Monday, September 29, 2008

Before It Hits the Fan

Oren Harari has written a "must read" post on the danger of ignoring the little indicators. An excerpt:

As Congress debates the trillion dollar bailout for Wall Street, I want to revisit the question I posed last week: How in the world did we not see this collapse coming? Especially, since as I wrote: “The clues were there for anyone to see. You didn’t need a Ph.D in accounting or economics”. (see http://www.harari.com/blog/index.php?/archives/196-Leveraged-Rubbish.html)

Willie Brown, the former mayor of San Francisco, writes a weekly column in the San Francisco Chronicle. In the September 21 issue, he shared a revealing story:

You know, it’s funny how sometimes you get wind of something happening without even realizing it.

About a year and a half ago, a friend of mine who owns a car dealership down in Salinas was telling me about this father of three who came in one day to buy a Hyundai. No matter how hard my friend tried, he couldn’t qualify the guy for a car loan. The man just didn’t have the money. Three weeks later, the same guy comes back to the car lot and tells my dealer friend about how he just bought a home. People who couldn’t even get credit for a $13,000 car were qualifying for mortgages on $300,000 homes.

That should have been the tipoff that something was wrong, if ever there was one.

2 Comments:

At 8:38 AM, Anonymous Cromagnum said...

The police and philosophers have always used the latin: "Quo Bene" when looking at something that seems odd.

Who benefits? Well follow the money trail(s). Any wonder why the FBI is investigating Fannie and Freddie? And aren't they the ones who pushed for and backed all these worthless mortgages?

 
At 6:49 PM, Blogger Michael Wade said...

I believe that is the root. It wasn't cries for deregulation. There were many conservatives calling for increased regulation and oversight of Fannie and Freddie.

 

Post a Comment

Links to this post:

Create a Link

<< Home