2008 Financial Crisis The Causes and Costs of the Worst Crisis Since the Great Depression

[eagle1462010]

 

[eagle1462010]

 

[BuckToothMoron]

Federal Reserve Policies Cause Booms and Busts | Richard M. Ebeling

"Interest rates, like market prices in general, cannot tell the truth about real supply and demand conditions when governments and their central banks prevent them from doing their job. All that government produces from its interventions, regulations, and manipulations is false signals and bad information. And all of us suffer from this abridgement of our right to freedom of speech to talk honestly to each other through the competitive communication of market prices and interest rates, without governments and central banks getting in the way."

In actuality Fed policies PREVENT boom and busts.

Since the creation of the Fed re has been one Depression. Prior to that there was one about every ten years

You’re assuming the creation of the Fed has stymied depressions/recessions and it seems you believe this to be the first government charted bank. Neither is true. In the 100 years prior to the creation of the Federal Reserve there were 129 months of recession/depression. In the 100 years after, there have been 196 months and the longest was the Great Depression under the Feds watch.

View attachment 225955

How many "bank panics" between 1929 and 2007?

None?

Oh...

That’s funny! Why would there be a bank panic when the bank can print money at will, and the money they print is guaranteed by the Government? Besides, your initial point wasn’t about bank panics, it was about the dearth of economic contraction since the creation of the Fed, which I showed is a fallacy.

 

[g5000]

Part XVI

Almost there. I can see the light at the end of the tunnel. There are a few more culprits who need to be called out.

That's why we need to circle back to AIG now.

Remember when AIG sold that first CDS to JP Morgan for the BISTRO CDO? If you understand that sentence, then I congratulate you for sticking it out this far. Well done!

Anyway, AIG didn't set any money aside in case JP Morgan came calling to collect on that insurance policy in the event a blue chip company defaulted.

And they continued to not set money aside as the CDS market exploded! They thought the universe would end before they would ever see the day when a CDO imploded.

No, literally. They actually believed the actual universe would end before such a thing would happen.

And if every CDO was of the same Smith & Wesson quality as that first one (BISTRO), they would have been right.

And everyone would have lived happily ever after.

But they weren't the same quality. Because Wall Street was making "toxic loans" to anyone who could draw a breath, and that is what was ending up in CDOs. A "toxic loan" is one in which the broker making the loan knew the borrower didn't have a chance in hell of ever paying off their mortgage.

I mentioned earlier that most of the subprime loans were made to middle class borrowers. However, it is definitely true that subprime loans were also being made to "low income borrowers".

The thing is, the hacks would have you believe the broker-dealers were FORCED to make those loans to the negroes. But now you know the opposite is true. The banks were forcing themselves on the lower income people.

This actually happened: Poor people would be attending church, and suddenly their preacher would introduce a mortgage broker and tell them Jesus want the congregation to listen to this motherfucker and Jesus was going to make them all rich. I kid you not.

Let me ask you something. If you have two people sitting at a table with a mountain of forms, and one of those people was poorly educated in an urban shithole school and was trapped in a redline area earning less than a survival wage, and the other person worked for an institution with CENTURIES of hard learned lessons about risk and lending, which one is the most culpable when that loan inevitably defaults?

That's right. The lender. That's why these loans were called "predatory loans".

Sure, the borrower should have known there was no way to make a $1400 a month payment on a less than subsistence wage.

But you see, good old Bush said we could and should "change the fine print". Then presto! Your monthly payment has just magically dropped to $300!

Whaaaaaat!?!

Wut!!!!!!!!!!!! I bought two houses and didn't fall prey to any of these practices. I read the fine print and rejected it. Wut!!!!!!!!!

I did not fall for any of these practices, either.

But not everyone has the educational background to smell a rat.

I remember one new housing development going up in my town, and I would visit it once in a while to watch how much the houses cost. While they were still just dirt plots, the prices were skyrocketing.

The developer also allowed a broker to work out of the model house. So I talked to the broker, and I found they were offering some of the worst negative amortization loans I have ever heard of.

I went outside and found the developer, and explained to him that if someone took one of those loans for a $250,000 house, by the time the loan reset in three years, the principal would have climbed to $325,000.

He shrugged and said, "People are buying them."

My whole body went cold.

That, and some internal documents at Washington Mutual that I stumbled across, caused me to become very frightened. So I called two reporters (one print, one television) that I knew, and tried to explain to them the colossal disaster that was coming. Neither one followed up.

I bet they regretted that two years later when it all came crashing down.

I did get a call from a reporter AFTER the crash, and they did a story on me. I did my best to explain what happened, and what was going to happen, but they only had so many column inches.


Just as an aside, the people who bought those houses in that development and took those predatory loans were all middle class white professionals.

At least half of them defaulted. I know because I attended the foreclosure auction in 2009.

 

[BuckToothMoron]

Federal Reserve Policies Cause Booms and Busts | Richard M. Ebeling

"Interest rates, like market prices in general, cannot tell the truth about real supply and demand conditions when governments and their central banks prevent them from doing their job. All that government produces from its interventions, regulations, and manipulations is false signals and bad information. And all of us suffer from this abridgement of our right to freedom of speech to talk honestly to each other through the competitive communication of market prices and interest rates, without governments and central banks getting in the way."

In actuality Fed policies PREVENT boom and busts.

