Real Estate: Banks, Dubai And The Black SwanBy
Greetings from New Mexico….
I found out today that New Mexico is not LAST in everything. We are first is DWIs as well as the first state to adopt a Real Estate Recovery Fund…which has now been adopted by most states. So…yes…we do have pride in being first….or maybe we have pride in being last?
A while back I was reading a book by Nassim Nicholas Taleb called The Black Swan. Great book by the way. Anyway…I remember Mr. Taleb talking about banks and how over the years…the banks have gotten bigger all over the world (smaller banks being absorbed by the big ones). What was more interesting was how he stated that all the banks are tightly connected in a dangerous way. More specifically, how if one big banks goes down how it impacts all the other banks.
Now…we all saw this when big banks started failing in the United States….but have we really been impacted by failing banks in other parts of the world? I am sure we have in one form or another…but what is happening in Dubai brings Mr. Taleb’s words back to life. If…by some chance the ordeal with Dubai explodes. Will we see another big bank fall? Which we all know is possible. If another big bank falls…what will be the impact to us Americans? ….to the world?
I am sure I am showing my ignorance…but in the big picture of things….I do know this is a dangerous situation. Chances are someone will save the day ….for now….but I am sure we have not heard the last of this situation.
Read more here on the situation in Dubai:
Until next time…..rob