2 ms·

Securitization is not intrinsically bad, but the fact that we are seeing more than this is indicative of the fact that the country's wealth is being hijacked b

Securitization is not intrinsically bad, but the fact that we are seeing more than this is indicative of the fact that the country's wealth is being hijacked by owners and monopolists rather than workers and builders. Imagine how big this market would be if homes were affordable nationwide and Americans could buy them with cash. Not very big, right? Houses didn't get any more expensive to build over the last 30 years, but they shot up in value thanks to policies basically designed to fuck the poor and transfer wealth directly to the rich (ZIRP, de-taxing land/wealth, etc.). Hence the fact that securitization of rental streams is a thriving market rather than just an idea.

kasey_junk 11y ago
The reason we are seeing more securitization is that the marketplace demands it. There are lots and lots of market participants that are looking for low risk, small fixed return style investments. This financial product, at least for the latter half of the last century, was almost entirely provided by US governmental debt. The monetary policy of the last decade+ has caused that debt to no longer be an acceptable investment for this. Coupled with the increase in number of investors looking for this style of vehicle (from China and other developing nations) and there is a huge market need. Of course, in the face of a huge market need financial product offerers are going to try new and possibly dodgy means to fill the gap.
- pas 11y ago
  > The monetary policy of the last decade+ has caused that debt to no longer be an acceptable investment for this. Could you elaborate on why that's the case? What happened to treasury bonds? Which part of monetary policy affected the returns and how?
- crdoconnor 11y ago
  >There are lots and lots of market participants that are looking for low risk, small fixed return style investments. And you think hopping on the next CDO bandwagon is a low risk investment?
  - kasey_junk 11y ago
    No of course not. I also don't understand the market for luxury pick up trucks, but it exists so why wouldn't car manufacturers create products in that space, even when all other products in that space are clearly stupid?

kasey_junk 11y ago

The reason we are seeing more securitization is that the marketplace demands it. There are lots and lots of market participants that are looking for low risk, small fixed return style investments. This financial product, at least for the latter half of the last century, was almost entirely provided by US governmental debt. The monetary policy of the last decade+ has caused that debt to no longer be an acceptable investment for this. Coupled with the increase in number of investors looking for this style of vehicle (from China and other developing nations) and there is a huge market need. Of course, in the face of a huge market need financial product offerers are going to try new and possibly dodgy means to fill the gap.

pas 11y ago
> The monetary policy of the last decade+ has caused that debt to no longer be an acceptable investment for this. Could you elaborate on why that's the case? What happened to treasury bonds? Which part of monetary policy affected the returns and how?
crdoconnor 11y ago
>There are lots and lots of market participants that are looking for low risk, small fixed return style investments. And you think hopping on the next CDO bandwagon is a low risk investment?
- kasey_junk 11y ago
  No of course not. I also don't understand the market for luxury pick up trucks, but it exists so why wouldn't car manufacturers create products in that space, even when all other products in that space are clearly stupid?