Financial Meltdown Enquiry

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I have been following the enquiry currently going on in Washington and have been amazed by the recent responses from the Omaha Oracle. 

Firstly having to be subpoenaed to the enquiry surely seems like a major PR miscalculation.  Having such a clear association with the Street through both Moody's and Goldman investments together with his tremendous history of investor success,  it would surely have been in the best interests of the financial investment industry to be seen as a willing participator.

More puzzling however is the continual referall to his inability to have seen the bubble burst on house prices.  If you go back historically I am sure that there have been times when the housing markets have overheated in value.  That has certainly been the case in off shore countries if not so in the US.  The more sanguine of people with experience in the markets (would have thought that was the  Oracle's history) would have a view I am sure that bubbles do burst, the big issue is when and that is always the problem - getting timing right.

I digress however from what would seem to me to be the main point and that is the valuation placed on securities (term used very loosely) that were comprised of mortgages that were so toxic.  Any regular visitor to the US over the mid 2000's let alone an astute local could have observed the expansion of lending based on absolutely ridiculously based lending criteria.  The extent these were then bundled/packaged and in other ways put together made it seemingly difficult to understand what value there was in the item being bought/sold.  The fall back situation to this then being that the market would continue to rise in real estate value is surely as invalid as the view in the middle of a strong bull market that stock values will rise indefinitely.

To conclude a defense of the principle valuation vehicles for these so called securities (ie Moody's) to be that no one saw the bubble bursting is fatuous to say the very least.  I doubt that I am the only person who has reached these conclusions

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