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Message
re: Black Swan Theory
Posted on 9/30/08 at 10:03 am to Colonel Hapablap
Posted on 9/30/08 at 10:03 am to Colonel Hapablap
Colonel Hapablap is correct. The rating agencies not only became corrupt, but their original models were based on a different generation of Americans and were initially flawed.
0
Posted on 9/30/08 at 10:03 am to geauxgiacomo
quote:
While I agree that people have said that the sub-prime mortgage market will have a negative impact on the economy as a whole, no one I listen to or read predicted anything of this magnitude.
the basics of the original $700bb bailout bill from the White House were written by the Treasury Dept over 10 months ago, if that isnt predicting something then I dont know what is
But just the idea that anyone was predicting mortgage lender failures throws the Black Swan theory out of play. Unexpected means no one ever thought of it before.
accurately predicted = merely a question of when will it happen
Posted on 9/30/08 at 10:10 am to supatigah
quote:
But just the idea that anyone was predicting mortgage lender failures throws the Black Swan theory out of play. Unexpected means no one ever thought of it before.
I am not talking about 'mortgage lender failures' I am talking about the restructuring of the American economic infrastructure as a whole.
Posted on 9/30/08 at 10:19 am to Meauxjeaux
Fannie and Freddie only back conforming loans, not the shite paper. They BOUGHT the shite paper on the open market, but that didn't imply a backing. Loans that were made to people who couldn't afford it was all rooted in financial engineering and mis-rating.
Posted on 9/30/08 at 10:21 am to geauxgiacomo
quote:
I am not talking about 'mortgage lender failures' I am talking about the restructuring of the American economic infrastructure as a whole.
I assume you mean "corporate socialism" becoming the new American Economic rule of law and that has not happened yet
based on the events of yesterday it probably will not happen either
Posted on 9/30/08 at 10:23 am to Colonel Hapablap
Blaming credit ratings is a red herring. We're talking about a socialist system dominated by GSEs. It's pretty fricking hard to rate risk in a non-transparent and quasi-public industry. At the end of the day, there's no way in hell the credit rating agencies could have stood up to the very same government that supported their special oligarchic status. You're dreaming if you think otherwise.
Posted on 9/30/08 at 10:24 am to Colonel Hapablap
quote:
They BOUGHT the shite paper on the open market, but that didn't imply a backing.
You're right. It didn't imply a backing, it WAS a backing.
Posted on 9/30/08 at 10:25 am to Doc Fenton
:jesustapdancingchrist:
Posted on 9/30/08 at 10:33 am to supatigah
The American financial system is based on two things at the end of the day 1. An abundance of Confidence and 2. Lack of Fear - these things have been challenged in the past, for example 9/11, but in that situation the fear was not rooted in a lack of confidence in the US Banking system, it was based on the notion that the government was unable to protect Americans - so we overcame it by doing the patriotic thing and living our normal lives. In this situation people have lost confidence in the very structure that we have depended on and further they fear that their money may be lost. There will be long term structural changes to this system that will go far beyond any initial rounds of bailouts.
Posted on 9/30/08 at 10:46 am to geauxgiacomo
chicxulub... that was a Black Swan.
Now, there's a historical perspective.
'87 had a drop 3 times higher than yesterday, I think. Breathe in. Breathe out.
Now, there's a historical perspective.
'87 had a drop 3 times higher than yesterday, I think. Breathe in. Breathe out.
Posted on 9/30/08 at 10:50 am to geauxgiacomo
quote:
The American financial system is based on two things at the end of the day 1. An abundance of Confidence and 2. Lack of Fear - these things have been challenged in the past, for example 9/11, but in that situation the fear was not rooted in a lack of confidence in the US Banking system, it was based on the notion that the government was unable to protect Americans - so we overcame it by doing the patriotic thing and living our normal lives. In this situation people have lost confidence in the very structure that we have depended on and further they fear that their money may be lost. There will be long term structural changes to this system that will go far beyond any initial rounds of bailouts.
yeah I took econ 2010 and 2020 in college too but to apply this to a Black Swan type of event is a real stretch
btw, imo the regular joe's faith in the US banking system is based on the FDIC Guarantee, not their relationship with their mortgage company or what stocks they own
Posted on 9/30/08 at 10:54 am to geauxgiacomo
quote:
The American financial system is based on two things at the end of the day 1. An abundance of Confidence and 2. Lack of Fear
It's based on one thing, the valuation of our productivity as a nation. The global markets overvalued us a bit too much and now we are in the middle of a correction.
Posted on 9/30/08 at 11:50 am to Colonel Hapablap
quote:
THIS IS ALL ABOUT THE RATINGS SYSTEM
How so? I saw many subprime bonds that were rated speculative, Baa1 at best. Now many CDO's backed by these bonds may have been rated investment grade.
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