(deep) inside the financial collapse

[willtaran]

Great article here about the heart of the Wall Street mess. Gets into all the gory details of mortgage-backed securities, etc. I had to stop and think often, but I now understand a lot more than I did yesterday

Comments

[a_steep_hill]

Oh, it's even worse than you think. And this will certainly happen again, probably soon. This article is also quite telling, and gets at the political underpinnings of the problem.

Though I think it's kind of silly that they blame a formula for the problem, when the real problem (on that level) was obviously a collective desire to believe the impossible: when your model tells you something patently dumb (like the idea that risk can be eliminated by dilution), the correct answer is to get a better model.

[willtaran]

Wow, that was a frightening read. But worth the time. Thanks.

[a_steep_hill]

This guy's blog (http://baselinescenario.com/) is also worth following. The perspective is kind of alien -- the authors there are all economists -- and it's kind of surprising how often they say dumb things, like suggesting that it was anything other than totally obvious even several years ago that we were in an enormous bubble. Nonetheless, interesting.