Since the creation of the Fed re has been one Depression. Prior to that there was one about every ten years

You’re assuming the creation of the Fed has stymied depressions/recessions and it seems you believe this to be the first government charted bank. Neither is true. In the 100 years prior to the creation of the Federal Reserve there were 129 months of recession/depression. In the 100 years after, there have been 196 months and the longest was the Great Depression under the Feds watch.

View attachment 225955

Before the Fed, recessions were more frequent, longer lasting, and deeper.

That's a simple fact.

That math doesn’t work.

Look, the 100 years prior to the Fed there were 6 major recessions and the longest was 27 months. The 100 years after the Fed there were 14 major recessions and the longest was 43 months. I’ll concede that the average length of the recessions have been shorter since the Fed, but they are much more frequent (and apparently can last much longer). We have had more than twice as many recessions with the Fed, but on average they are 7 months shorter.

 

[g5000]

List of recessions in the United States - Wikipedia, the free encyclopedia

Take a good look at the list of recessions in that link, and take special note of the length and depth of each one. Notice how the ones of the 19th century were longer and more frequent than those of the 20th century.

Also notice there has been a recession under every Republican president except for Trump (so far).

You are cherry picking.

There was a recession under Carter, LBJ, Kennedy, and Truman. And there was a recession just two months after Clinton left office.

And Clinton played a part in the Great Recession by allowing the deregulation of derivatives. A mistake he admitted after the crash.

 

[g5000]

Federal Reserve Policies Cause Booms and Busts | Richard M. Ebeling

"Interest rates, like market prices in general, cannot tell the truth about real supply and demand conditions when governments and their central banks prevent them from doing their job. All that government produces from its interventions, regulations, and manipulations is false signals and bad information. And all of us suffer from this abridgement of our right to freedom of speech to talk honestly to each other through the competitive communication of market prices and interest rates, without governments and central banks getting in the way."

In actuality Fed policies PREVENT boom and busts.

Since the creation of the Fed re has been one Depression. Prior to that there was one about every ten years

You’re assuming the creation of the Fed has stymied depressions/recessions and it seems you believe this to be the first government charted bank. Neither is true. In the 100 years prior to the creation of the Federal Reserve there were 129 months of recession/depression. In the 100 years after, there have been 196 months and the longest was the Great Depression under the Feds watch.

View attachment 225955

Before the Fed, recessions were more frequent, longer lasting, and deeper.

That's a simple fact.

That math doesn’t work.

Look, the 100 years prior to the Fed there were 6 major recessions and the longest was 27 months.

Not true. The longest recession in American history was actually called The Long Depression, and it was from 1873 to 1879. By some measurements, the Long Depression lasted until 1896.

Here: Long Depression - Wikipedia

 

[g5000]

We are in a bond (debt) bubble which dwarfs the subprime bubble.

 

[g5000]

Federal Reserve Policies Cause Booms and Busts | Richard M. Ebeling

"Interest rates, like market prices in general, cannot tell the truth about real supply and demand conditions when governments and their central banks prevent them from doing their job. All that government produces from its interventions, regulations, and manipulations is false signals and bad information. And all of us suffer from this abridgement of our right to freedom of speech to talk honestly to each other through the competitive communication of market prices and interest rates, without governments and central banks getting in the way."

In actuality Fed policies PREVENT boom and busts.

Since the creation of the Fed re has been one Depression. Prior to that there was one about every ten years

You’re assuming the creation of the Fed has stymied depressions/recessions and it seems you believe this to be the first government charted bank. Neither is true. In the 100 years prior to the creation of the Federal Reserve there were 129 months of recession/depression. In the 100 years after, there have been 196 months and the longest was the Great Depression under the Feds watch.

View attachment 225955

How many "bank panics" between 1929 and 2007?

None?

Oh...

That’s funny! Why would there be a bank panic when the bank can print money at will, and the money they print is guaranteed by the Government? Besides, your initial point wasn’t about bank panics, it was about the dearth of economic contraction since the creation of the Fed, which I showed is a fallacy.

Tying our currency to how much of a particular metal we dig out of the ground is lunacy.

And it does not prevent long, deep, frequent economic crashes.

 

[easyt65]

What Caused the 2008 Financial Crisis and Could It Happen Again?

I still don't understand the cause of the financial crisis. I try to wrap my head around it.

It's not rocket science:

IMPORTANT FACT TO COMPREHEND:
CONGRESS - NOT the President - controls 'the purse strings', the budget, spending, the economy.

During the 8 years Bush was in office $4 Trillion in new debt was added.

In the 1st 6 years Bush was President the GOP Controlled Congress.

During those 6 years - in which the US suffered / experienced 9/11/01, the economic aftermath of 9/11/01, and 2 wars the GOP added $2.5 Trillion in new debt.

The Democrats took over a near super-majority control of Congress - they held that control of Congress for Bush's last 2 years in office and during Obama's 1st 2 years in office.
-- That means DEMOCRATS controlled 'the purse strings', the budget, spending, the economy during Bush's last 2 years in office.
** This is important because this is the EXACT time period Democrats claim the economy started 'tanking' under Bush - which they falsely blame Bush for. ('Falsely Blame'? Yeah - remember CONGRESS and whoever controls Congress controls 'the purse strings', the budget, spending, the economy - not the President~)

During Bush's last 2 years in office $1.5 Trillion in new debt was added. The DEMOCRATS CONTROLLING THE BUDGET added in only 2 years just $1 trillion dollars in new debt shy of what Bush and the GOP had added in 6 years!

