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Wouldn't any economist be able to say that the assumption that house prices will not move in a correlated way across the united states is patently false? It ha

by YZF 10y ago

Wouldn't any economist be able to say that the assumption that house prices will not move in a correlated way across the united states is patently false? It happened before during the great depression, and to some degree in the 80's and 90's. It was also clear house prices were in bubble territory by any sort of economic measure. While no one can accurately time the burst of bubbles there's enough historical data to be able to have an idea of whether things are over valued by various metrics. What I'm saying it that I don't think that claims that bankers, who are sophisticated players and experts in their field, didn't know what they were selling. They should have known those instruments were not of the quality they represented them to their customers. I don't think shifting the blame to the rating agency holds water. At the same time they were giving mortgages to people who wouldn't "normally" qualify and where the risk was obviously very high they were selling pieces of those mortgages as AAA rated securities. Doesn't pass the red face test in my books.

Lazare 10y ago
> They should have known those instruments were not of the quality they represented them to their customers. You're not wrong! And yet it seems very clear they did not know this. Which is pretty stupid, really...but being stupid isn't a crime. (Plus...I mean, you were alive back then right? Did you make a ton of money betting against the housing market? If not, why not? Or if you were too young/poor, then do you know anyone who did?)
- solipsism 10y ago
  being stupid isn't a crime Doing stupid things is often a crime. It may not be in this particular case, but it's not true that lack of criminal intent is always exculpatory.
- cheiVia0 10y ago
  > Did you make a ton of money betting against the housing market? If not, why not? Or if you were too young/poor, then do you know anyone who did? Considering there was no product to bet against the housing market, your options are: (1) Be a hedge fund manager of a large enough hedge fund to enter a custom derivative contract with a bank, to create the product (which is what those funds that made a ton of money betting against the housing market did) (2) Have a few million for the minimum to investment in one the said hedge funds So I'd say the answer for most people is "were too poor".
- camelite 10y ago
  > And yet it seems very clear they did not know this. And therein rests your case. But you appear to be simply taking them at their word on this, to me. Unsophisticated observers will say, "Why would they do something so colossally stupid that it'd bankrupt their firm". But the person is not the firm. The person quite often can permanently enrich himself on the path to firm-wide dissolution.

by YZF 10y ago

Lazare 10y ago

> They should have known those instruments were not of the quality they represented them to their customers. You're not wrong! And yet it seems very clear they did not know this. Which is pretty stupid, really...but being stupid isn't a crime. (Plus...I mean, you were alive back then right? Did you make a ton of money betting against the housing market? If not, why not? Or if you were too young/poor, then do you know anyone who did?)

solipsism 10y ago
being stupid isn't a crime Doing stupid things is often a crime. It may not be in this particular case, but it's not true that lack of criminal intent is always exculpatory.
cheiVia0 10y ago
> Did you make a ton of money betting against the housing market? If not, why not? Or if you were too young/poor, then do you know anyone who did? Considering there was no product to bet against the housing market, your options are: (1) Be a hedge fund manager of a large enough hedge fund to enter a custom derivative contract with a bank, to create the product (which is what those funds that made a ton of money betting against the housing market did) (2) Have a few million for the minimum to investment in one the said hedge funds So I'd say the answer for most people is "were too poor".
camelite 10y ago
> And yet it seems very clear they did not know this. And therein rests your case. But you appear to be simply taking them at their word on this, to me. Unsophisticated observers will say, "Why would they do something so colossally stupid that it'd bankrupt their firm". But the person is not the firm. The person quite often can permanently enrich himself on the path to firm-wide dissolution.