Business

In the leadup to the financial crisis, lenders did some pretty silly things.

The securitization bonanza and the attendant proliferation of the “originate to sell” model drove lenders to adopt increasingly lax underwriting standards.

Put simply, the pool of creditworthy borrowers is by definition finite. That’s a problem because the securitization machine needs feeding. So what do you do if you’re a lender? Why, you expand the pool of eligible borrowers by making it easier to get a loan.

Lately UBS, which just announced its latest ugly quarter in which the ultra-wealthy client dependent bank saw $3.3 billion in outflows from its all important wealth-management business, has been increasingly dour on the future, whether it is warning to "Buy Gold" As Equities “Rolling Over” or explaining "How The Investment Grade Dominos Will Fall." Today, UBS' chief global credit strategist Matthew Mish takes on the pleasant topic of predicting what the next imploding "energy-like" sector in credit markets, which is particularly relevant after today's historic downgrade of several energy na

Submitted by Salil Mehta via Statistical Ideas blog,

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Systemic fragility doesn't respond to central bank jawboning or Keynesian claptrap; unlike those "policy tools," fragility is real.

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