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December 26, 2008


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You have it right.

I've had loans where I've put down 20 %+. loans that were 95 % to value, building loans, bridge loans that were effectively secured only on already mortgaged property. The germane issue in all of them was what I could afford to write a check for on a regular basis, not the ratios.

Modern market bubbles began with the South Sea islands company in early 18th century Great Britain and they have followed that pattern ever since. There's nothing wrong with fractionating risk per se as an investment so long as the structure of such investments doesn't incentivize people toward magical thinking. When that's occurring, tax and regulatory changes need to be made to shift risk-tolerant "high returns" investors to productive venture capital rather than unproductive bidding up of paper investments

This is one of the reasons why when I read bonddad I take it as one man's perspective, and not economic gospel, as his legions of DKos fans seem to. He can be interesting, but he's no soothsayer.

That Duncan Black on the other hand...

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