Comments on: Recommended reading: a simplified explanation of the current financial crisis

By: Fernando Lichucha

Fernando Lichucha — Tue, 03 Jan 2012 14:19:53 +0000

Thank you very much for sharing this insightfull article. It seems that financial democraticazation it works with stock markets5

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By: Steven Pang

Steven Pang — Tue, 10 Feb 2009 05:17:45 +0000

Superb. Easy to understand. Thumbs up!

By: Corban

Corban — Sun, 21 Dec 2008 16:43:51 +0000

I’m a business major; however, I have learned as much from this single translated Spanish article than my Corporate Finance class. It would appear that these many handy tools that I’ve learned, from NPC, WACC and liquidity management, can be used to create a machine ala Rube Goldberg.

What is the purpose of finance? To get money from where it’s at to where it should be. Clearly something went wrong here. However, strategic errors like these can’t be fixed by analyzing the tools, but by motivations.

Man, it really is like magic; it’s like that 64 = 65 geometry trick. Where’d that extra part come from?!

By: ricemutt

ricemutt — Sat, 22 Nov 2008 20:03:06 +0000

Hi Paul – Yeah, I think the explanation is saying that losing Peter’s money is a real possibility though so far (knock on wood), it hasn’t happened yet. Doesn’t mean it won’t though. The problem is that if Peter’s or anyone else’s money has been used to buy assets of unknown valuation (SIVs, CDOs, etc.) then it’s not clear how everyone could get their money back at 100%. Sooner or later someone (perhaps the government if they end up paying out insured FDIC deposits, in the US now up to $250K through 12/31/2009) has to take the hit on these assets assuming their underlying value is less than what banks and institutions paid for them (which seems inevitable but is still yet to be determined).

By: Paul in HK

Paul in HK — Fri, 21 Nov 2008 17:07:55 +0000

Peter’s cash deposit should be backed by the FDIC or something similar in Britain. Is this not the case?

If his Savings Bank is Icesave, then yes maybe he is not seeing his money right now, but event that bank is soon to start repayment. Are there others I which I’m not aware, that are paying 60 cents on the dollar for cash deposits?

Who out there has gotten 60 cents on the dollar as result of failed bank? (i.e not a failed investment bank)

By: BizBlogged1

BizBlogged1 — Thu, 20 Nov 2008 09:42:39 +0000

The subprime mortgage crisis is an ongoing financial crisis triggered by a significant decline in housing prices and related mortgage payment delinquencies and foreclosures in the United States. Finance blog, finance,economics,Corporate finance,Personal finance,Investing,Marketing/

By: ricemutt

ricemutt — Wed, 19 Nov 2008 23:50:42 +0000

@Alvaro: Thank you so much for letting me know the original source. I will now update the post to reflect that, as well as a link to Mr. Abadia’s blog. Always great when we can correctly acknowledge someone’s work!

By: Alvaro Aguilar

Alvaro Aguilar — Wed, 19 Nov 2008 23:43:58 +0000

Hi Ricemutt,

I have to confess as it was quite a long post I started reading at the middle, and as I was reading I was thinking, this sounds really familiar … and so more familiar as I continued reading. So I turned to the begining to look for the source and I have to say thank you for giving credit and stating right at the begining that it was someone else’s work.

Just for the shake of completitud I would like to give you the original source, the author of that whole story is a Spanish engineer who is like 70 years, studied at Harvard and has been teaching at IESE a Spanish Lebusiness School for 31 years. His name is Leopoldo Abadia and he even have a blog about the crisis where he keeps completing that story and is puting togheter a dictionary of the ninja crisis.

I hope you find it usefull and would like to thank you again for giving credit to the author even you didn’t know who he was.

Best,

By: ricemutt

ricemutt — Mon, 17 Nov 2008 05:07:03 +0000

Thanks Bernard. I thought people might not read it because it’s so long :)

When I was in bschool, I thought financial engineering might be an interesting field to study. In theory, anyway. Seems that in practice, it might not have been very responsible to have created/used all those exotic financial instruments.

By: Bernard Lim

Bernard Lim — Mon, 17 Nov 2008 01:16:12 +0000

Excellent stuff! Easy to read and understand. By the way, I’m from Singapore, half way round the world in the East! It was said that Eastern banks have better fundamentals having gone through the Asian Financial Crisis in 1997 and have been reporting profits in the last few years. Now, I’m having my reservations.