At its core, the Minsky view was straightforward: When times are good investors take on risk; the longer times stay good, the more risk they take on, until they've taken on too much. Eventually, they reach a point where the cash generated by their assets no longer is sufficient to pay off the mountains of debt they took on to acquire them. Losses on such speculative assets prompt lenders to call in their loans. "This is likely to lead to a collapse of asset values," Mr. Minsky wrote.
We are certainly at a "Minsky moment", though the outcome is by no means certain. The point of this blog is to try to bring a lot of the current events down to a reasonably comprehensible level.
I received a lot of feedback from my email to friends and family this past weekend and felt that this was the best way to continue the conversation. I do not have the time to blog as well as the best (I find that blogs that don’t post often are inferior, maybe you don’t…), but will try to post at least once weekly (more like posting a weekly newsletter of sorts) unless circumstances dictate otherwise.
I also don’t really have a plan here other than to cover the basics of the unfolding crisis as best I can, answering questions as best I can from you. This blog is really directed to the friends and family that know me, but feel free to send traffic.
4 comments:
Congrats, my man. Finally a call to action! Maybe you should start with a couple of preliminaries. For instance, folks might be interested to know that the
Subprime Securities Market Began as `Group of 5' Over Chinese
Bloomberg Article
MSG = Mortgage Security Garbage
I screwed up the link above but this is all you need to know, the rest is history.
Dec. 17 (Bloomberg) -- Representatives of five of Wall Street's dominant investment banks gathered around a blonde wood conference table on a February night almost three years ago. Their talks over take-out Chinese food led to the perfect formula for a U.S. housing collapse.
The most basic question following the events in DC today is can we hold out for a long term buttoned up solution or do we have to rush an immediate solution to build confidence and bank liquidity to once again jump start housing and reduce foreclosures now.
Here's the link that fec_nola refers to: http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=aA6YC1xKUoek
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