Steve O
Recycles dryer sheets
- Joined
- Dec 16, 2007
- Messages
- 291
"When Genius Failed" was about LTCM but the difference is they only almost brought down Wall Street.I assume everyone involved in these funds had heard about LTCM and could explain why the new models were vastly superior to anything that LTCM had. You know, It's different this time.
And in spite of a pretty good scare, we (US congress and administration) rolled back even more regulation, quit enforcing several existing regs, and let investment banks triple their leverage."When Genius Failed" was about LTCM but the difference is they only almost brought down Wall Street.
The scary part was that even after LTCM failed miserably the people in charge set up shop again and investors still turned their money over to them to invest/gamble away.
I see the great contraction as composed of two parts. The first was the housing bubble. The second is the morphing of the housing pop into a crisis that would have led to the next Great Depression except for billions of tax dollars (and actually did lead to the Great Recession).
But Step Two was exclusively in the financial sector ...
Actually, those two descriptions of step 2 are not the same. A deflating housing bubble would have been highly recessionary whether the banking crisis occurred or not. Consumers were (are) over-leveraged as well, remember.