Mint.com has created a diagram of the financial sub-prime crisis. Head on over and take a look. As far as I can tell, it's accurate based on the sources I've read so far. I've been trying to explain this to friends, family and co-workers and this chart makes it much easier.
I think this recent round of idiocy has proven the Greater Fool theory. Thas is person A buys [stock|bond|house|etc] knowing that it isn't worth what their paying. Person A hopes to find person B who will buy the product at a higher price. Person B is then the greater fool. Person B then hopes to find Person C, the greater fool, ad nauseam.
It appears much of the speculation in CDO's (Collateralized Debt Obligations) has been fooled by Greater Fool thinking. No one in their right mind would buy these things, yet Wall Street knowingly sold bad products to its customers.
If you are I did that, it would be fraud. If Wall St does it, it's time for a bailout. I think it's time for some jail time.
Remember, you don't really need Wall St to invest. You can buy the entire stock market through a low cost index fund. I'm done with any form of sales person, at least when it comes to financial instruments.
With the rise of the Internet, there is no reason you can't do almost all financial transactions online, saving time and money. Wall St proves over and over that instead of adding value for investors, they destroy it with extreme prejudice.
Tags Investing subprime Wall StreetRelated Posts
- Subprime Mortgage Fiasco: An Explanation
- Obama calls for bailout tax
- Time to Buy Gold?
- SEC Shuts Down Prosper
- Will Your Bank Fail?