Quote:
Originally Posted by Adder
If this was true, there would have been no market for all the mortgaged backed products the banks were turning out. There was a huge market for them. You're confusing what you believed, confirmed in hindsight, with what everyone believed.
All your neighbors knew...
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It was musical chairs. "This is going to scorch a lot of folks... but not me." Or, "This is going to scorch a lot of folks, but I'll have made so much money in the interim, I'll be alright if it scorches me."
One thing I don't think anyone at a bank in 2007 thought was:
"This is going to scorch a lot of folks, but when it does, the govt will bail people like me out and I'll wind up only losing a year or two of big bonuses, and I'll make multiples of that loss in the stock market from a crazy run-up fueled by liquidity and MBS purchases the Fed uses to cure the problem I was involved in creating. I can't lose!"
But they do now.
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