. . . to modify a phrase from a previous presidential election, “it’s the economy, stupid”. Virginia Postrel blogs here with money quote: “The commercial paper crunch, not bad mortgages, is the biggest threat to the overall health of the economy.” That is the real issue, not particular types of loans (stated income, subprime, neg am, etc.). Or as I like to say on stage, “I’m a recovering mortgage broker . . . yes, I was there the day the capital markets died.” I still don’t get how in the 21st century one can’t even make a slightly educated guess as to the value of a portfolio with the motley brew of various “tranches” of mortage loans. Of course, during my ten years in the mortgage industry, I remember being appalled at how low-tech the industry was. What we need is more innovation and “exotic” loan products to drag finance out of the 19th century. But what we are demanding from Washington is a “managed” financial market with all the sophistication of suicide bombers and cave-dwellers. Who needs terrorists to destroy the world when the alleged civilized among us are in such a hurry to endorse, encourage, aid and abett the work ourselves in the enterprise only the deceitful or cynical can call “capitalism”? Bartender, make that a double.
