Stocks do 9 times better when Democrats are in the White House

[SavannahMann]

AIG had written what were in essence insurance policies on stock holdings for people who owned Lehman.

It was called a Credit Default Swap.

CDS had to do with debt (credit) not stock (equity).

When Lehman went down AIG was on the hook for more than $100 billion.

I believe you're confused. Do you have any backup?

Regulations were put in place to keep that sort of thing from happening again.

What sort of thing, Credit Default Swaps?

You really need to watch the movie.

 

[Toddsterpatriot]

You really need to watch the movie.

I watched the movie. It was ok.
I don't remember it saying that AIG wrote CDS on Lehman stock.

Let me know if you find any backup.

 

[Mashmont]

You know what is really funny? All the recessions and such were due to lack of regulations.

Let’s take Bush and the Housing Bubble. I give Bush credit because his economists saw the danger and tried to reduce the reach of Fannie Mae and Freddie Mack. Everyone said that was stupid, people pay mortgages. Well when it crashed shortly after that effort, everyone howled demanding to know who was to blame. The no regulations folks were to blame.

Ok. So we learn and close the barn door. The economy recovers under Obama. Regulations are passed and put into place. Trump comes and gets rid of them on medium sized banks. They need more freedom to make money. Sure enough, the banks go under.

Blame Biden. He was President when it happened. But the regulations that would have prevented the moves the banks were making were abolished.

Go back one to the Savings and Loan crash. Regulations cut by Reagan to get rid of the red tape holding back American Exceptionalism. The end result, the entire industry was taking risks and committing essentially fraud. They got bailed out.

That’s the thing about Free Market no regulations people. They want the freedom to cheat all the money they can get. Then when it comes crashing down they want the public to bail them out. They arrange it so if you don’t bail them out it will result in even worse damage to the economy.

Back to the housing bubble. Every Wall Street firm held stock in all the others. So if one went down, the collapsing stock value drove the value of the others into the red, so they were now in trouble. A domino effect begins and the end is catastrophic for the economy. Along comes Uncle Sam to bail everyone out. To make sure we don’t have to do that again we put regulations in place to keep it from happening again. Within a couple years the same people who screamed for a bailout are howling that regulations are strangling the industry.

When the inevitable result from no regulations come about we are told we have to do this to save the economy.

I bet those same companies would be unwilling to take risks if the entire management team was told they went to prison for twenty years if they took a bailout.

The Great Recession was caused by Democrat-run Fannie and Freddie making thousands of bad loans to unqualified (black) borrowers and basing instruments off that. Republicans in the Senate tried to rein it in, but Democrats howled racism, and it failed in Committee.

Blaming banks like the left did is dishonest. Democrat-controlled Fannie and Freddie laid all that money out there if only banks made those loans. They took the bait. Then got blamed.

Question: If the government set $10,000.000 at your doorstep and said you could legally take it, would you? Of course you would.

 

[SavannahMann]

The Great Recession was caused by Democrat-run Fannie and Freddie making thousands of bad loans to unqualified (black) borrowers and basing instruments off that. Republicans in the Senate tried to rein it in, but Democrats howled racism, and it failed in Committee.

Blaming banks like the left did is dishonest. Democrat-controlled Fannie and Freddie laid all that money out there if only banks made those loans. They took the bait. Then got blamed.

Question: If the government set $10,000.000 at your doorstep and said you could legally take it, would you? Of course you would.

Almost sort of true. Sort of.

The mortgage backed securities were created in the 1980’s. Those became popular because of the guaranteed return. I mean in principle the people pay their mortgages.

As their popularity grew more investors wanted in on it. A safe thing to have in your portfolio. Mutual funds invested in them as did folks with their 401k.

Doctor Michael Burry was the first to actually look at the details and see the danger. He saw an opportunity and started the Credit Default Swaps. Essentially insurance policies for the MBS.