WHO controlled 'the purse strings', the budget, spending, the economy in the 2 years before Obama....FROM WHOM did Obama inherit the 'horrific' declining economy?
- IT WAS NOT BUSH AND THE REPUBLICANS - IT WAS THE DEMOCRATS WHO HELD A NEAR SUPER MAJORIOTY CONTROL OF CONGRESS, WHO CONTROLLED THE 'PURSE' STRINGS', SPENDING, THE ECONOMY.....

In 2008 Obama 'enjoyed' a near super-majority Democratic Party controlled Congress - the Democrats controlled the House, the Senate, and the WH.

What was Obama's 1st REAL ECONOMIC SPENDING BILL?
-- THE $1 TRILLION NON-Stimulating STIMULUS BILL

Snowflakes and Democrats now claim they KNEW the economy was doing poorly, claiming they 'inherited' it from Bush, which I just proved / pointed out was FALSE!

OK, they KNEW the economy was in decline … SO THEY THOUGHT THE SOLUTION WAS TO PASS A $1 TRILLION 'JOBS CREATION' SPENDING BILL THAT CONTAINED OVER 7,000 PIECES OF DNC-ONLY PORK?
-- This Liberal 'Tax Dollar-Funded Wet Dream' included funding for things like studies of 'Shrimp On A Treadmill' and a 'research study' to discover 'WHY THE SEX LIFE OF A HOMOSEXUAL ARGENTINIAN MALE WAS BETTER THAN THE SEX LIFE OF A HETEROSEXUAL US MALE'!



Part of those tax dollars went to Diane Feinstein, Nancy Pelosi and other politicians as 'loans' to save their spouses' bankrupting businesses, loans they never paid back. The list of wasteful pork spending and out-right theft of hard-earned tax dollars is long, but the bottom line was this:

The CBO reported that the Stimulus Bill resulted in a COST PER JOB Obama claimed to have created or saved of approx $774,000 PER JOB!

..and let's not forget Obama publicly admitting that there was actually no such thing as 'shovel-ready' jobs which he claimed was also a large part of the justification for passing this DNC Pork Monster!


The debt added in Obama's 1st 2 years was RECORD-SETTING...and part of the reason is obvious....like the Stimulus Bill passed by the Democrats...

 

[g5000]

Appendix A

So here's the worst part.

After AIG discovered 90 percent of the loans in CDOs were toxic, and announced to the world they were no longer issuing CDS, then everyone woke up and stopped pushing bad loans on homeless people, right?

Nope.

In fact, the broker-dealers started drinking their own bongwater. They took over the business of selling CDS to each other.

I wish I was lying. I wish I was making this up.

Now, some of the players knew this was all going to blow up. They called it a "house of cards". They knew damned well they were ripping the faces off their clients.

And they didn't care.

These bastards committed outright fraud. And not one of them went to jail.

Let me give you an example.

ABACUS 2007 AC-1.

Note the date on that towering pile of horseshit is 2007. After AIG revealed to Wall Street the gig was up.

There's this guy. John Paulson. Not Hank Paulson, SecTreas. John Paulson, hedge fund manager.

John Paulson approached Goldman Sachs with an idea for a fraud he wanted to perpetrate. And Goldman went along with it.

What John Paulson did was construct a CDO. He was an arsonist. He constructed that CDO out of toxic loans. He KNEW those loans were going to burn down. He knew those loans were firetraps.

They got this CDO built and rated as AAA by the ratings agencies, and then Goldman sold the cups to this revenue stream of pure sewage to investors. 401k money managers, pension funds, you get the picture.

Then Paulson bought CDS against those toxic loans.

So Paulson and Goldman fucked everybody both coming and going. They profited off selling the cups to the investors, and they profited off all those mortgages burning down.

And that, ladies and gentlemen, is why Credit Default Swaps need to be regulated like insurance. That, boys and girls, is why CDS need to have an insurable interest requirement.

But guess what?


To this day, CDS are not regulated like insurance. To this day, CDS do not have an insurable interest requirement.


And another thing. I know the names of everyone involved in that ABACUS crime. And so does the federal government. And not one of them has gone to jail.

One of the small fish was put on trial, and you know what the jury decided? They decided the guy should be in jail, but felt it would be unfair to put him in jail while his bosses went free.

So they let him go.

I shit you not.

 

[Lesh]

Inflation is not necessarily bad as long as it's low and controlled.

It's what makes buying a home affordable

That $1500 mortgage payment is tough to make today...but 20 years from now it becomes very affordable and allows for early pay down

Part XVI

Almost there. I can see the light at the end of the tunnel. There are a few more culprits who need to be called out.

That's why we need to circle back to AIG now.

Remember when AIG sold that first CDS to JP Morgan for the BISTRO CDO? If you understand that sentence, then I congratulate you for sticking it out this far. Well done!

Anyway, AIG didn't set any money aside in case JP Morgan came calling to collect on that insurance policy in the event a blue chip company defaulted.

And they continued to not set money aside as the CDS market exploded! They thought the universe would end before they would ever see the day when a CDO imploded.

No, literally. They actually believed the actual universe would end before such a thing would happen.

And if every CDO was of the same Smith & Wesson quality as that first one (BISTRO), they would have been right.

And everyone would have lived happily ever after.

But they weren't the same quality. Because Wall Street was making "toxic loans" to anyone who could draw a breath, and that is what was ending up in CDOs. A "toxic loan" is one in which the broker making the loan knew the borrower didn't have a chance in hell of ever paying off their mortgage.

I mentioned earlier that most of the subprime loans were made to middle class borrowers. However, it is definitely true that subprime loans were also being made to "low income borrowers".

