SharksPosted: September 16, 2008
Well, well, now we know for sure. The masters of the universe are in fact no masters. They don’t have a clue either. Not on their street and not in their own companies.
For years they have allowed local banks, homeowners and real estate agents to dream up house prices, give loans based on those dreams and then pay each other fat fees and bonuses.
The homeowner, most innocent of the gang but not free of guilt, closed both eyes and enjoyed the banks generosity. People, not only in the US, got themselves annual loans to buy some whatever (“Our house went up 20% last year!”); or financed a bigger even more overvalued place with a debt on the old house (one may call this a “self-enhancing feed-back cycle”).
And as sure as physics the cycle defaulted. The long financial food-chain awoke from dreaming up asset values. With that awakening crashed a good deal of world economy, paying for the damage not only in taxes but in trust and confidence. Failing masters are scary.