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Economy
In reply to the discussion: Weekend Economists Mourn David Bowie 8 January 1947 – 10 January 2016 (1/15/16) [View all]Proserpina
(2,352 posts)75. David Bowie's 'back catalogue bonds' may have started the credit crunch from 2009
http://www.mirror.co.uk/3am/celebrity-news/david-bowies-back-catalogue-bonds-370719
Hes 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 its 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 10 years from my back catalogue, but Id 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 good 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 dont 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...
The author is putting the horse behind the cart here...securitization started in the 1970's, long before his Bowie bonds...he got the idea from the banks, not the other way around!
Hes 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 its 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 10 years from my back catalogue, but Id 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 good 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 dont 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...
The author is putting the horse behind the cart here...securitization started in the 1970's, long before his Bowie bonds...he got the idea from the banks, not the other way around!
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Weekend Economists Mourn David Bowie 8 January 1947 – 10 January 2016 (1/15/16) [View all]
Proserpina
Jan 2016
OP
Interesting how he changed changed his name from Jones to Bowie due to Davey Jones of the Monkees
Mnemosyne
Jan 2016
#1
Bowie Bonds: How David Bowie Securitized His Royalties and Predicted the Future Ethan Wolff-Mann
Proserpina
Jan 2016
#11
David Bowie's 'back catalogue bonds' may have started the credit crunch from 2009
Proserpina
Jan 2016
#75
David Bowie was quite the artistic, musical, technology, financial contributor
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Jan 2016
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