The thing is, the hacks would have you believe the broker-dealers were FORCED to make those loans to the negroes. But now you know the opposite is true. The banks were forcing themselves on the lower income people.

This actually happened: Poor people would be attending church, and suddenly their preacher would introduce a mortgage broker and tell them Jesus want the congregation to listen to this motherfucker and Jesus was going to make them all rich. I kid you not.

Let me ask you something. If you have two people sitting at a table with a mountain of forms, and one of those people was poorly educated in an urban shithole school and was trapped in a redline area earning less than a survival wage, and the other person worked for an institution with CENTURIES of hard learned lessons about risk and lending, which one is the most culpable when that loan inevitably defaults?

That's right. The lender. That's why these loans were called "predatory loans".

Sure, the borrower should have known there was no way to make a $1400 a month payment on a less than subsistence wage.

But you see, good old Bush said we could and should "change the fine print". Then presto! Your monthly payment has just magically dropped to $300!

Whaaaaaat!?!

Wut!!!!!!!!!!!! I bought two houses and didn't fall prey to any of these practices. I read the fine print and rejected it. Wut!!!!!!!!!

I did not fall for any of these practices, either.

But not everyone has the educational background to smell a rat.

I remember one new housing development going up in my town, and I would visit it once in a while to watch how much the houses cost. While they were still just dirt plots, the prices were skyrocketing.

The developer also allowed a broker to work out of the model house. So I talked to the broker, and I found they were offering some of the worst negative amortization loans I have ever heard of.

I went outside and found the developer, and explained to him that if someone took one of those loans for a $250,000 house, by the time the loan reset in three years, the principal would have climbed to $325,000.

He shrugged and said, "People are buying them."

My whole body went cold.

That, and some internal documents at Washington Mutual that I stumbled across, caused me to become very frightened. So I called two reporters (one print, one television) that I knew, and tried to explain to them the colossal disaster that was coming. Neither one followed up.

I bet they regretted that two years later when it all came crashing down.

I did get a call from a reporter AFTER the crash, and they did a story on me. I did my best to explain what happened, and what was going to happen, but they only had so many column inches.


Just as an aside, the people who bought those houses in that development and took those predatory loans were all middle class white professionals.

At least half of them defaulted. I know because I attended the foreclosure auction in 2009.

My sister is a real estate agent and made a fortune in the housing bubble. She was selling the same house three times in two years.

People were actually thinking that if they could just make those first few payments, they could resell that home for tens of thousands more. What they failed to realize was that they had to live SOMEWHERE. And when the bubble burst...they were living in the most expensive part of their little pyramid.

I actually considered selling my home and renting. That might have worked but I couldn't handle living in an apartment. I bought my house in 85 for $225K and could have sold it in 2004 for $425K.!!! With a lot of recent improvements I eventually sold it in 2016 for $400K...which I found astounding. We may be in a mini (possibly local) housing bubble

 

[g5000]

Inflation is not necessarily bad as long as it's low and controlled.

It's what makes buying a home affordable

That $1500 mortgage payment is tough to make today...but 20 years from now it becomes very affordable and allows for early pay down

Part XVI

Almost there. I can see the light at the end of the tunnel. There are a few more culprits who need to be called out.

That's why we need to circle back to AIG now.

Remember when AIG sold that first CDS to JP Morgan for the BISTRO CDO? If you understand that sentence, then I congratulate you for sticking it out this far. Well done!

Anyway, AIG didn't set any money aside in case JP Morgan came calling to collect on that insurance policy in the event a blue chip company defaulted.

And they continued to not set money aside as the CDS market exploded! They thought the universe would end before they would ever see the day when a CDO imploded.

No, literally. They actually believed the actual universe would end before such a thing would happen.

And if every CDO was of the same Smith & Wesson quality as that first one (BISTRO), they would have been right.

And everyone would have lived happily ever after.

But they weren't the same quality. Because Wall Street was making "toxic loans" to anyone who could draw a breath, and that is what was ending up in CDOs. A "toxic loan" is one in which the broker making the loan knew the borrower didn't have a chance in hell of ever paying off their mortgage.

I mentioned earlier that most of the subprime loans were made to middle class borrowers. However, it is definitely true that subprime loans were also being made to "low income borrowers".

The thing is, the hacks would have you believe the broker-dealers were FORCED to make those loans to the negroes. But now you know the opposite is true. The banks were forcing themselves on the lower income people.

This actually happened: Poor people would be attending church, and suddenly their preacher would introduce a mortgage broker and tell them Jesus want the congregation to listen to this motherfucker and Jesus was going to make them all rich. I kid you not.

Let me ask you something. If you have two people sitting at a table with a mountain of forms, and one of those people was poorly educated in an urban shithole school and was trapped in a redline area earning less than a survival wage, and the other person worked for an institution with CENTURIES of hard learned lessons about risk and lending, which one is the most culpable when that loan inevitably defaults?

That's right. The lender. That's why these loans were called "predatory loans".

Sure, the borrower should have known there was no way to make a $1400 a month payment on a less than subsistence wage.

But you see, good old Bush said we could and should "change the fine print". Then presto! Your monthly payment has just magically dropped to $300!

Whaaaaaat!?!

Wut!!!!!!!!!!!! I bought two houses and didn't fall prey to any of these practices. I read the fine print and rejected it. Wut!!!!!!!!!

I did not fall for any of these practices, either.

But not everyone has the educational background to smell a rat.

