How The Economy Was Crashed

[g5000]

I will make a copy of this thread
I will read it when I'm dead

Cool!

 

[g5000]

A better use of this space is to celebrate the Grateful Dead.

Ladies and gentlemen, I give you a textbook case of willful blindness.

 

[boedicca]

A better use of this space is to celebrate the Grateful Dead.

Ladies and gentlemen, I give you a textbook case of willful blindness.

Yes, you definitely fit that to a "T". I recommended a book for you to read which is a far more insightful analysis of what caused the crash than is you babbling.

 

[g5000]

A better use of this space is to celebrate the Grateful Dead.

Ladies and gentlemen, I give you a textbook case of willful blindness.

Yes, you definitely fit that to a "T". I recommended a book for you to read which is a far more insightful analysis of what caused the crash than is you babbling.

I've read enough books on the subject, and also lived in that life.

IMHO, the best book ever written about the derivatives market for the man on the street is this one:
Traders, Guns and Money: Knowns and unknowns in the dazzling world of derivatives

It was written before the crash.

 

[g5000]

I suspect this will be a non-existent thread.

Your predictive abilities have failed you once again.

 

[g5000]

I think you should just get a grip and read "Reckless Endangerment".

You do realize that book blames the deregulation of the financial services industry as a critical factor behind the crash, right? The author also blames the Republican Congress as much as Clinton and Dodd and Frank.

In other words, it does not contradict anything I am saying or have ever said.

 

[g5000]

The "banks", for want of a better word, convinced their governments that they had found a way to eliminate all risk to the financial system.

Imagine if government regulations limited the number of widgets you could build to 10 per year. And they told you that at least 3 of those widgets had to be sold to minorities.

You wanted to make a lot more than that, and you come up with some new materials that you are convinced are safer, and so you are finally able to convince the government you could safely make more than 10 per year. So the government gives you their blessing to make as many widgets as you want.

Could this in any way be construed as the "government forced him to make more widgets"?

No, of course not. But that is exactly the illogic we hear from people who have no clue how the system works.

When the government lifts the restrictions on the number of widgets, is it enacting a policy which encourages more widget building?

Sure, it is. But since when is the Right opposed to the government getting out of the way? The GOP Congress wrote the laws which removed all the safety barriers and limits.

Sure enough, more widgets started getting built and the politicians, being politicians, were more than happy to take credit for more people being able to buy widgets.

But the widget builders started making their widgets out of cheaper and cheaper materials in order to produce as many as possible.

And that was the beginning of the end.

 

[CrusaderFrank]

You won't tire of it either because you're a fucking moron and incapable of understanding the GSE stamped AAA on subprime paper

As I already explained to you once today, the GSE's didn't rate their CDOs. The ratings agencies did. If you don't even know the basics of the financial system, I strongly suggest you run away before rambling any more of your retardation here.

You sound like Krugman and are just as wrong. It's like talking about why the Titanic sunk and never mentioning the iceberg.

Say there's just 2 entities that can sell mortgages to the public: GSE and Bank. GSE has a competitive advantage because they have a defacto AAA credit rating. So when the GSE start stamping AAA on subprime paper, the bank has to adjust their pricing.

Using your analogy, the GSE burned down the housing market by selling fire insurance to arsonists. They gave the worst credit borrowers the highest credit rating. Mr Banks had to adjust his pricing and then yes the banks said fuck it, I'll get insurance and sell the same crap the government is selling.

The GSE should be barred forever from the sfh market.

The ultimate irony is that the 2 biggest scumbag politicians responsible for the meltdown got to rewrite the banking laws and regulations.


Sent from smartphone using my wits and Taptalk

 

[g5000]

You won't tire of it either because you're a fucking moron and incapable of understanding the GSE stamped AAA on subprime paper

As I already explained to you once today, the GSE's didn't rate their CDOs. The ratings agencies did. If you don't even know the basics of the financial system, I strongly suggest you run away before rambling any more of your retardation here.

You sound like Krugman and are just as wrong. It's like talking about why the Titanic sunk and never mentioning the iceberg.

Say there's just 2 entities that can sell mortgages to the public: GSE and Bank. GSE has a competitive advantage because they have a defacto AAA credit rating. So when the GSE start stamping AAA on subprime paper, the bank has to adjust their pricing.

Using your analogy, the GSE burned down the housing market by selling fire insurance to arsonists. They gave the worst credit borrowers the highest credit rating. Mr Banks had to adjust his pricing and then yes the banks said fuck it, I'll get insurance and sell the same crap the government is selling.

