RECENT NEWS
Clusterstock  Aug 24  Comment 
Billionaire entrepreneur Elon Musk has loaded up SolarCity shares, just days after famed short-seller Jim Chanos disclosed he is shorting the stock. Musk, the company's chairman, spent $5 million on 123,519 shares of SolarCity at around $40.48...
Clusterstock  Aug 21  Comment 
Famed short-seller Jim Chanos is betting against SolarCity, the solar power company cofounded by Elon Musk. The founder of Kynikos Associates revealed on CNBC's "Halftime Report" that he thinks SolarCity's business model is similar to...
Wall Street Journal  Aug 11  Comment 
Fortress Investment’s Wesley Edens turns $124 million into $3.5 billion. “It’s not a bad thing.”
Wall Street Journal  Aug 11  Comment 
Reuters  Aug 6  Comment 
** Subprime lender's shares down as much as 7.8 pct to $47.16; biggest ever one-day percentage fall
guardian.co.uk  Aug 2  Comment 
The chancellor seems increasingly willing to resort to ‘fiddling the figures’ – something for which he castigated Gordon Brown When thousands of poor American families saw the homes they had loved and saved for seized by the banks in the...
Financial Times  Jul 15  Comment 
Former JPMorgan banker becomes chairman of US Santander arm
Financial Times  Jul 15  Comment 
Lender supported by Neil Woodford and Michael Spencer to offer doorstep loans
Clusterstock  Jul 9  Comment 
China's stock markets have nosedived over the last month and banks are starting to worry that the collapse could be tipping over from a hefty correction into a full-blown financial crisis. The Shanghai Composite has collapsed over 30% in the...
New York Times  Jul 2  Comment 
Mr. Dundon built a small regional lender into a national powerhouse in subprime auto lending.




 

What happened blaicasly was because of assuming that a trend was permanent. In the financial world, this is a form of mental disorder. Trends are why anyone could be a day-trader and make money, for a while. Their impermanence is why anyone that didn't get out of that in time lost their shirts. The subprime loans were designed to churn the loans. You had loans that were fixed for usually two years, then would become variable. The whole intent was for the borrower to refinance in two years, again generating all of the bank's new-loan fees. The trend for real estate to appreciate rapidly was counted on to continue to keep this attractive for the borrower. Borrow 100 with 5k in costs to pay off a loan of 95, wait two years, borrow 105k with 5k in costs to pay off a loan of 100, wait two years, borrow 110k with 5k in costs to pay off a loan of 105 but then the trend didn't cooperate by giving a home value of 110k, and the balloon broke. People still had the same house they did, but now a loan for more than they originally paid for it, and they can't get refinancing, and can't sell it for what they owe. Trends are temporary. People that think otherwise will eventually lose money. Now, how do you know when a trend is coming to an end? There's a story about the Crash of '29 about a broker who was getting a shoe shine, and the shoe shiner gave him a hot tip on a stock. He realized that when shoe shine boys were giving stock tips, the market was about to crash and he got out. During the day-trader era, there were stories about bus drivers and janitors making huge money in day-trading, just before that went south. How many times have YOU seen people offering to help people get loans in their answers right here on Yahoo, offers totally unconnected to the question being asked? It was a trend. Now it's not.

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