In Japan, the liquidity trap motivated innovative methods to spur investment demand. New banking restructuring might encourage more lending. Do you think micro lending would work in the US?
A comment on the cartoon, Freddie and Fanny... was at the Investment Board meeting Wednesday, we had a guest speaker from a large international investment house. He says that without Fred and Fanny the residential mortgage market would be as broken as the commercial real estate market is presently. So thanks for that. Basically ZERO CMBS (Commercial Mortgage Backed Securities) traded in last quarter of '08 and none so far this year. But RMBS (residential Mort. backed securities) are trading. He also described our world financial situation as "problem is massive". His worse dream is interest rates on bonds, US treasuries go from 2% to 4% or more, like 7%. "and decimate all investments."
Thecrash maybe caused by three things that worked together or in concert,. #1. agency problem, some times called the principal agent problem in text books. The traders were using other people's money. #2. Excess leverage. Too much borrowed money being used by home owners, investors, and banks. #3. Every bodies "utility function" became the same. How to get out of this bad investment. When teh movie theater catched fire, everyone's utility function becomes the same. How to get out...now. How long before someone discovers this? wayne iNWI
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ReplyDeleteA comment on the cartoon, Freddie and Fanny... was at the Investment Board meeting Wednesday, we had a guest speaker from a large international investment house. He says that without Fred and Fanny the residential mortgage market would be as broken as the commercial real estate market is presently. So thanks for that. Basically ZERO CMBS (Commercial Mortgage Backed Securities) traded in last quarter of '08 and none so far this year. But RMBS (residential Mort. backed securities) are trading. He also described our world financial situation as "problem is massive". His worse dream is interest rates on bonds, US treasuries go from 2% to 4% or more, like 7%. "and decimate all investments."
ReplyDeleteThecrash maybe caused by three things that worked together or in concert,. #1. agency problem, some times called the principal agent problem in text books. The traders were using other people's money. #2. Excess leverage. Too much borrowed money being used by home owners, investors, and banks. #3. Every bodies "utility function" became the same. How to get out of this bad investment. When teh movie theater catched fire, everyone's utility function becomes the same. How to get out...now. How long before someone discovers this? wayne iNWI
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