richardhutnik said:
Kasz216 said:
Do I need a trillion dollars? No, does a company that employs that many people? Yes. Why would I keep doing this? Because at the end of the day I'll be out ahead.
This would of never happened, so long as there wasn't a worldwide government bubble that popped at the same time. Which there wouldn't of been without government prodding, heck even with the prodding the fact that it all happened at once was extremely unlikely.
Ask someone 5 years ago if the housing market could be down in every sector of the US at once, and any expert will tell you no.
At the end of the day, even after the crash... the economy is ahead of where it was without derivitives
|
Ask people also, if it is realistic for home housing prices everywhere to go up at a rate that is three times the normal rate, and have it be sustainable forever, or if there would be a correction. Even if you asked 5 years ago, do you think people would of said "yes" if they were honest?
That was the fundamental flaw everyone bet on with derivatives and made a problem FAR worse than it would of been normally. Derivatives are a fuel that can work well, or run you off a cliff, as they had here. Do you really think a $600 TRILLION derivates market is better for the world than if it wasn't there?
http://www.marketoracle.co.uk/Article20149.html
What happens when your event you say would seldom ever happen does happen? Problems with quants is that they result in greater moral hazzards being taken than if you didn't have them. Overconfidence in outcomes, which is what happened with the recent housing bubble, is a prime example of this.
|
There would of been corrections for sure.
The corrections weren't expected to be universal at the same time however. Markets usually collapse seperatly.
