Biotech Values

[iwfal]

OT -

Really? So do we want financial institutions that prepare for and lend as if there would be a collapse in money supply and thus asset prices?

I would suggest it is odd to claim that the collapse in asset prices were ultimately related to money supply (proximally, maybe - but ultimately seems untenable) - in the sense that asset prices were clearly way way above norms, and ultimately only 3 things could happen:

a) they burst - due to money supply or some big company going bust and causing an implosion or ... (whatever - the point is that when a large fraction of the market is playing the bigger-fool game it doesn't take much to explode the bubble)

b) it goes stable - and within 3 years it becomes obvious 30+%(depending upon which submarket of the mortages) of the MBSs from 2005 to 2007 are insolvent because the ultimate payer (the 'homeowner') could never pay the real rate (the 'homeowners' were assuming prices would continue to go up and they could continually refinance). So it goes bust 3 or 4 years hence.

c) It continues to hyper inflate - any I'd like to see any example of any country anywhere were that has turned out well over, say, 15 years.

Note that I think b is essentially impossible. Bubbles are inherently unstable. It is impossible to predict what exactly will cause them to pop, but it doesn't take much.

And also note that if I were to blame money supply I would blame Greenspan for not popping the dot com earlier. Once that happened he had to rescue the bust, thereby causing a bigger bubble in realestate.