Wednesday, October 01, 2008

Bleurgh

I'm trying, really hard, to write the next economics post (I promised Toaf. Shut up) but every time I start, another piece of the world economy twists out of all recognition and I have to re-write the whole thing.

So here it is in short until I get a chance to finish it:

Derivatives are bad. They mitigate risk on paper, but the risk doesn't go away. If it was an accounting practice, you'd get done for it.

**Edit** To the person who got here via the search the term "No-Doc Loans Idiotic":

Yes, yes they are. Very.

1 comment:

dam buster of preston said...

Last night on the ABC there was interesting replay of a 4 corners show from sept last year showing how the whole sub-prime thing was starting to unravel in the states.

All of the commentators fears come to fruition. One frightening fact was that 1 in 6 mortgages in the USA were larger than the value of the house.