Monday, April 06, 2009

Scope of Financial Crisis

One interesting puzzle of this crisis is that while it started with mortgages, it affected every financial sector pretty similarly. Below are cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 total returns from April 30 2008 through March 31 2009, for a variety of financial institutions with market cap greater than $30MM as of April 2008 (about 800 firms).

Stock Returns By Sub Industry From 4/30/08 - 3/31/09


One would think that size or industry would highlight those with cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 most direct mortgage ownership. It suggests that while mortgages may have started cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 crisis, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 real problem was cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 amplification process that decimated everything. To this day only mortgage backed debt has had abnormally large loss rates. Speculative grade defaults for 2008 were 4.1%, which makes it cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 12th worst year in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 last 30, hardly consistent with cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 market debacle of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 past 12 months. Auto loans, credit cards, etc. have reported an increase in losses, but are holding up pretty well. Everyone expects cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365m to get much worse, but that's a forecast.

A similar issue is cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 performance across countries, where cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 US is actually doing better than most countries. This is all quite puzzling, as it appears cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 amplification mechanism is much more important than cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 initial cause. I don't really understand that mechanism.

3 comments:

J said...

I think cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 apmplification mechanism is panic.

Berend de Boer said...

With a cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ory of sound money you can make a lot more sense of this. We averted cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 dot com crash by printing money, but that simply doesn't work. Malinvestments will be liquidated. We might get out of this one by printing even more. But cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 one after this will be unlike anything we've ever seen. You can't become wealthier unless you produce.

Toronto Real Estate Agent said...

The amplification mechanism is always cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 problem. If your system failed in one sector and kept going in all cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r ones, eventually it would level itself out and show very little change. But if a sector like mortgages is damages, it affects everything. The system would have to be perfectly built to not be affected by cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 mortgage crisis. But of course its not.

Take care, Julie