I remember one new housing development going up in my town, and I would visit it once in a while to watch how much the houses cost. While they were still just dirt plots, the prices were skyrocketing.

The developer also allowed a broker to work out of the model house. So I talked to the broker, and I found they were offering some of the worst negative amortization loans I have ever heard of.

I went outside and found the developer, and explained to him that if someone took one of those loans for a $250,000 house, by the time the loan reset in three years, the principal would have climbed to $325,000.

He shrugged and said, "People are buying them."

My whole body went cold.

That, and some internal documents at Washington Mutual that I stumbled across, caused me to become very frightened. So I called two reporters (one print, one television) that I knew, and tried to explain to them the colossal disaster that was coming. Neither one followed up.

I bet they regretted that two years later when it all came crashing down.

I did get a call from a reporter AFTER the crash, and they did a story on me. I did my best to explain what happened, and what was going to happen, but they only had so many column inches.


Just as an aside, the people who bought those houses in that development and took those predatory loans were all middle class white professionals.

At least half of them defaulted. I know because I attended the foreclosure auction in 2009.

My sister is a real estate agent and made a fortune in the housing bubble. She was selling the same house three times in two years.

People were actually thinking that if they could just make those first few payments, they could resell that home for tens of thousands more. What they failed to realize was that they had to live SOMEWHERE. And when the bubble burst...they were living in the most expensive part of their little pyramid.

I actually considered selling my home and renting. That might have worked but I couldn't handle living in an apartment. I bought my house in 85 for $225K and could have sold it in 2004 for $425K.!!! With a lot of recent improvements I eventually sold it in 2016 for $400K...which I found astounding. We may be in a mini (possibly local) housing bubble

Yeah, the houses in my area are selling for far more than they were during the subprime bubble.

I have equity out the wazoo. I bought my house at the bottom of the crash for pennies on the dollar.

 

[eagle1462010]

Inflation is not necessarily bad as long as it's low and controlled.

It's what makes buying a home affordable

That $1500 mortgage payment is tough to make today...but 20 years from now it becomes very affordable and allows for early pay down

Part XVI

Almost there. I can see the light at the end of the tunnel. There are a few more culprits who need to be called out.

That's why we need to circle back to AIG now.

Remember when AIG sold that first CDS to JP Morgan for the BISTRO CDO? If you understand that sentence, then I congratulate you for sticking it out this far. Well done!

Anyway, AIG didn't set any money aside in case JP Morgan came calling to collect on that insurance policy in the event a blue chip company defaulted.

And they continued to not set money aside as the CDS market exploded! They thought the universe would end before they would ever see the day when a CDO imploded.

No, literally. They actually believed the actual universe would end before such a thing would happen.

And if every CDO was of the same Smith & Wesson quality as that first one (BISTRO), they would have been right.

And everyone would have lived happily ever after.

But they weren't the same quality. Because Wall Street was making "toxic loans" to anyone who could draw a breath, and that is what was ending up in CDOs. A "toxic loan" is one in which the broker making the loan knew the borrower didn't have a chance in hell of ever paying off their mortgage.

I mentioned earlier that most of the subprime loans were made to middle class borrowers. However, it is definitely true that subprime loans were also being made to "low income borrowers".

The thing is, the hacks would have you believe the broker-dealers were FORCED to make those loans to the negroes. But now you know the opposite is true. The banks were forcing themselves on the lower income people.

This actually happened: Poor people would be attending church, and suddenly their preacher would introduce a mortgage broker and tell them Jesus want the congregation to listen to this motherfucker and Jesus was going to make them all rich. I kid you not.

Let me ask you something. If you have two people sitting at a table with a mountain of forms, and one of those people was poorly educated in an urban shithole school and was trapped in a redline area earning less than a survival wage, and the other person worked for an institution with CENTURIES of hard learned lessons about risk and lending, which one is the most culpable when that loan inevitably defaults?

That's right. The lender. That's why these loans were called "predatory loans".

Sure, the borrower should have known there was no way to make a $1400 a month payment on a less than subsistence wage.

But you see, good old Bush said we could and should "change the fine print". Then presto! Your monthly payment has just magically dropped to $300!

Whaaaaaat!?!

Wut!!!!!!!!!!!! I bought two houses and didn't fall prey to any of these practices. I read the fine print and rejected it. Wut!!!!!!!!!

I did not fall for any of these practices, either.

But not everyone has the educational background to smell a rat.

I remember one new housing development going up in my town, and I would visit it once in a while to watch how much the houses cost. While they were still just dirt plots, the prices were skyrocketing.

The developer also allowed a broker to work out of the model house. So I talked to the broker, and I found they were offering some of the worst negative amortization loans I have ever heard of.

I went outside and found the developer, and explained to him that if someone took one of those loans for a $250,000 house, by the time the loan reset in three years, the principal would have climbed to $325,000.

He shrugged and said, "People are buying them."

My whole body went cold.

That, and some internal documents at Washington Mutual that I stumbled across, caused me to become very frightened. So I called two reporters (one print, one television) that I knew, and tried to explain to them the colossal disaster that was coming. Neither one followed up.

I bet they regretted that two years later when it all came crashing down.

I did get a call from a reporter AFTER the crash, and they did a story on me. I did my best to explain what happened, and what was going to happen, but they only had so many column inches.


Just as an aside, the people who bought those houses in that development and took those predatory loans were all middle class white professionals.

At least half of them defaulted. I know because I attended the foreclosure auction in 2009.

My sister is a real estate agent and made a fortune in the housing bubble. She was selling the same house three times in two years.

