What was the journey of the mortgage industry was our journey

Best put together list of the possible reasons of why the system failed to respond and react. Why in the world Economists and Finance gurus removed from the front line of trading failed to warn.


Traditional institutions failed.
IMF
From the center of the international monetary system, the IMF was sent to a peripheral position. Third world countries accumulated more reserves than the IMF budget. Commodities raised, so what need was there for the infamous IMF. They are trying to come back - the trillion dollar lady.

Traditional measures of market volatility should have registered some uptick as the aberrations began multiplying.

There was a reduction of volatility. Given the belief of the great moderation which a belief that the world's economies had entered a period of reduced fluctuations in economic and financial indicators.

VIX is wall street fear index, now covered daily by Melissa Lee's Fast Money - I wondered if it happened after this book was published-. It is the Chicago board options exchange volatility index. Measure of implied volatility based on the weighted average of prices for various options on a diversified basket of stocks.

Sustained moves in the vix carries important information about the extend of the uncertainty in the markets. A decline in vix would be accompanied by an increase in many investors willingness to assume risk.

VIX kept declining in an impressive fashion until the summer 2007. In other words, investors preferred to take more risks at a time of growing and simultaneous inconsistencies in the marketplace.

The same occurred for volatility in the fixed income and foreign exchange markets.

There another more general sign:
A notable increase in correlations among different asset classes in different geographies and different fundamental drivers.

And others.

Inspired by scribbles and notes from:
When markets collide

Even if Greenspan called it a statistical aberration, It had to take an Asperger's person in Michael Burry and a removed statistician working for Paulson to look beyond the indicators followed by the crowd.

Nothing a Carnegie Mellon process wouldn't catch.

Neuf Règles générales du marché

China owns 45% of the world supply of polysilicon used in the solar industry.

With prices for end products falling rapidly, a raise on demand, consolidation , or a technological breakthrough would bring some stability to the sector.

But that was the world of yesterday. The Chicago free market dogma woud have dictate a foreseen equilibrium, but it is today.

China largest producer will withhold production until prices raise 60%. The market forces are just indicators.

The old fashion banker is still priceless in today's world

There is no more clear sign that shows the old banker prestige hasn't been forgotten. Their nod is not like any other nod. Trained in the art of valuation and risk for generations, their nod is still the ACCURATE factoring of information in one instance.

And the markets haven't forgotten their role no matter how powerful conglomerates are.

Investors May Rethink Plan to Oust Rothschild at Bumi http://on.wsj.com/znLjiV #WSJ #iPhone

The days of risk

Call it the passing of time. Usual headlines on mega chips didnt seem attractive. The big short was always the play. Charlie Rose holding the iPad was just an hour long infomercial.

New tides have reached the desert sands. Coincidentally, the Maddoff proposition of low risk with low consistent returns is the new grail, and the infomercial is then another attempt to curve fit the news of tomorrow.

Google lost a bit of steam, and a buy was suggested

Fears from the Motorola acquisition and a small disappointment in earnings for pricing and non-operating income made Goog catch a cold.

However, there is consensus on a buy. In the money: strike price of 540 is 28.49 with high volatility. With one month still out, it is a taker.

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Opening market next day: 27% gain plus or minus when you actually moved in or out of the position. Price strike of 540: +7.84 from 28.49.

Chinese solar panel producers to suffer passing of evolution

From the 330 chinese manufacturers of solar panels, only 15 are expected to survive the next few years.

Meanwhile, the major players continue to post huge gains on a daily basis. There seems to be a correlation between good economic news and these stocks. They did hold while the markets hesitated to post gains.

On the other hand, Germany one of the largest markets, is planning to cut subsidies on its domestic solar panel market. This is probably helping the rebound expecting more supply from chinese manufacturers.

Without much new information, it is time to decide whether to get out on the next station or hold hoping that the spike in the volume traded with an increase in prices continues.

Google bought Motorola. Ooops?

Google strategic decision to control the supply chain in the mobile market will backfire when it realizes it needs to behave like everyone else unless it pulls it off brilliantly.

Having Motorola's slow growth in their statements will make Google's numbers look less attractive. It seems they didn't consider this when announcing the buyout.

They said they will report Motorola separately. Isn't that a choice everyone would like to have?

Even when staying optimistic and positive, what is going to happen to the transactions out of the synergy? Even assuming there is no precendent on this, what happens when Motorola requires assistance that Google investors were not expecting?

On the other hand, what better way to go head to head with Apple by getting their hands into hardware. Sometimes when you are left with the hot potato, you just have to find a way to cool it.