Here’s an interesting article by David Leonhardt at the NYT on understanding the credit crisis. A friend forwarded it to moe on the heels of a long string of conversations about the current situation. That’s not a unique story, I’m sure, echoed as it is by thousands or millions of conversations across America and the world. Even more so, we’ve lived through this before, given the slump of the 90s and the tech-bubble economy at the turn of the century. Notably, though, this is the first time that I’ve personally had a direct stake, since I’m heavily invested and work a job to support my family. It’s an interesting perspective, to say the least.
Having lived fairly conservatively - fiscally speaking, of course; let’s not get carried away - I’m not paranoid about what’s yet to show up on the financial horizon, but there are other, more subtle issues at play. Carrying close to a 20% loss in overall market investment value is a difficult thing to do, surely; still, I’m almost lucky that I don’t own a house at the moment. Of course, the flip side is that housing in Southern California is still an impossible market to get into, especially when you consider that I’m not willing to leverage myself into a home I can’t afford - besides, what lender would consider a risky client at this point? Okay, I’m sure there’s some disreputable lender I can turn to somewhere.
Of some note is something that Leonhardt points out in his article:
So firms are now hoarding cash instead of lending it, until they understand how bad the housing crash will become and how exposed to it they are.
An interesting point - and an obvious circumstance, considering what recently happened to Bear Stearns. This is the nest egg that could help the global markets out of their dank pits, if everyone else can keep their heads in the meantime. Allow the major investment engines to build up a head of steam again (that is, if rampant lending/borrowing on zero principal can come to a ceremonious end) and we’ll have a chance on the backside of this disaster.
Don’t even get me started on individual investor/taxpayer bailouts. It’s not something I can stomach.
Bubble, bubble, toil and trouble.
March 19, 2008Here’s an interesting article by David Leonhardt at the NYT on understanding the credit crisis. A friend forwarded it to moe on the heels of a long string of conversations about the current situation. That’s not a unique story, I’m sure, echoed as it is by thousands or millions of conversations across America and the world. Even more so, we’ve lived through this before, given the slump of the 90s and the tech-bubble economy at the turn of the century. Notably, though, this is the first time that I’ve personally had a direct stake, since I’m heavily invested and work a job to support my family. It’s an interesting perspective, to say the least.
Having lived fairly conservatively - fiscally speaking, of course; let’s not get carried away - I’m not paranoid about what’s yet to show up on the financial horizon, but there are other, more subtle issues at play. Carrying close to a 20% loss in overall market investment value is a difficult thing to do, surely; still, I’m almost lucky that I don’t own a house at the moment. Of course, the flip side is that housing in Southern California is still an impossible market to get into, especially when you consider that I’m not willing to leverage myself into a home I can’t afford - besides, what lender would consider a risky client at this point? Okay, I’m sure there’s some disreputable lender I can turn to somewhere.
Of some note is something that Leonhardt points out in his article:
An interesting point - and an obvious circumstance, considering what recently happened to Bear Stearns. This is the nest egg that could help the global markets out of their dank pits, if everyone else can keep their heads in the meantime. Allow the major investment engines to build up a head of steam again (that is, if rampant lending/borrowing on zero principal can come to a ceremonious end) and we’ll have a chance on the backside of this disaster.
Don’t even get me started on individual investor/taxpayer bailouts. It’s not something I can stomach.