The GSE should be barred forever from the sfh market.

The ultimate irony is that the 2 biggest scumbag politicians responsible for the meltdown got to rewrite the banking laws and regulations.


Sent from smartphone using my wits and Taptalk

What you continually fail to realize is that the GSEs were a smaller and smaller player in the secondary markets. They were not the dog, they were the tail.

The GSEs were around a very long time, and their market model never caused this kind of crash. What you are completely ignorant of is what drastically changed after 2003. It wasn't the GSEs. It was Wall Street and its derivatives, and the deregulation of those derivatives by the CFMA.

From 2003 up to the crash, the GSEs market share steadily declined. They were not the driving force of the race to the bottom.

In 2005, the Bush Administration tried to get the size of the GSEs portfolios downsized. This attempt was blocked by Chris Dodd in the Senate and Barney Frank in the House. Ignorant people think this is some kind of smoking gun.

It isn't.

Even if the GSE portfolios were wound down, all that would have meant was that much more market share would have gone to Wall Street. The feeding frenzy would not have slowed down one bit.

In fact, this may have been the true motive behind the Bush Administration's attempts to shrink the GSEs. This may have been an attempt to push the GSEs away from the trough so Wall Street could get more.

 

[g5000]

CDO Boom Masks Subprime Losses Abetted by S&P, Moody's, Fitch

 

[g5000]

This was a GLOBAL derivatives bubble. That's the part to which the rubes are completely blind.

 

[EdwardBaiamonte]

Even if the GSE portfolios were wound down, all that would have meant was that much more market share would have gone to Wall Street. The feeding frenzy would not have slowed down one bit.

Fan/Fred insured about half the mortgages in the USA. Without that it would have been a very different world. As important was the Fed printing all the money necessary to continiously blow up the housing bubble. Does a liberal think the soviet union collapsed because of too much govt involvement?

 

[CrusaderFrank]

You won't tire of it either because you're a fucking moron and incapable of understanding the GSE stamped AAA on subprime paper

As I already explained to you once today, the GSE's didn't rate their CDOs. The ratings agencies did. If you don't even know the basics of the financial system, I strongly suggest you run away before rambling any more of your retardation here.

You sound like Krugman and are just as wrong. It's like talking about why the Titanic sunk and never mentioning the iceberg.

Say there's just 2 entities that can sell mortgages to the public: GSE and Bank. GSE has a competitive advantage because they have a defacto AAA credit rating. So when the GSE start stamping AAA on subprime paper, the bank has to adjust their pricing.

Using your analogy, the GSE burned down the housing market by selling fire insurance to arsonists. They gave the worst credit borrowers the highest credit rating. Mr Banks had to adjust his pricing and then yes the banks said fuck it, I'll get insurance and sell the same crap the government is selling.

The GSE should be barred forever from the sfh market.

The ultimate irony is that the 2 biggest scumbag politicians responsible for the meltdown got to rewrite the banking laws and regulations.


Sent from smartphone using my wits and Taptalk

What you continually fail to realize is that the GSEs were a smaller and smaller player in the secondary markets. They were not the dog, they were the tail.

The GSEs were around a very long time, and their market model never caused this kind of crash. What you are completely ignorant of is what drastically changed after 2003. It wasn't the GSEs. It was Wall Street and its derivatives, and the deregulation of those derivatives by the CFMA.

From 2003 up to the crash, the GSEs market share steadily declined. They were not the driving force of the race to the bottom.

In 2005, the Bush Administration tried to get the size of the GSEs portfolios downsized. This attempt was blocked by Chris Dodd in the Senate and Barney Frank in the House. Ignorant people think this is some kind of smoking gun.

It isn't.

Even if the GSE portfolios were wound down, all that would have meant was that much more market share would have gone to Wall Street. The feeding frenzy would not have slowed down one bit.

In fact, this may have been the true motive behind the Bush Administration's attempts to shrink the GSEs. This may have been an attempt to push the GSEs away from the trough so Wall Street could get more.

You're just clueless. No other explanation. F/F set the standard for AAA rated paper and everyone priced back from there.

Hey Krugman has a new column maybe you can "learn" more from him

Sent from smartphone using my wits and Taptalk

 

[Toddsterpatriot]

CDO Boom Masks Subprime Losses Abetted by S&P, Moody's, Fitch

Nice article.
I noticed it didn't confuse CDOs with insurance. LOL!