On Tue, 6 Jan 2015 06:15:04 -0800 (PST),
wrote:
snip
Stress testing banks doesn't address the question.
But what do top specialists in the field say? "The U.S. stress tests succe=
eded because they forced banks to raise a lot of capital," says Anil Kashya=
p, an economist at the University of Chicago's Booth School of Business ...=
"
/snip
While this does indeed seem to indicate *SOME* positive
action, if we look at the events leading up to 2008 a major
contributing factor to the real-estate asset bubble appears
to have been the so-called "merchant banks" such as Lehman,
Bear-Sterns, and Merrill which were outside the regulatory
pervue of the FDIC and FRB. These "merchant banks" had
morphed into prop traders / hedge funds and were leveraged
at 40:1 or more. These along with Goldman-Sachs, were among
the leading creators and traders in the residential mortgage
backed collateralized debt obligations, some of which were
synthetic or virtual and contained no "bricks and mortar"
assets at all. In other cases the CDOs were backed by other
CDOs, producing the so-called CDO "squared." [This was a
re-run -- see Goldman's Shenandoah and Blue Ridge from 1928
http://tinyurl.com/kjoowa5 ]
The trouble seems to have started [from the perspective of
those unlucky to own stock in the merchant banks] when the
"masters of the universe" started believing their own hype,
and began "investing" in their own paper creations, albeit
only in the "safest" tranches
http://tinyurl.com/p2ovckk.
"Those who learn nothing from history are condemed to repeat
it" may be trite, it is also true. For anyone interested in
this off topic thread [well gold is metal] watch these
dramitizations on You-Tube to get the feel of what we are
yammering on about.
About the collapse of Lehman
From the BBC
http://tinyurl.com/lde7vvh
For an earlier cycle [Enron]
http://tinyurl.com/qynxdjk
An even earlier cycle and lead-in to the 1929 stock market
bubble. [Florida land bubble]
http://tinyurl.com/nctz7cy
http://tinyurl.com/pm2j5r2
Humans are the only animals you can skin more than once...
--
Unka' George
"Gold is the money of kings,
silver is the money of gentlemen,
barter is the money of peasants,
but debt is the money of slaves"
-Norm Franz, "Money and Wealth in the New Millenium"