sunday thoughts

you can get the impression reading about financial crises that preceding events move very quickly and hindsight is 20/20.

but that’s not quite right.

bear stearns was showing widely reported significant distress in 2006 and 2007 before they eventually went under in march 2008. lehman took another 6 months to go under.

EVERYONE knew there were massive problems in the asset backed securitization market. what wasn’t well understood was the systemic risk.

today, everyone knows the commercial mortgage market is in trouble.

many of the assumptions of the last decade have been totally upended.

do we properly understand the systemic risk?

are we looking through the short term ebb and flow of the market and properly assessing the long term trends?