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March 19, 2008
The Sub-Prime Mess Explained
High finance forby Dummies.
Well, they're actually not dummies. They're damn smart people. That doesn't mean they're wise or correct, mind you, but they are damn smart.
And that really points to the larger problem that they create and it manifests itself even in my humble commodities business: a lot of these 'structured' deals and 'instruments' are so complex that the people creating them haven't really thought through all the permutations, and the accountants who are supposed to monitor such things don't understand them so they end up, in large part, taking the creator's word that they are ok. So when things begin to slide it can accelerate very rapidly out of control. It's scary stuff.
Posted by Mr. Bingley at March 19, 2008 08:06 AM