All credit booms manifest in their own unique way. All credit busts however look alike.
- Fact: mean absolute deviation is not the same as standard deviation. Discuss amongst yourselves.
- What happens in China doesn't stay in China. Paging Dr. Zhou.
- Have you yet bid on the coolest bumper sticker the site has ever auctioned?
- For perspective, consider that the entire savings and loan crisis is estimated to have cost US taxpayers some $519 billion over a ten year period. And consider that 80% of all mortgage debt ever originated has been originated in the last five years (some $7.7 trillion) and that 75% of all subprime mortgages ever originated were created in the last four years (some $975 billion – thank you Stephanie Pomboy).
- Every credit cycle ends with the bankruptcy of the largest borrower.
- What assumptions does the Black-Scholes-Merton options pricing equation make? Securities trading is continuous in time, there are no transaction costs, there are no arbitrage opportunities, and stock price behavior follows a geometric Brownian motion (changes in logarithmic price are Gaussian distributed). Insert your own conclusion here.
- How does one turn a pool of 1 million subprime mortgages into a series of CDOs, 70% of which are AAA rated securities?
- If the new 'tough' mortgage lending standards (apparently Countrywide is going to ask for some money down now) that are in place were enacted in 2006, some $380 billion worth of mortgages would never have been granted (according to CSFB's Ivy Zellman). Now, ask yourself: are these loans sub prime, Alt-A, or prime?
- The term 'mark-to-model' isn't yet well known in the financial lexicon. It will be.
- When the Fed/Treasury print money. Who are the first receivers of that new cash? Who are the last? What happens in between? Who wins? Who loses?
- The Austrian school of economics embraces complexity. The Keynesian and Monetarist schools embrace command and control.
- What does John Williams think the real macro stats are once you strip out the government's statistical shenanigans? 4Q '06 y/y inflation: 10.2%. And GDP? 4Q '06 y/y gross domestic product: -1.53%.
- How does Todd rhyme so much?
- All credit booms manifest in their own unique way. All credit busts however look alike.
- Why do NYC airports basically shut down ahead of the actual bad weather now?
- Needless to say I have deflation going all the way in the Minyanville Final Four. That said, I was sorely disappointed that deflationary depression never even got a bid to the dance.
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