People were actually thinking that if they could just make those first few payments, they could resell that home for tens of thousands more. What they failed to realize was that they had to live SOMEWHERE. And when the bubble burst...they were living in the most expensive part of their little pyramid.

I actually considered selling my home and renting. That might have worked but I couldn't handle living in an apartment. I bought my house in 85 for $225K and could have sold it in 2004 for $425K.!!! With a lot of recent improvements I eventually sold it in 2016 for $400K...which I found astounding. We may be in a mini (possibly local) housing bubble

Inflating the prices makes it affordable..................LOL

In who's universe.........LOL

 

[eagle1462010]

Inflation is not necessarily bad as long as it's low and controlled.

It's what makes buying a home affordable

That $1500 mortgage payment is tough to make today...but 20 years from now it becomes very affordable and allows for early pay down

Part XVI

Almost there. I can see the light at the end of the tunnel. There are a few more culprits who need to be called out.

That's why we need to circle back to AIG now.

Remember when AIG sold that first CDS to JP Morgan for the BISTRO CDO? If you understand that sentence, then I congratulate you for sticking it out this far. Well done!

Anyway, AIG didn't set any money aside in case JP Morgan came calling to collect on that insurance policy in the event a blue chip company defaulted.

And they continued to not set money aside as the CDS market exploded! They thought the universe would end before they would ever see the day when a CDO imploded.

No, literally. They actually believed the actual universe would end before such a thing would happen.

And if every CDO was of the same Smith & Wesson quality as that first one (BISTRO), they would have been right.

And everyone would have lived happily ever after.

But they weren't the same quality. Because Wall Street was making "toxic loans" to anyone who could draw a breath, and that is what was ending up in CDOs. A "toxic loan" is one in which the broker making the loan knew the borrower didn't have a chance in hell of ever paying off their mortgage.

I mentioned earlier that most of the subprime loans were made to middle class borrowers. However, it is definitely true that subprime loans were also being made to "low income borrowers".

The thing is, the hacks would have you believe the broker-dealers were FORCED to make those loans to the negroes. But now you know the opposite is true. The banks were forcing themselves on the lower income people.

This actually happened: Poor people would be attending church, and suddenly their preacher would introduce a mortgage broker and tell them Jesus want the congregation to listen to this motherfucker and Jesus was going to make them all rich. I kid you not.

Let me ask you something. If you have two people sitting at a table with a mountain of forms, and one of those people was poorly educated in an urban shithole school and was trapped in a redline area earning less than a survival wage, and the other person worked for an institution with CENTURIES of hard learned lessons about risk and lending, which one is the most culpable when that loan inevitably defaults?

That's right. The lender. That's why these loans were called "predatory loans".

Sure, the borrower should have known there was no way to make a $1400 a month payment on a less than subsistence wage.

But you see, good old Bush said we could and should "change the fine print". Then presto! Your monthly payment has just magically dropped to $300!

Whaaaaaat!?!

Wut!!!!!!!!!!!! I bought two houses and didn't fall prey to any of these practices. I read the fine print and rejected it. Wut!!!!!!!!!

I did not fall for any of these practices, either.

But not everyone has the educational background to smell a rat.

I remember one new housing development going up in my town, and I would visit it once in a while to watch how much the houses cost. While they were still just dirt plots, the prices were skyrocketing.

The developer also allowed a broker to work out of the model house. So I talked to the broker, and I found they were offering some of the worst negative amortization loans I have ever heard of.

I went outside and found the developer, and explained to him that if someone took one of those loans for a $250,000 house, by the time the loan reset in three years, the principal would have climbed to $325,000.

He shrugged and said, "People are buying them."

My whole body went cold.

That, and some internal documents at Washington Mutual that I stumbled across, caused me to become very frightened. So I called two reporters (one print, one television) that I knew, and tried to explain to them the colossal disaster that was coming. Neither one followed up.

I bet they regretted that two years later when it all came crashing down.

I did get a call from a reporter AFTER the crash, and they did a story on me. I did my best to explain what happened, and what was going to happen, but they only had so many column inches.


Just as an aside, the people who bought those houses in that development and took those predatory loans were all middle class white professionals.

At least half of them defaulted. I know because I attended the foreclosure auction in 2009.

My sister is a real estate agent and made a fortune in the housing bubble. She was selling the same house three times in two years.

People were actually thinking that if they could just make those first few payments, they could resell that home for tens of thousands more. What they failed to realize was that they had to live SOMEWHERE. And when the bubble burst...they were living in the most expensive part of their little pyramid.

I actually considered selling my home and renting. That might have worked but I couldn't handle living in an apartment. I bought my house in 85 for $225K and could have sold it in 2004 for $425K.!!! With a lot of recent improvements I eventually sold it in 2016 for $400K...which I found astounding. We may be in a mini (possibly local) housing bubble

Yeah, the houses in my area are selling for far more than they were during the subprime bubble.

I have equity out the wazoo. I bought my house at the bottom of the crash for pennies on the dollar.

Making profits on others misery.......helping drive up the cost til the bubble burst........buying the Real Estate to do a quick turn around hoping not to be stuck with the underwater mortgage when the bubble pops..........

aka......you got yours and to hell with those without a seat when the music stops.............and a country of people were destroyed in the process.

Am I supposed to clap........say yippie...........I don't think so.

 

[eagle1462010]

We are in a bond (debt) bubble which dwarfs the subprime bubble.

A house of cards..........can come down with a smaller bubble...........as we have seen.

