Wednesday, September 21, 2011

@AllAmerInvest Apple, Fake It, Gisele, 2007 Bust, Bernanke, Perry

2007 Bust: How Could They Not Have Known?

We are still living in the wake of the great 21st century bubble. That is the dominant economic and financial fact of 2011, which applies both to the American housing and mortgage debt, and to the European sovereign debt, crises. As the massive losses keep coming, there is a lot of negotiating, suing, whining and politicking among contentious parties over who will take which losses.

Among the many losses imposed by the bubble is a well-deserved loss of credibility on the part of central bankers and economists. "Policy makers around the world didn't see the global financial crisis coming," columnist David Wessel said recently. "My own profession, economics, has not distinguished itself in recent decades," Henry Kaufman sadly wrote.

Observers at the peak of the housing bubble could count zero U.S. bank failures in 2005 and 2006, and as late as the second quarter of 2007, it seemed that bank profitability and capital were high and that the world had plenty, probably a surplus, of liquidity. Indeed, as British banking expert Charles Goodhart pointedly describes it:

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Gisele Bundchen


Original content Bob DeMarco, All American Investor