i know the real reason for the credit crunch david bowie

Discussion in 'Economics' started by morganist, Jul 24, 2009.

  1. morganist

    morganist Guest

    i found this article and thought it might make you laugh.

    http://new.uk.music.yahoo.com/blogs/guestlist/14935/did-david-bowie-cause-the-credit-crunch

    i don't agree with it. they are confusing future cash flows with derivatives in my opinion. they also haven't taken risk into account (in relation to how the sub prime risk was concealed).

    even with the credit model you estimate your return with the expectation of the repayment in the future so the bank assesses the chance of repayment before it lends. so the concept of securitisation they claim he invented already existed although the payment mechanism was different. it was not a based on buying the future right to the cash flow at margin so is not a derivative. i find their argument invalid.