 

[JWBooth]

Give this a listen, he can explain it better than I.

Ep. 1270 The Major Arguments for Money the State Can’t Control | Tom Woods

 

[g5000]

Inflation is not necessarily bad as long as it's low and controlled.

It's what makes buying a home affordable

That $1500 mortgage payment is tough to make today...but 20 years from now it becomes very affordable and allows for early pay down

Part XVI

Almost there. I can see the light at the end of the tunnel. There are a few more culprits who need to be called out.

That's why we need to circle back to AIG now.

Remember when AIG sold that first CDS to JP Morgan for the BISTRO CDO? If you understand that sentence, then I congratulate you for sticking it out this far. Well done!

Anyway, AIG didn't set any money aside in case JP Morgan came calling to collect on that insurance policy in the event a blue chip company defaulted.

And they continued to not set money aside as the CDS market exploded! They thought the universe would end before they would ever see the day when a CDO imploded.

No, literally. They actually believed the actual universe would end before such a thing would happen.

And if every CDO was of the same Smith & Wesson quality as that first one (BISTRO), they would have been right.

And everyone would have lived happily ever after.

But they weren't the same quality. Because Wall Street was making "toxic loans" to anyone who could draw a breath, and that is what was ending up in CDOs. A "toxic loan" is one in which the broker making the loan knew the borrower didn't have a chance in hell of ever paying off their mortgage.

I mentioned earlier that most of the subprime loans were made to middle class borrowers. However, it is definitely true that subprime loans were also being made to "low income borrowers".

The thing is, the hacks would have you believe the broker-dealers were FORCED to make those loans to the negroes. But now you know the opposite is true. The banks were forcing themselves on the lower income people.

This actually happened: Poor people would be attending church, and suddenly their preacher would introduce a mortgage broker and tell them Jesus want the congregation to listen to this motherfucker and Jesus was going to make them all rich. I kid you not.

Let me ask you something. If you have two people sitting at a table with a mountain of forms, and one of those people was poorly educated in an urban shithole school and was trapped in a redline area earning less than a survival wage, and the other person worked for an institution with CENTURIES of hard learned lessons about risk and lending, which one is the most culpable when that loan inevitably defaults?

That's right. The lender. That's why these loans were called "predatory loans".

Sure, the borrower should have known there was no way to make a $1400 a month payment on a less than subsistence wage.

But you see, good old Bush said we could and should "change the fine print". Then presto! Your monthly payment has just magically dropped to $300!

Whaaaaaat!?!

Wut!!!!!!!!!!!! I bought two houses and didn't fall prey to any of these practices. I read the fine print and rejected it. Wut!!!!!!!!!

I did not fall for any of these practices, either.

But not everyone has the educational background to smell a rat.

I remember one new housing development going up in my town, and I would visit it once in a while to watch how much the houses cost. While they were still just dirt plots, the prices were skyrocketing.

The developer also allowed a broker to work out of the model house. So I talked to the broker, and I found they were offering some of the worst negative amortization loans I have ever heard of.

I went outside and found the developer, and explained to him that if someone took one of those loans for a $250,000 house, by the time the loan reset in three years, the principal would have climbed to $325,000.

He shrugged and said, "People are buying them."

My whole body went cold.

That, and some internal documents at Washington Mutual that I stumbled across, caused me to become very frightened. So I called two reporters (one print, one television) that I knew, and tried to explain to them the colossal disaster that was coming. Neither one followed up.

I bet they regretted that two years later when it all came crashing down.

I did get a call from a reporter AFTER the crash, and they did a story on me. I did my best to explain what happened, and what was going to happen, but they only had so many column inches.


Just as an aside, the people who bought those houses in that development and took those predatory loans were all middle class white professionals.

At least half of them defaulted. I know because I attended the foreclosure auction in 2009.

My sister is a real estate agent and made a fortune in the housing bubble. She was selling the same house three times in two years.

People were actually thinking that if they could just make those first few payments, they could resell that home for tens of thousands more. What they failed to realize was that they had to live SOMEWHERE. And when the bubble burst...they were living in the most expensive part of their little pyramid.

I actually considered selling my home and renting. That might have worked but I couldn't handle living in an apartment. I bought my house in 85 for $225K and could have sold it in 2004 for $425K.!!! With a lot of recent improvements I eventually sold it in 2016 for $400K...which I found astounding. We may be in a mini (possibly local) housing bubble

Yeah, the houses in my area are selling for far more than they were during the subprime bubble.

I have equity out the wazoo. I bought my house at the bottom of the crash for pennies on the dollar.

Making profits on others misery.......helping drive up the cost til the bubble burst........buying the Real Estate to do a quick turn around hoping not to be stuck with the underwater mortgage when the bubble pops..........

aka......you got yours and to hell with those without a seat when the music stops.............and a country of people were destroyed in the process.

Am I supposed to clap........say yippie...........I don't think so.

I want you to think about what would happen if the supply of MONEY stayed constant while the supply of GOODS and SERVICES increased.

 

[eagle1462010]

Inflation is not necessarily bad as long as it's low and controlled.

It's what makes buying a home affordable

That $1500 mortgage payment is tough to make today...but 20 years from now it becomes very affordable and allows for early pay down

Wut!!!!!!!!!!!! I bought two houses and didn't fall prey to any of these practices. I read the fine print and rejected it. Wut!!!!!!!!!

I did not fall for any of these practices, either.

But not everyone has the educational background to smell a rat.

I remember one new housing development going up in my town, and I would visit it once in a while to watch how much the houses cost. While they were still just dirt plots, the prices were skyrocketing.