Those were hugely popular with the investment houses. They were making money two ways. Bundling and selling MBS groupings and selling CDS’s on the MBS.

They needed more mortgages to build more MBS. And since the banks knew they were not holding onto these mortgages for long, they approved loans that had no business being approved. No Job No Income. File the paperwork on Friday and it would be approved on Monday.

The bank sold the mortgage the day after the paperwork arrived.

Nobody knew what was in the MBS’s because nobody looked. They were buying rebundleing and selling them so fast that nobody knew what was in them.

The ratings agencies were not doing their jobs. They were giving whatever rating the stock brokers wanted. As more people saw the writing on the wall they bought the CDS.

Again a shortage of things to buy and sell meant that people needed new things to sell. So they took mortgages that they knew were too crappy to be put into MBS were relabeled CDO’s.

These things were absolute garbage. The banks you say were essentially blameless, were knowingly and willingly bundling and selling garbage. And they got their bonuses and severance packages for screwing the economy over.



But the demand for these was high. So they created Synthetic CDO’s.

It wasn’t the Government dropping dollars at the doorstep. It was con men and scam artists on Wall Street conning others to give the money to them and in the future they promised the dollars would end up on your doorstep.

 

[Toddsterpatriot]

Almost sort of true. Sort of.

The mortgage backed securities were created in the 1980’s. Those became popular because of the guaranteed return. I mean in principle the people pay their mortgages.

As their popularity grew more investors wanted in on it. A safe thing to have in your portfolio. Mutual funds invested in them as did folks with their 401k.

Doctor Michael Burry was the first to actually look at the details and see the danger. He saw an opportunity and started the Credit Default Swaps. Essentially insurance policies for the MBS.

Those were hugely popular with the investment houses. They were making money two ways. Bundling and selling MBS groupings and selling CDS’s on the MBS.

They needed more mortgages to build more MBS. And since the banks knew they were not holding onto these mortgages for long, they approved loans that had no business being approved. No Job No Income. File the paperwork on Friday and it would be approved on Monday.

The bank sold the mortgage the day after the paperwork arrived.

Nobody knew what was in the MBS’s because nobody looked. They were buying rebundleing and selling them so fast that nobody knew what was in them.

The ratings agencies were not doing their jobs. They were giving whatever rating the stock brokers wanted. As more people saw the writing on the wall they bought the CDS.

Again a shortage of things to buy and sell meant that people needed new things to sell. So they took mortgages that they knew were too crappy to be put into MBS were relabeled CDO’s.

These things were absolute garbage. The banks you say were essentially blameless, were knowingly and willingly bundling and selling garbage. And they got their bonuses and severance packages for screwing the economy over.



But the demand for these was high. So they created Synthetic CDO’s.

It wasn’t the Government dropping dollars at the doorstep. It was con men and scam artists on Wall Street conning others to give the money to them and in the future they promised the dollars would end up on your doorstep.

Doctor Michael Burry was the first to actually look at the details and see the danger. He saw an opportunity and started the Credit Default Swaps. Essentially insurance policies for the MBS.

He did not invent CDS.

 

[candycorn]

While Republicans promote themselves as the friendliest party for Wall Street, stock investors do better when Democrats occupy the White House. From a dollars- and-cents standpoint, its not even close.

The BGOV Barometer shows that, over the five decades since John F. Kennedy was inaugurated, $1,000 invested in a hypothetical fund that tracks the Standard & Poors 500 Index (SPX) only when Democrats are in the White House would have been worth $10,920 at the close of trading yesterday.

Thats more than nine times the dollar return an investor would have realized from following a similar strategy during Republican administrations. A $1,000 stake invested in a fund that followed the S&P 500 under Republican presidents, starting with Richard Nixon, would have grown to $2,087 on the day George W. Bush left office.

Stocks Return More With Democrat in White House: BGOV Barometer - Bloomberg

Obama’s DJIA climbed 149%.

The blob’s not so much.