tag:blogger.com,1999:blog-5090403.post4559897272932950958..comments2023-09-07T04:24:11.648-06:00Comments on y-intercept blog: Debt as an Assety-intercepthttp://www.blogger.com/profile/03389285761013186443noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-5090403.post-53423808676030469752008-12-30T22:59:00.000-07:002008-12-30T22:59:00.000-07:00The troubles within the banking system are only ob...The troubles within the banking system are only obvious in hindsight (or to insiders). The reason a debt bomb is so dangerous is because it is impossible to distinguish a debt bomb from a pile of legitimate mortgages. <BR/><BR/>The real value of a mortgage portfolio is the equity behind the portfolio. A debt bomb simply is a pile of paper that looks the same as a solid mortgage portfolio, but has no solid backing.<BR/><BR/>The fact that bank's accounts are reverse of the public's at large is to be expected. In double entry accounting every debit on the ledger is a credit in another ledger.<BR/><BR/>My thoughts are that, in an ideal world, the assets held in banks should try to mirror the real economy. What seems to have happened is that the financial sector invented all sorts of tools to protect themselves from risk, and they created a system that no long reflected the real economy and became self destructive.y-intercepthttps://www.blogger.com/profile/03389285761013186443noreply@blogger.comtag:blogger.com,1999:blog-5090403.post-25345178101624788822008-12-30T15:35:00.000-07:002008-12-30T15:35:00.000-07:00Our finance industry turned liabilities into asset...Our finance industry turned liabilities into assets and assets into liabilities. If any other sector had tried this they would have been stopped dead in their tracks. Only the right kind of connections allowed this system to proliferate. But the piped had to be paid. That should have been obvious from the start.Scott Hinrichshttps://www.blogger.com/profile/11831447472339880148noreply@blogger.com