The Financial Crisis: Junk In, Junk Out

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  Joe.enlight09/29/08 Report as spam
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  RE: The Financial Crisis: Junk In, Junk Out

  The problem is the silos. Credit risk, prepayment risk and marketing all use different models without much interaction.
  
  Of course thereis the 800-pound gorilla in the room. All those financial models that earned Nobel prizes are simply wrong. Relying on those models has always been the one risk that was ignored.

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  MVanderford09/29/08 Report as spam
  2

  RE: The Financial Crisis: Junk In, Junk Out

  Plenty of people knew there were big, big problems.
  
  The issue is that no one can give bad news anymore -- when you give the bad news you become the spoiler or the troublemaker and you are marginalized in the company. So, it doesn't matter how good the models are or the quality of the input data when the prognosis always has to be rosey.

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  Stef109/30/08 Report as spam
  3

  RE: The Financial Crisis: Junk In, Junk Out

  Financial institutions playing the game were too big for sure, thinking thy could get away of everything!!
  
  Loans were too easy to get - banks were not caring enough about the financial situation of the borrowers - They were driven by a pure speculative motivation giving loans away - They only thought about the potential financial gain behind each loan and forgot about the basics - make sure the borrower can pay back. They act deliberately as speculators, they played and now are about too loose. Governments are trying to come and rescue the big players like a dad would do for his kid...but it's too late I'm afraid and the kid should face the consequences of his own act.
  
  It's not the system, algorythm programmes and so forth that have failed - It is the men, the team members of the board, the CEO, directors and so on. They have been too much human maybe and despite of how smart they are, they failed for one reason: being greedy for money!! So pathetic!!
  
  One remark I would make is that it is depressive to see that those people were all as smart as greedy!!
  
  The humanity evoluate through technologies but seems that the Man psychology has not change for thousands years!! Probably main reasons why in financial market we identify cycle and we talk about market psychology!!
  
  The good things is that we do not need to be too much worry...just wait a few months, probably a couple of years and we can just wait for the next one in about 50 years!!