Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
a passing thought... is this fever of bad loans perhaps an inevitable consequence of the whole usury model?  i.e., the outstripping of tangible asset worth by notional money due to compounding interest over time (which makes money multiply far more rapidly than trees, potatoes, eggs, fish, wheat, etc)?  a later consequence is devaluation of the money supply, but an earlier symptom (it seems to me, just watching from the sidelines) is the desperate search of "too much money" for value to represent, i.e. for hot capital to find some real-world value to invest itself in.  when the amount of capital out there exceeds the worth (at current price points) of available real property and assets, then it starts to invest itself in imaginary or wildly overvalued property -- to create notional bubbles of value -- rather than sit quietly in savings accounts at "unacceptably low" (non-usurious?) rates of return.

just slowly chewing on the problem from my very hands-on little world here at the dock... where a significant chunk of the local economy is informal barter and time trade, plus a lively gift/share economy...

The difference between theory and practise in practise ...

by DeAnander (de_at_daclarke_dot_org) on Sat Jul 12th, 2008 at 01:37:50 PM EST
IANAE, but my guess is that taxes would normally be used to remove this excess money from circulation so it didn't have to chase tulips.

Of course, if you have a governing ideology that stipulates that taxes are teh vork of teh devvil... well, you do the math.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Jul 12th, 2008 at 02:00:43 PM EST
[ Parent ]
In the US a lot of the sub-prime was fueled by frantic efforts to keep the bubble inflating by bringing in less and less qualified borrowers.  The majority of the players profited from fees.  Then they "securitized" the mortgages by putting some "sub-prime," some"Alt.A 'liar loans or NINJAs' (No Income, No Job or Assets!)" and some traditional loans all in a package.  The sales pitch was much the same as it had been for Junk Bonds: put different asset classes with different yields and risks into a single package to get higher overall yield with some increase in risk.  Too bad they didn't look at what happened to junk bonds under Michael Milken and Drexel.


"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Jul 12th, 2008 at 03:20:54 PM EST
[ Parent ]


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