Wednesday, March 25, 2009

Toxic assets

A WSJ opinion, titled "Toxic Assets Were Hidden Assets" by Hernando de Soto, covers some of the issues related to the financial mess. We can rant about the culprits (who are many), opine on causes, belittle the greedy, and such. We can harp at those who are trying to fix things up.

But, the core issue is securitization gone wild. As said before, in this blog, the problem stems from the misuse of modern methods, the lack of appreciation of quasi-empiricism's message, and from outright exploitation of (and profiteering on) the confusions caused by the insertion, into finance, of unsuitable methods.

de Soto mentions that many things were largely off-the-books which breaks trust. Too, as said here, the argument from CBOE'ers and hedge fund'ers was that they required opacity to cover their strategies (ah, the best-and-brightest knew that they could more easily pilfer with the lesser scrutiny). And, the risk people thought that they had a stable grasp of things. Hah!

Well, it's time to get past the rhetoric and to get back to talking turkey. Hence, future posts will get more serious, except an occasional poke at the madness cannot be denied.


08/01/2013 -- We're relook at this as we consider the good side (as if there is one) of financial engineering.

04/03/2011 -- Need to look at some background. Too, tranche and trash.

02/01/2011 -- The chimera shines, though the toxic still underlie Big Ben's balance sheet.

11/02/2010 -- Over a year later, the message is the same, except some changes have occurred. But Big Ben continues in his ways. Of real note is that the jobless rate is high; out-housing really set up for that. Also, we need to re-look at that learned from the 'vons' guys, Ludwig and Friedrich. See Near Zero.

11/08/2009 -- The gigantic chimera needs proper attention.

09/15/2009 -- Lessons, one year after Lehman. Also, Time on culprits.

08/17/2009 -- As promised, FEDaerated is here.

06/17/2009 -- Michael Milken says that structure counts (see WSJ article). Remember, the theme here is that a lot of securitization is bunk, many times. Sheesh, talk about a perpetual motion machine, always moving monies from the pockets of the hapless to that of the fat cats.

Modified: 08/01/2013

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