One mans toxic investment=another mans windfall

Discussion in 'Economics' started by NZDSPeCIALISt, Feb 6, 2009.

  1. One mans toxic investment=another mans windfall

    Trillions of dollars in toxic loans/cmo's/investments made went somewhere right?
    Those developers who are probably sitting on a beach in the carribean right now laughing at all those investors who were trampling all over each other to get a piece of their action with 110% financing.
    The 'toxic" debt that is left - somewhere, is sitting in someones bank account.

    Assuming that developer or whathaveyou did not 'invest' there windfall gains in the stock market for example - but instead sold there project and lots and lots of wealthy retired people that benefitted directly from easy finance, that you never hear about.

    Sure, developers were overpaying for land and construction for their projects, so then those landholders and builders they dealt with benifitted big time.
    And anyway - the developers tagged on there inflated markup on the project and out it went.

    Tax man got his share. And on and on.
    The point is - all these trillions are sitting somewhere on the positive side of the ledger. Not that any of that money is recoverable, just that lots of people you never hear about are living it up and seriously well off from the debt binge. And I just thought to give that idea some airplay - cause you never read about it. :)

    Someones toxic cmo=someone elses cash in the bank - somewhere..
  2. Illum


    Sure if they got out in time. How many are screwed because of the unfinished projects there are involved in. Timing.
  3. Confidence in the system = wealth for those invested in the system.

    (Warning: very basic info :D) When people say 30 trillion in value "vanished," it's just paper value. Your house was worth $600K because someone had confidence that they could buy and sell it for the same amount or, ideally, more. The same principle now values that house at $350K. 1000 shares of AAPL was worth $20K, because investors wanted to buy while other investors wanted to hold. They all had faith the price would increase.

    I know that's all extremely elementary, but sometimes it feels like people forget how money and asset valuations work. If 30 trillion was "lost," how much was actually removed from the system? 1/30 of that number? Even less? **Once confidence is restored and that money is returned to the system, valuations will return to old levels (unless your country's name begins with the letter J).