How ridiculous that the world runs along until we find that the Achilles heal is nothing more innocuous than mortgage backed securities. Who would think it. Wars, disease, famine, nuclear threats, AIDS, all these things come and go and people in general carry on living. Now I do not make light of any of these scourges of the modern world. But a mortgage backed security bubble and the world goes to hell and a hand basket. It seems quite frankly, ridiculous. I am quite familiar with the product and remember their early appearance in the late eighties. But then they were bundles of good quality mortgages to help people buy a house who had a good chance of paying it back. What a great idea. So how did it go so horribly wrong. Bundling mortgages with good track records with mortgages giving people 125% of the value of the property. I suppose no one saw the insanity of this and how it has entangled every other person who wants to buy a house in the 'normal' fashion. South sea bubble all over again. What was it they said.... 'Those who do not learn from history are doomed to repeat it' Sigh....I'll retire to bedlam.
Update Jan 18th 2013. So nearly five years on and still the mayhem continues. Libor rates fixed, loan insurance scandalized, some of my best loved institutions brought almost to their knees by falling on their own swords. Can it get any worse? I hope that there is finally some hope that maybe the rot may finally be checked. After all what is left to ruin? As the saying goes, when you hit rock bottom the only way is up. I sincerely hope this is the case.
* The photo is the beautiful Barclays Bank in Dolgellau Wales. I chose this photo from my collection for its clarity only.
2 comments:
The morgage backed security is a product? Sorry dad, I am very confused, but that is not the fault of your writing...just my general knowledge of how things work in the world!
By the way, I linked you on my blog :)
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