There's that word "Psychology" again on ABC NEWS tonight...

Betsy Stark and David Muir (who I used to like when he did the all-night program on ABC WNN) were stating that IndymacBank which has been taken over, may have been the victim of the psychology of the investors...and thus a 'run' on the bank, leading to its collapse.

Of course, it's the public's fault...they should just sit there and watch their funds disappear before their eyes when you can bet your bottom dollar - if you have one left - that the 'smart money' go out a long time ago from both the investment and the depositor standpoint.

They're good...they blame the 'speculators', the psychology of the dreaded public, the regulators, anyone and everyone but the people who actually engineered this nightmare. Years ago, I spoke with a hotshot from Citibank who was a patient of mine when he was getting his MBA from Wharton many many years ago. I asked him, "How can you justify lending money to people who can't pay the loan back since it's backed by a 'security' whose value cannot possibly linearly increase without 'correction', and the assumption is that it will have to do just that?" I was told patiently, but firmly, that I didn't "understand the intricacies of the market".

I replied, "Well, you're right - I'm not too bright, I'm only a dentist, but if I see every patient at a loss since they can't possibly pay the bill, then I'll go out of business. I don't see why this is any different."

I saw him recently and asked him how the sub-prime complexities are working out for him...he was a little sheepish...but not too much. These guys are arrogant as the walls crumble.

On edit: I may have 'coined' a new word: I used spellcheck before the initial post and the word 'incestors' was allowed rather than 'investors' which was my intended word. Maybe I was right the first time!

and bought huge amounts of stock in the G.E. and oil companies.