involvement in third-world debts.
What tempted me back in now was a survey in a daily paper saying 90% of respondents thought it would all get much much worse. That's like when the taxi-driver says its a good time to buy shares is probably a good time to sell.
Look what happens when you go with the herd, Merrill. You get lynched. When you rely on experts.
Its actually very simple.
Quote from Mr WB "When the price of hamburgers goes down there is joy in the Buffet household. We eat well. When the price goes up, we don't buy so many. What is different about shares?"
Who is Mr WB? The richest man in the world. He actually bailed out one bank from his own pocket. I don't think he's going to lose his money.
Bye now.
QUESTION FOR THE DAY
What's the difference between a football manager and a banker?
Answers on the back of a (50) pound note please
I remember the theory fashionable in the eighties, or was it the nineties, that a butterfly flapping its wings in the rain-forests of Brazil creates vibrations affecting a squirrel on the steppes of Siberia...what was that theory called, now? Ah yes, the Chaos Theory.
Hey ho, now I remember another idea - buy when there's blood on the streets!
In the late eighties when I was part of that buck-based world we all thought the banking system was going to collapse because of involvement in third-world debts.
What tempted me back in now was a survey in a daily paper saying 90% of respondents thought it would all get much much worse. That's like when the taxi-driver says its a good time to buy shares is probably a good time to sell.
Look what happens when you go with the herd, Merrill. You get lynched. When you rely on experts.
Its actually very simple.
Quote from Mr WB "When the price of hamburgers goes down there is joy in the Buffet household. We eat well. When the price goes up, we don't buy so many. What is different about shares?"
Who is Mr WB? The richest man in the world. He actually bailed out one bank from his own pocket. I don't think he's going to lose his money.
Bye now.
QUESTION FOR THE DAY
What's the difference between a football manager and a banker?
Answers on the back of a (50) pound note please
posted by Kris Deva North at 8:20 PM
