The third day of the reading experiment and so far failing miserably to adhere. Will try and read a lot from the Economist Tuesday before the school run. Today’s interesting news was a further fall in mortgage advances last month, and reports that asking prices have fallen quite sharply in parts of London: the first signs, some would say, of the long-awaited property reversal. The good news, from the point of view of my bias experiment, is that I got this word of mouth. It is perhaps the sort of story I would have sought out.

Meanwhile, an interesting idea on the mortgage front, which came to me via the Motley Fool message boards: the securitisation of mortgage debt may mean that lenders have much less leeway in dealing with arrears than in the early nineties. Then, most debt was still owned by the lending institutions and had not been sold on in the mortgage backed-securities market as bonds. Don’t know how true this might be, but it made me shudder to think that “what might be different this time” would be that repossessions happen more swiftly and with even less ceremony than they did in the nineties, as the lenders face a more stringent need to maintain the credit-rating of their bonds. I’m glad this suggestion did reach me, because a couple of weeks ago I read Liar’s Poker, Michael Lewis’ account of yuppie life at investment bank Salomon Brothersn in the 1980s. The organizational hubris and frequent stupidity that lay behind the creation of such large and powerful market forces is very worrisome. These markets have now bedded into the financial system and both their existence and assumed safety seem to be taken for granted.

The longer term consequences of this spreading of risk are far from clear, although it is generally thought to be a good thing. For a more cautious point of view, John Nugee and Avinash Persaud of State Street produced a good piece in the FT last Friday.

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