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Notes to myself, possibly of interest to others.
-- Bill Northlich

Wednesday, October 3, 2018

Very quick, very dirty history of the crisis



Misunderstanding Credit and Housing Crises: Blaming the CRA, GSEs  #10YEARSAGO  ritholtz.com/2008/10/misund…


ibilln's avatar
Vitus Capital
Replying to @ritholtz

A GREAT new screed about the crisis!  Causes, motivations, etc. This should be made into a book!  Wait... One big thing - which is hard to discuss - is the factor of the structure of the debt. EG, the first big CDO championed by Blythe Masters at JPM /1

ibilln's avatar
Replying to @ibilln @ritholtz

...started out not matching it's performance profile.  IE, beating your model of piles of disparate financial vehicles into something that fails along a Bell curve is, um, hard. In fact, CDO's in general never worked.  The -substance- of the crises was that shadow banks 2/
ibilln's avatar
Replying to @ibilln @ritholtz

and regular banks were caught in a downdraft in 2007 when they all, knowing what kind of assets they all had, stopped short-term (repo) loans to each other. More bluntly, they knew that they all were a blink away from insolvency  All due to misunderstanding normal distributions/3


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