After the Music Stopped - Alan S. Blinder

Title - After the Music Stopped
Author - Alan S. Blinder

Published by - Penguin

Year - 2013
Review - Sampson Onwuka

'The financial crisis, the response, and the work ahead….'

The theme motivation for financial crisis at the very junior level is perhaps the summary of the book by Alan Blinder. The best-selling author presented a step by step unraveling of the problems of 2008 and why it happened. It is important that a case study of this nature should incorporate some of the basic innovation in earlier books on 2008. It is important that the territorial integrity of the author is defended concerning the left and right of the crisis, beginning with a short dribble into the failing necessity to reprove the lending practice. Whereas the author may have given to several informed sources on the lingering problems of debt service and repay rate, we wonder why no few Americans mentioned Alan Blinder to the corridors of the prophets of financial unbound. At least some of us indicated that such was the case anymore than the situation warranted, but the sharp thrust between a misnomer and organ of the Reserve is within the dust on the investigative reporting. At least in crisis - there are always causes and effects, especially the reasons for the crisis, but in his book, there are several trying reasons for the period and why the lessons serve several purpose and one. 

For a professor attached to Princeton University and a doctored advertorial for financial capacity - especially in Risk management, there are possibilities of assuming a just leniency to his lithe academic. Nothing is far from the gospel and so the professor may sounded that the lessons were not obvious or the consequences better than expected. The lessons which the book offers survive for ordinary reasons, to a point that we appreciate his book only from a distance with lit glow light of thoroughly searching example - yet lacking in originality. 

It is interesting that the author – Alan Blinder - a one time member of Federal Reserve and accomplished duct tape for reforms at the Federal Reserve may point out some of the benefits of writing about the latest crisis years after the incident, he's point is that edited materials of that structure may not or not likely persuade public dissent. The title 'After the Music Stopped' is far more stile than macarana that follows a different title such as the 'Music Ended'. There are mirage resulting from doctrine linear perception of some of trying moments of the Federal Reserve and why certain actions were a moral constipation that needed the experiment, but then reality checkers in. There are issues of Prime Mortgages (a) FHA/VA mortgages and Residential mortgage-backed securities ($1.2 trillion in 2006), and the additional weight of the Office of Federal Housing Enterprises Oversight (OFHEO) which the author raised, and this is the case, the resolve is generally infectious. It may therefore serve is no small purpose and perhaps not enough reasons to propose that the author was writing with a mirror reflecting the prejudiced concern of the public concerning $1.2 trillion and why, but it renders itself disabled by the enigma that welcomes the risk when the going is good and when the 'music is moving'. For if we suggest to the rest of us that a 22% increase in house acquired over a period, is worth the trial by market, we may or may not resist the greater temptation of doubting the munificence of buying, selling, and carrying on the deal. 

The author argues that the human factors may have a played a hand, but the fingers were not savior grace when it was too obvious that against the decoration of a house build of derivative, it was destined to die a sudden and perhaps uncertain death. Decay and Death enlarge our views from 2008, and in this book that a pomposity erodes reason that there houses were too fly to remain unchecked.    

There are Deals with General Motor and Chrysler and TARP for multi-billion dollar bridge (1) National Economic Council - (NEC) (2) Council of Economic Advisers (CEA), “The markets involved included those for mortgage backed securities (MBS), other asset-backed securities (abs), commercial paper (CP), repurchase agreements (“repos”), and a bewildering variety of derivatives, including the notorious collateral debt obligations (CDOS) and the ill-fated credit default Swaps (CDS).” This tautological behavior is useful as a way of improving the public psychology and as a way of improving the expectation at the market place. classroom and the International Swaps and Derivatives Association (ISDA), Systemic Risk Regulator – Ted, the SEC, The FDIC, in terms of the financial landscape, Federal Reserve Reform – Section 13 (13) “finance bailouts”, ‘Glass-steagall barriers….’, securitization of money, Capital and liquidity Requirement,  (SIFI) (SIFI), (TBIF), reforming the rating agencies, proprietary trading by banks and re-arranging the regulatory con, derivatives, regulating Hedge funds, pay package for executives, redesigning mortgage finance ….

How well we recall the themes of the Music are details for an end game - that is how the expectations of irrationality in market movement and how the behaviors in common momentum inspire caution. There is the Golden rule ‘do unto others as you want them to do unto you’ – a nun to a more familiar ‘stitch in time’ each line capable of forestalling the false sensation of moving market and poverty if not failure for not trying. There are winners and losers when markets expose the earning potential, there are risk in many ways than one, but one recurrent theme which the lasting principles of even a Federal Reserve cannot defend is the premier issue of long term investment or housing even banks saturate borrowing and lending practice. There are times that we may wish certain times hardly take place in business of everyday life, or avoid narrow disclosure indictment for a failed or failing house such as Countrywide but when as from Irrational behavior of any market we learn of profit, there are hardly any way out of the saddle back. 

Alan blinder in this tailored explicating of the forcing pre-eminent in 2008 assume to disorder that this was not the case in the last kamikaze for U.S market. The toss between the end of a sensitive investment group and the collapse of even greater proportion were not items that escape the decision complex of 2008 class, and even in this book, there are lessons that hardly heralded worldwide financial shortfalls.

