Sunday, February 22, 2009

The David Bowie theory of the recession

this is from The Rolling Stone.

Presented without further comment.

"David Bowie is to blame for the recession and the current credit crunch, the U.K. press reports today. According to a BBC Today host, it was the Thin White Duke, Ziggy Stardust himself, who opened the flood gates for the current economic problems, all thanks to his “Bowie Bonds.” Back in 1997, Bowie issued “Bowie Bonds” as a way of getting his royalty money up front. He sold bonds of his future royalties to his fans for an immediate sum of money, figuring they’d be more patient about waiting for the royalties, plus it’d give them a stake in Bowie’s catalog.

"Economically, the term for this action is “securitization.” The article speculates that banks were inspired by Bowie’s foresight and started to do the same thing, except with mortgages instead of Hunky Dory. The plan was so successful for banks that they lowered the bar on who got loans, figuring a deadbeat would be the problem of whoever scooped up the security, or the bundle of mortgages. Repeat this and multiply it by several thousand and you’re faced with one of the main reasons for the current recession."

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