daver

The Economics of Second Liens

Where are you getting your default rate data from? I would love to get a look at it.

In Memory of Long Term Capital

When banks can no longer lend because their capital is impaired one may very well enter a period where everything slows down. Businesses and individuals that are actually good risks and in the past would have gotten credit no longer have access. In the end this hurts all aspects of an economy as credit is a key component driving growth. I would be a bit more cautious here - you may see a slow down in the sales of many retail items as consumers retrench. You may see a slowdown as businesses also retrench and cut back due to more expensive or a lack of access to capital.