It’s been doing the blog rounds but I thought it worthwhile to mention this quick guide to the sub prime crisis.

Well worth a look but be warned that the language is a little rough around the edges

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

  • Hehe, that quick guide is funny.

    By coincident, the subprime-101 is making fun of complex products as CDO (Collateralized Debt Obligation) and MBS (Mortgage-backed Security) derivatives & fixed-interest which were used to sell investment packages & obfuscate investors, I have actually developed a Java API to both model CDO & MBS financial derivatives. The majority of the models that are currently deployed by major financial institutions completely missed the sub-prime fiasco, however it doesn’t mean that the models are useless, they do price financial derivatives & fixed-interest correctly (with relative small error) to more than 90% of the times, it is that 10% uncertainty, that no one knows when it is going to hit the market. But as any technology, it improves as time progresses (ie, more sophisticated models are continually being published in the economic literatures which are shown to perform better than the existing ones) .

  • Hi,

    Two things, about two years ago i was in London & ended up chatting with friend of the family who was actively selling sub-primes to insurance companies. What struck me was 1) the whole thing was funny money, they literally created a product out of thin air and 2) we don’t think of the merchant banks and insurance companies as product development shops, but thats what they were doing. Trying to create ways for getting more money from people…obviously some of them aren’t that great.

    Secondly (quote from an email from Tasman Mortgages limited….how fricken spooky…)

    We do 102% mortgages
    We use AU money (which is cheaper) to fund NZ mortgages
    We have our own construction company which can do the job cheaper so you save money on the build renovation costs

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