I don't think experts were too worried about a real estate bubble at the time. The logic was that the subprime market, which was only like 6-10% of the loan market could implode, but that would be self-contained. The rest of real estate could afford some drops as people had such high amounts of equity built in. Then things turned worse than expected, subprimes weren't self-contained, people who could afford their mortgages began mailing the bank the keys in record number so they could buy the same house at a 20% discount, oh yeah, and investment banks along with hedge funds pulled some complicated shit that got way outta control. You see, experts may have believed there was a bubble, but the way these contracts were being crafted, the risk was not correctly perceived.

Who started it, govt or free markets? I'd say both are at fault. We all know free markets go nuts from time to time and they always will, so it is acting exactly by definition. Highly regulated markets also experience bubbles. It is felt that the govt perpetuated some of the careless derative betting by insuring too many mortgages with low capital down. People were taking bets that they never would have in a normal situation as they never would have wanted debts they couldn't get off their books. So like I said, the risks were hard to evaluate.

And some of these corporate lawyers are just getting too smart, finding too many ways to make money. There are such complicated derivitive schemes that I still don't think the bulk of us understand wtf is happening…that includes CEOs. Matter of fact, this shit is so complicated that Buffett himself decided to sell a company he had purchased that was involved in some sort of CDS operation, because he couldn't understand it well enough. Scary. I've also read the CDS market was as loose and unpatrolled as can be. Contracts were agreed upon over voice mails, emails, hand shakes, whatever. Then you end up with stuff being leveraged a dozen times over. That's the shit-kicker with leverage. You can make a fortune, but it goes both ways.

And so, that's were we are. Greenspan acknowledges his error in betting markets cannot govern themselves properly. Maybe. Or maybe 3 years of ridiculously low interest policy pushed us into a real estate bonanza and the market were powerless to stop the feeding frenzy. Maybe Greenspan would rather blame the market's inability to self-police than his policy. I think markets are acting as they should…basically like a toilet flushing out all the shit. Trouble is, this is one painful flush as the bowl was brimming with turds and without some stabilization effort nobody really knows how bad it can get. It will be hard to argue some oversight isn't required to prevent markets from skyrockting too far from greed-driven easy money schemes like CDSs as I doubt most of us are willing to watch the economy crumble after these schemes finally detonate. I hope it isn't under piles and piles of SEC regulation…I don't see much efficiency from the SEC. Ever.

Yet, with all the smart assholes out there inventing knew ways to do this stuff….

So I say: make everything as transparent as possible so every agent taking
part in economic exchanges has access to realistic information. Hell,
appoint some public-service commission to issue reports and recommendations;
maybe that would have convinced a few people that interest-only mortgages
were perhaps not as great an idea as they had thought. But in the end
you've got to let the market do its thing. To paraphrase Winston Churchill,
it's the worst possible system except for everything else that's been tried.

I don't think experts were too worried about a real estate bubble at the time. The logic was that the subprime market, which was only like 6-10% of the loan market could implode, but that would be self-contained. The rest of real estate could afford some drops as people had such high amounts of equity built in. Then things turned worse than expected, subprimes weren't self-contained, people who could afford their mortgages began mailing the bank the keys in record number so they could buy the same house at a 20% discount, oh yeah, and investment banks along with hedge funds pulled some complicated shit that got way outta control. You see, experts may have believed there was a bubble, but the way these contracts were being crafted, the risk was not correctly perceived.

Who started it, govt or free markets? I'd say both are at fault. We all know free markets go nuts from time to time and they always will, so it is acting exactly by definition. Highly regulated markets also experience bubbles. It is felt that the govt perpetuated some of the careless derative betting by insuring too many mortgages with low capital down. People were taking bets that they never would have in a normal situation as they never would have wanted debts they couldn't get off their books. So like I said, the risks were hard to evaluate.

And some of these corporate lawyers are just getting too smart, finding too many ways to make money. There are such complicated derivitive schemes that I still don't think the bulk of us understand wtf is happening…that includes CEOs. Matter of fact, this shit is so complicated that Buffett himself decided to sell a company he had purchased that was involved in some sort of CDS operation, because he couldn't understand it well enough. Scary. I've also read the CDS market was as loose and unpatrolled as can be. Contracts were agreed upon over voice mails, emails, hand shakes, whatever. Then you end up with stuff being leveraged a dozen times over. That's the shit-kicker with leverage. You can make a fortune, but it goes both ways.

And so, that's were we are. Greenspan acknowledges his error in betting markets cannot govern themselves properly. Maybe. Or maybe 3 years of ridiculously low interest policy pushed us into a real estate bonanza and the market were powerless to stop the feeding frenzy. Maybe Greenspan would rather blame the market's inability to self-police than his policy. I think markets are acting as they should…basically like a toilet flushing out all the shit. Trouble is, this is one painful flush as the bowl was brimming with turds and without some stabilization effort nobody really knows how bad it can get. It will be hard to argue some oversight isn't required to prevent markets from skyrockting too far from greed-driven easy money schemes like CDSs as I doubt most of us are willing to watch the economy crumble after these schemes finally detonate. I hope it isn't under piles and piles of SEC regulation…I don't see much efficiency from the SEC. Ever.

Yet, with all the smart assholes out there inventing knew ways to do this stuff….

So I say: make everything as transparent as possible so every agent taking
part in economic exchanges has access to realistic information. Hell,
appoint some public-service commission to issue reports and recommendations;
maybe that would have convinced a few people that interest-only mortgages
were perhaps not as great an idea as they had thought. But in the end
you've got to let the market do its thing. To paraphrase Winston Churchill,
it's the worst possible system except for everything else that's been tried.

Are you saying The Monarch is a fucked up weirdo?

I cared less about your “Cyborg” post.