Like a comically misplaced banana peel, the subprime mortgage industry has slipped up more than a few big names in the housing industry. But as Bill Bonner explains, when the collateral on these loans rests on white lies, lenders are left slipping and sliding... with nothing to grab hold of.
Bill Bonner -- The Daily Reckoning
"Credit issues are there but they are contained." --Hank Paulson, March 6, 2007
March 17, 2007 -- You can take the temper of an era by looking to see what its brightest minds take up. Pythagoras applied himself to geometry. Alexander Fleming discovered penicillin. Wernher von Braun built rockets to blow up London.
But if St. Augustine were alive today, he'd probably be touting the benefits of globalized markets. Isaac Newton would be running a hedge fund in London. And Henri Poincare would be working for Goldman Sachs, calculating the return on a tranche of BBB-rate subprime debt.
Scientists and philosophers alike have turned their focus to the greatest challenge and opportunity of our time: Relieving other people of their money. We are voyeurs... gawkers at the merry and absurd world of money. And now comes the part that makes this sorry métier of ours worthwhile.
This week, traders at the big financial houses in the City and Wall Street were marking down their own paper. Merrill equity analysts, for example, cut their recommendations on Goldman, Lehman and Bear Stearns shares (as well as those of European banks Deutsche Bank and Credit Suisse Group) from 'buy' to 'neutral.'
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