[quote=FlyerInHi]spd, New York and London are not just the financial capitals of their respective countries, but financial capitals of the world. Beginning with oil money decades ago, the money sloshing around the world is invested in NY, London, Singapore, HK, Dubai.
Financial innovation is a great export for us.[/quote]
personally, I think some of the “financial innovation” is giant step backwards!!!
take credit default swaps for instance (which is basically “insurance” on a bond, that you need not own)
the reason “swaps” are not a good idea, is because it would be akin to you taking out homeowners insurance policy (worth a million dollars) on a “crack” house in detroit (worth a thousand dollars) that you did not own
these “swaps” were side bets, in the market are what caused the US government to take over AIG (basically AIG did not have the “reserves” set aside to to cover the “insurance” on various “bonds”)
Also I don’t see any benefit for financial innovation like “stated income” mortgage loans, etc…
Recall financial deregulation during the ’80 produced the S&L crisis and hit texas pretty hard
Fast forward to what just happened a few years ago, across the nation, cash-outs became ubiquitous during the mortgage boom, as skyrocketing house prices made it possible for homeowners, even those with bad credit, to use their home equity like an ATM. But not in Texas. There, cash-outs and home-equity loans cannot total more than 80 percent of a home’s appraised value.
