« Back to story "The World Finance Crisis&the American Mission - The New York Review of Books"

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Posted by: beavith1 5 months, 3 weeks ago

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beavith15 months, 3 weeks ago

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good article. it seems lately that no one will talk aboutthe 800 pound gorilla in the room.

take it for what its worth. i only hold an MBA from a thrid rate university, but i can quibble with some of his points.

he talks about 'underpricing risk.' i think it should be 'mispricing risk' and that's based on teh packaging of CDO and CDS debt tranches.

american subprime debt may have been the fuse that caused the explosion, but vast chinese savings was going to be invested somewhere. it could have been like excess japanese cash in the 1980s that was sunk into actual real estate. the CDO and CDSs generated could theoretically absorb any amount of cash as an investment and provide excellent return.

in an absolutely unregulated environment, with vast gouts of cash flowing in, it was a question of time.

20/20 hindsight is great!

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  deathray5 months, 3 weeks ago
  
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  he talks about 'underpricing risk.' i think it should be 'mispricing risk' and that's based on teh packaging of CDO and CDS debt tranches. >
  
  that's true...but he's mostly talking about issues outside the financial markets...except for issues of capital flight, he's looking at trade imbalances.
  
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    GWHayduke5 months, 3 weeks ago
    
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    One interesting thing about trade imbalances is how they are sometimes measured.
    
    Often, 'services' are discounted because they dont meet the criteria of durable goods, products or tangible assets that can be easily measured.
    
    We are not deficient in the services we provide abroad.
    
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