To the People

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Wednesday, January 14, 2009

The Man Who Sold The World?



Is an aging 70s glam rocker behind the world financial meltdown? The UK Daily Mail investigates:
He's always been a trendsetter. But could David Bowie have caused the latest fad sweeping the nation - the credit crunch?

It may sound like a ridiculous question, but it's not as mad as it seems. Even when it comes to finances Bowie leads the way - and back in 1997 he did something called 'securitisation'.

He thought: 'I have a lot of money coming in over the next ten years from my back catalogue, but I'd rather have the cash now and not have to wait.'

He produced some bits of paper - Bowie Bonds - and said: 'Whoever buys these gets my royalties.'

It meant he no longer had the money coming in but instead had a lot up front. His investors were guaranteed a decent income. It was a good deal all round.

And the banks were catching on to the idea. They thought: 'We have billions out there in mortgages which are going to pay us back very slowly. Why don't we sell those and get the money now?'

So the banks started doing what Bowie had done - in a big way.

It was a complete rebuilding of what a bank does. Normally, a bank borrows from people like you and I, then lends it out.

But now the bank was lending the money - and selling the loan on elsewhere.
Read the rest here.

And you mocked the people who said rock n' roll was the Devil's music? Well, who's laughing now?

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