McMansions. McDoughnuts (Updated) 0
Investors met in Philadelphia.
The subprime crisis, which has claimed the jobs of three chief executive officers and prompted more than $45 billion in write-downs at the world’s biggest banks, may end up spilling into 2009.
“These events tend to become deeper and play out longer than most people initially expect,” said Michael Mayo, an analyst who covers securities firms at Deutsche Bank AG in New York. “This is one of the slowest-moving train wrecks we’ve seen.”
The tumbling U.S. housing market will continue to inflict the damage. Mortgage-backed securities and collateralized debt obligations containing those securities are falling in price and will not find their footing anytime soon. That’s because most of the subprime mortgages, which provide collateral for $800 billion in securities, have yet to go bad, said Christopher Whalen of Hawthorne, Calif.-based Institutional Risk Analytics.
And the U. S. housing bubble is bursting all over the world.
Note the banks cited in the article:
American securities firms sold their “securitized” junk all over the world.
In The Wealth of Nations, Adam Smith talked about the “invisible hand” of supply and demand. Sadly for the mortgage hucksters, the “invisible hand” works reliably only when the producers are producing real stuff, stuff that people need and use, not when they are producing phony stuff, financial vaporware.
And who is producing real stuff these days?
China. Korea. Japan. Malaysia. India.
And who is producing financial vaporware?
American financial houses.
Our economy has become a house of cards, dealt by card sharks.
Addendum, Later That Same Evening:
Follow the link.
