My Personal Credit Crisis...

[vincent191]

Who is the bigger idiot, the guy who took out the loan or the bank who gave him the loan???

The answer is neither of them. The biggest idiot is the ones who went and bought the toxic loan from the bank.

 

[jono1887]

Seems a bit like what the Obama's and Rudd's are being advised to do. I wonder what happens when you have to forclose on a country?

Hahaha.... i can just picture the debt collectors coming raiding the country

 

[theasxgorilla]

The answer is neither of them. The biggest idiot is the ones who went and bought the toxic loan from the bank.

I think the answer is that it depends on what you paid and what you got for that price. My guess is the Fed Reserve is laughing all the way to the Federal Reserve Bank on this one.

 

[basilio]

Incredible story. Basic point (imho) is just how crazy the whole financial system was in constructing these quite ridiculous loans. This multiplied by a million represents the reason why our financial system is now insolvent and we are going to get it in the neck.

The core message seems to be that the banks were trying to make their profits on the fees associated with establishing the loan. They were then going to flick the loan on and let the next party worry about actually getting the repayments.

 

[Largesse]

I feel like alot of people are hating the game rather than hating the player.
Securitisation shouldn't be a naughty word.
It is actually an incredibly useful tool in creating a more efficient marketplace.

People need to hate the greed-mongers that created and then flogged the dirty product, not the actual dirty product.

If ya get me.....

 

[Jack Payback]

I think this story highlights the idea that financial decisions should be made using logic and not emotions.

A share trader or investor, does not make a trade or investment based on the emotion that it felt good, they base it on analysis. Any other transaction should be the same.

Studies show it is human nature to spend 10% more than we earn, no matter how much we earn. People overspend because it makes them feel better when they buy something they desire - hence the term "retail therapy".

This guy made it quite clear he was thinking emotionally only. We are emotional creatures by nature, so it is hard to avoid falling in to this trap. Some people can do it quite easily however.

It looks like his professional expertise was finance on a macro scale, not on a micro scale, which would have helped him, but the logic behind the two are the same. Don't spend more than you earn, easy to say, but very hard to do!