Reading Gretchen Morgenson of The Times, there was a stable interest rate for borrowers before Libor? It was developed by the Federal Home Loan Bank of San Francisco. Entitled the 11th District. This was a non volatile rate called ARM and it did not respond to swings in the market. It linked home loan rates to the rate paid on bank deposits. This was a published rate that fell into decline in 1991, it was discarded by Wall Street for Wall Street? The original ARM could not be traded like a commodity on the exchange. Therefore, Libor became popular as the instrument of choice for trading .. It was the “backbone” of MBS mortgage backed securities, they were and are still traded today. Who knew?
Read the Times today, Ron Lieber, states what all of us are feeling. We can’t ignore the financial catastrophes occurring on a daily basis . They are happening with ever greater frequency. This week Knight Capital sent markets reeling as they failed to control their flash trades. No one knows why it took 30 minutes to apply the brakes? But one would assume for flash traders this is akin to “long term” investing? So what happened?
what’s the average investor to do? Other then being the victim of the various trades and scams on Wall Street? It turns out, not much.. Other then lending to your neighbor who has the next best idea. One has to think locally and support those in the local economy. It’s a risk, but several cities are finding ways to reinvigorate themselves.
Detroit is turning old warehouses and prisons into studio space for Artists. They are even saving old graffiti walls if they meet a certain standard of excellence. Buy Detroit based Art, it’s a start.
Adeo Ressi,of Israel, has started a school for entrepreneurs , called the Founders Institute. Their aim is to vet an idea and link the start up to a network of money and organizations. The plan is to provide long term stable products for growth over many years. More then another good idea, it has to be one with long term profitability.
