Sub Prime Devices

Daniel Drew Looks at the Sub Primes and Thinks it a Great Scam!

Someone asked if I thought the stock market would decline further. I answered affirmatively. We know about sub primes. What don't we know about? Central bank intervention to stabilize the markets...so much for your "free" markets. Whom shall we bail out this time? What kind of a system is it where you have sub prime mortgages? It is a system of cunning creation of a supply of financial instruments. It cannot control itself after it has run out of reliable instruments, so it turns to pastiches of unreliable instruments. Does anyone remember junk bonds? It is a system where the buyers of such instruments are criminally incompetent. Is or is not a sub prime mortgage a financial instrument based on people who have low credit entering into an agreement to repay? And is there not an automatic triggering bomb in the shape of rising interest rates which serve to ensure that the person who already has trouble paying will have even more trouble? Is it not a fool's game? So if we have one fool's game, how many others are there? If financial markets may stumble because they actually used a financial instrument which almost guaranteed being defaulted on, what do you think will happen? In summary, one of the defining characteristics of American Capitalism is a complete lack of control. When we have run out of good investments, the markets allow junk to be sold on the open market. The savvy buyers actually buy this junk, assuming that they will be able to dodge the negative consequences. One of the results of market surges is this incredible gorging on offal! This is a side to market psychology which is very nasty. Some other goal must be found other than " grabbin' all ya kin". (if you wish to know more about Daniel Drew, you know the drill.)