The developer also allowed a broker to work out of the model house. So I talked to the broker, and I found they were offering some of the worst negative amortization loans I have ever heard of.

I went outside and found the developer, and explained to him that if someone took one of those loans for a $250,000 house, by the time the loan reset in three years, the principal would have climbed to $325,000.

He shrugged and said, "People are buying them."

My whole body went cold.

That, and some internal documents at Washington Mutual that I stumbled across, caused me to become very frightened. So I called two reporters (one print, one television) that I knew, and tried to explain to them the colossal disaster that was coming. Neither one followed up.

I bet they regretted that two years later when it all came crashing down.

I did get a call from a reporter AFTER the crash, and they did a story on me. I did my best to explain what happened, and what was going to happen, but they only had so many column inches.


Just as an aside, the people who bought those houses in that development and took those predatory loans were all middle class white professionals.

At least half of them defaulted. I know because I attended the foreclosure auction in 2009.

My sister is a real estate agent and made a fortune in the housing bubble. She was selling the same house three times in two years.

People were actually thinking that if they could just make those first few payments, they could resell that home for tens of thousands more. What they failed to realize was that they had to live SOMEWHERE. And when the bubble burst...they were living in the most expensive part of their little pyramid.

I actually considered selling my home and renting. That might have worked but I couldn't handle living in an apartment. I bought my house in 85 for $225K and could have sold it in 2004 for $425K.!!! With a lot of recent improvements I eventually sold it in 2016 for $400K...which I found astounding. We may be in a mini (possibly local) housing bubble

Yeah, the houses in my area are selling for far more than they were during the subprime bubble.

I have equity out the wazoo. I bought my house at the bottom of the crash for pennies on the dollar.

Making profits on others misery.......helping drive up the cost til the bubble burst........buying the Real Estate to do a quick turn around hoping not to be stuck with the underwater mortgage when the bubble pops..........

aka......you got yours and to hell with those without a seat when the music stops.............and a country of people were destroyed in the process.

Am I supposed to clap........say yippie...........I don't think so.

I want you to think about what would happen if the supply of MONEY stayed constant while the supply of GOODS and SERVICES increased.

There is about 247 trillion in debt in the world......private........about 90 trillion in Countries debt.............Most of that is still in U.S. currency..........

I want you to think about debasement of currency.........and what it does to your buying power............

Then I want you to tell me what has changed.........does a tree grow differently now.......it is turned into lumber the same way now......does it take more or less manpower to make it to market.........is a home built the same way......or is it now quickly built compared to the past.................

Then tell me why that should now cost a TON more to buy a house..............then explain to most Americans who would like to own a home why that is better for them...........

 

[JWBooth]

Inflation is not necessarily bad as long as it's low and controlled.

It's what makes buying a home affordable

That $1500 mortgage payment is tough to make today...but 20 years from now it becomes very affordable and allows for early pay down

Wut!!!!!!!!!!!! I bought two houses and didn't fall prey to any of these practices. I read the fine print and rejected it. Wut!!!!!!!!!

I did not fall for any of these practices, either.

But not everyone has the educational background to smell a rat.

I remember one new housing development going up in my town, and I would visit it once in a while to watch how much the houses cost. While they were still just dirt plots, the prices were skyrocketing.

The developer also allowed a broker to work out of the model house. So I talked to the broker, and I found they were offering some of the worst negative amortization loans I have ever heard of.

I went outside and found the developer, and explained to him that if someone took one of those loans for a $250,000 house, by the time the loan reset in three years, the principal would have climbed to $325,000.

He shrugged and said, "People are buying them."

My whole body went cold.

That, and some internal documents at Washington Mutual that I stumbled across, caused me to become very frightened. So I called two reporters (one print, one television) that I knew, and tried to explain to them the colossal disaster that was coming. Neither one followed up.

I bet they regretted that two years later when it all came crashing down.

I did get a call from a reporter AFTER the crash, and they did a story on me. I did my best to explain what happened, and what was going to happen, but they only had so many column inches.


Just as an aside, the people who bought those houses in that development and took those predatory loans were all middle class white professionals.

At least half of them defaulted. I know because I attended the foreclosure auction in 2009.

My sister is a real estate agent and made a fortune in the housing bubble. She was selling the same house three times in two years.

People were actually thinking that if they could just make those first few payments, they could resell that home for tens of thousands more. What they failed to realize was that they had to live SOMEWHERE. And when the bubble burst...they were living in the most expensive part of their little pyramid.

I actually considered selling my home and renting. That might have worked but I couldn't handle living in an apartment. I bought my house in 85 for $225K and could have sold it in 2004 for $425K.!!! With a lot of recent improvements I eventually sold it in 2016 for $400K...which I found astounding. We may be in a mini (possibly local) housing bubble

Yeah, the houses in my area are selling for far more than they were during the subprime bubble.

I have equity out the wazoo. I bought my house at the bottom of the crash for pennies on the dollar.

Making profits on others misery.......helping drive up the cost til the bubble burst........buying the Real Estate to do a quick turn around hoping not to be stuck with the underwater mortgage when the bubble pops..........

aka......you got yours and to hell with those without a seat when the music stops.............and a country of people were destroyed in the process.

Am I supposed to clap........say yippie...........I don't think so.

I want you to think about what would happen if the supply of MONEY stayed constant while the supply of GOODS and SERVICES increased.

An increase in the availability in goods and services increases the purchasing power of the money when the supply is fixed.