Alan Blinder – no stranger to reform and perhaps no leader of any reform begins with his thesis on housing that “…home-building rose from 4.5 percent in 2000 to just over 6 percent in 2005. That extra 1.5 percentage points of GDP, spread out over five years, added just 0.3 percent per year to the overall GDP growth rate. Not much.” Compared to the housing numbers that were sentenced to a presumption of 30 year decay or mortgage at a requisite 6% and in the receding decade and perverse five years, the houses were returning to the market with 17%– 22% rate which has a net compounding effect of proportion which the new owners were not aware of. He posed the question of subprime and the issue of indicators – from the expectations ‘you couldn’t lose by investing in houses’, that the temptation to take additional debt during the long decade is exponential in its unraveling that a price tag twice the original currency was too common for any buyer to see the imprecator. For instance, at the growth rate of 1.5 percentage and 0.3 diffusion rate – not necessarily bankrupt from economic progress is too tar for a selling width than the buying range for a 22% overnight increase in market value.

Alan Blinder once more, that (p.19), “When an economy is inching along, with employment drifting down, spending weakening, and its financial system reeling from gut wrenching year of ups and downs, that economy is in a weak position to withstand any adverse shocks.” Blinder did not mention spending section away from CPI since investment over the top is a kind of spending from only salvaged by the recovery rate from 0 convexity and nearly a debt and investment category when there is an uptake. Blinder indicated that US economy under the fine numbers of jobs and employment numbers showed only relative concerns of slowing down until on September 15th 2008 when Lehman filed to Bankruptcy and in his words ‘the whole US economy fell of the table.” However we can use a counter-argument for Job and GDP dependent economy that GDP is so far as the overall US markets are concerned was a better measure, for instance, Job losses in 2008 averaged ‘152 thousand’ per month, but towards the end of 2008, the losses leaped to 598, 000 jobs per month and then to 780 thousand job losses in the first few months of 2009. These numbers are negligible if only we can show that the US market and economy was adding enough money and enough jobs throughout the same period of the down turns.

The Short View 

The changing face of the transition is between 17% and 22% fixed income securities makes a louder case, that one the investing market divide their own according to how well and perhaps easily to rain in the buyers. That is the material culture of investment banks – or so they become after 2008 – is such that the corporation feigned under the microscope of risk asset allocation, overstated some of the debt on houses to earnings – even on a national level, and ended packaging or re-packaging several loans for customers creating money from non-monetary bath. Simply put the familiar issue of collateral debt obligation or collateral in shorts, was such that these spring boards for many companies and individuals served equal opportunity for other debt sanctuary elsewhere – with or without the suspicions of the Commercial banks. We take that a 40 to 1 leverage at (2.5%) is base story for a financial pyramid that has a 40 to nearly 1 chance of making it, almost pyramid obverse down. This is not the same with 2.5% going rate or any hurdles over 2% - there are chances that the rate at which buildings stand and the structure in of itself may give us hints of understanding.  We may add that the actions taken by Feds and Treasury was no contingent on CDO or OTC or collateral requirement for banks with FDIC and Federal Reserve convertibles. 

There are issues that are forcing the actions of the lending party through a credit based avenue that never since the age of credit card and at least the run of the 80’s that made its way into American industrial life. If there is CDOs and (CDO) 2, they result from placing CDOs on top CDOs and may lead to CDO2 which where the problems of the collateral begins and perhaps ends. 8% losses that accumulates “across all five underlying mortgage pools – D2 – securities promised to pay debts if Bank Corporation (RBC)

In so far as Paul A. Volcker is concerned, these correlations where not directly effective, he took more faith in larger picture, increased interest rate mainly as the overall economy detected new growth and mainly in employment numbers suggest. That poor correlation enhanced public expectations in the markets, for we were sure that that huge percentage appreciation of interest rate promoted a frisson effect that short term outlooks of many businesses were compromised with such gallop changes interest rate only to be pampered and perm-pressed or smothered into long range planning giving the plateau that was reached in the 80’s characterized in part by lack of leads, stagflation; arbitrary justifying price and problem of demand by default creating redundancies which are natural consequences of a fully cornered stock market or extreme cases of zero or lack of international interest scalable. So Dovish job numbers is a persuasion for the future hence more lenient to long term US or Bond markets, than the present value estimators of interest rate and the Hawks who like Bernanke showed obvious emphasis on the Big Banks, the here and now estimate for future gain.

The seven distinction raised and discussed by the author as areas of interest (1) inflated asset prices (2) excess leverage (3) lax financial regulation (4) disgraceful banking practices (5) the crazy quilt of bad regulation (6) the abysmal performance of the statistical rating agencies (7) a problem of permanent money. His general and main concern is (1) subprime mortgage (2) Alt – A mortgage ---origination of loans. 

It does not support inflationary pressure or tendencies towards expectations which govern Europe bonds with collateral emphasis on new Jobs and employment numbers which is sometime different from unemployment and jobless rate. It measures the impact of labor and employment statistics on the development of U.S interest rate and where the interest rate as we mentioned can serve as a direct sensitive US economic barometer, it is what affects US interest rate especially during 8% seasonal adjustment such as Christmas when demands tend to last, that a change or to some extent failure to meet estimate or dividends which are bound to interest rate reflect activities from the top affecting the bottom, unusual changes with momentum and aggregate demand that from prices further appreciation of interest rate, the real interest rate being those within the margins of the Fund’s rate.