yes you did over react……by ALOT.

you’re reply is indicative of what’s wrong with america. Americans HATE americans.

his complaint (since your hate clouds your thought process) his the banks are getting a free pass.

and that my friend is what caused the problems in the first place.

At the preent time America is reaping the harvest of the “starve the beast” strategy propounded by the right wing.

What I fail to understand is why the American people did not see through this in 2004 and why they blame Obama and the Dems now….No wonder I worry about this country..it is too dysfunctional for words.

THE PEOPLE GET THE GOVERNMENT THEY DESERVE.

It feels like there are many people whose careers rely on complexity. Sorry, you may be nice people, but part of what has happened is that folks with great talents for math and the manipulation of symbols have been recruited to work for the dark side. The best and the brightest are able to out-math the lessers and stay one step ahead of the game. It’s a priesthood, and it’s rotten. Make the system simple and you don’t need the thousands of “engineers” to maintain it. Sorry if that threatens your livelihood — maybe you should have directed your talents to a more socially acceptable outlet. (Not pointed at you personally, BG)

It’s hard to believe that this fact escaped both very conscientious blogs.

Ozajh reminds us about Tanta (Doris Dungey). Wonder if she’s related to this other Dungey who works with the Centre for Financial Analysis & Policy at the Cambridge Endowment for Research in Finance (CERF).

http://www-cfap.jbs.cam.ac.uk/

http://www.dungey.bigpondhosting.com/

Prof. Dungey’s research seems to focus on financial crisis contagion. In this paper she references the earlier work of Kaminsky and Reinhardt on crises (see previous Naked Capitalism post on Early Warning Systems.

http://economistsview.typepad.com/economistsview/2009/08/could-an-early-warning-system-have-predicted-the-crisis-.html#more (Read Bruce Wilder’s comments on the post too)

Prof. Thoma’s post republishes a paper by two VoxEU people which “suggests” that we can’t predict crises like this one.

http://www.voxeu.org/index.php?q=node/3834

The title of their paper is “Could An Early Warning System Have Predicted This Crisis” Considering the title of their paper, it’s strange they don’t reference Kaminsky, Reinhart, and Morris Goldstein’s (Peterson Institute) paper titled “Assessing Financial Vulnerability: An Early Warning System for Emerging Markets”

Nor do they reference Prof. Dungey’s work. Important enough for Cambridge University, but not enough for them? One of the authors works at the Fed, and the other teaches at Berkeley and is associated with CEPR.

More curious — another interest of Prof. Dungey’s is US Treasuries and shocks thereto… but in her discussion of contagion she doesn’t mention the yield curve, one of the great indicators of brewing trouble?

CERF is fascinating. Looks like it’s strongly associated with a company called RiskLab International, and with DeutscheBank. One would assume they know a thing or two about risk… and financial crises…

http://www.cerf.cam.ac.uk/

Until fairly recently they had a Centre For Real Estate Finance (dead link on the page above). Wonder if they just moved the page, or if they decided it would be better not to have the Centre anymore.

Many, many problems that won’t go away.

If the loans have been securitised, matters complicate considerably. Different tranches may win/lose from different servicer strategies, and the holder of part of any tranche can find a hungry lawyers . . .

Tanta over at Calculated Risk was writing repeatedly about the problems of Tranche Warfare before her untimely demise.

It’s a shame, but by the time of the next election, almost every incumbent in either party will be in trouble, and most of the monied interests that support their reelection campaigns will be tapped out from supporting them in office. And who wants to run for office in such a situation. I would question that anyone wanting to must be nuts.

Sounds like a real commitment to meeting one’s obligations:)

As I say, Americans have a problem with repaying. But if “things change” means it’s OK not to repay, then you won’t mind if ownership of the things you bought is changed to the person whose money you used to buy them, and whom you didn’t repay.

But I forget, that last little change can be controlled, with political muscle.

Whitney will have to speak for himself, but I think its a reasonably safe bet that his reference to “a black, two year senator” is commentary on the likelihood of the ruling class actually allowing a black man and one clearly short on credentials at that to serve in any high ranking government job without owning him lock, stock, and barrel. In my view, no statement respecting the intrinsic relevance of Obama’s skin color to his native capabilities is being made here at all, but rather an indictment of the suspected prejudices of those in charge of things. Whitney’s critique of Obama here is of Obama-as-tool, not of Obama-as-negro, and his point is all-too-well taken.

If “the best interests of bondholders” is the determining factor, that can be anything and everything depending on how the p and i payments on the underlying loans are sliced. Depending on the tranche the investor owns, the specifics of how the loan is modified (principal reduction, reduced interest rate, extended maturity…) may have a different impact on different investors.

I think calling this a “sanctity of contracts” issue kind of oversimplifies things. But the apparent lack of diligence in how these securities were produced never ceases to amaze me.

Yakkis: crap; gain frequently happens without pain and pain frequently happens without gain.

For the first case, witness Goldman Sachs and Merrill Lynch bonus recipients. For the second case, witness the survivors of life-saving surgeries where coverage was denied by their carriers and who can’t afford to pay for it.