Video: The Crisis of Credit Visualized

Business • Views: 12,799

This is an excellent video presentation on the credit crisis, created by designer Jonathan Jarvis.

vimeo.com

Here’s Jarvis’ description of the project, from his website:

The Crisis of Credit Visualized distills the economic crisis into a short and simple story by giving it form. It is also argues that designers have the ability to see a complex situation, then turn around and communicate it to others. By giving graphic form to the credit crisis, it becomes comprehensible. Not only do economic activities take shape, but new relationships can emerge between these shapes.

My interest in the project stems from 3 primary sources: my simple desire to understand it, diagramming work I conducted at UNICEF, and my earlier motion design work. Initially, I researched printed news and spoke with several friends working in investment banks. However, I began turning more and more to audio and video sources for information. These sources contained an editor’s narrative which greatly enhanced my understanding, often by putting the crisis in some sort of larger context. But I still could not find a holistic or concise explanation.

In the summer of 2008 I was awarded a fellowship to join The Innovation Team at UNICEF in New York. There, while designing global storytelling and media platforms, I began creating system diagrams. The diagrams served to make crazy ideas understandable, and served as a tangible object when presenting these systems which hadn’t yet be built. I felt that I was onto something when the technical project manager informed me that the diagrams had helped him significantly with the system architecture.

After returning from New York, I realized that the earlier motion designs (see Harper’s Index in Motion & Tangible Interactions) I had done were in a sense glorified, moving diagrams. Moving mediums allow for richer narratives. But what really intereseted me was when I gave form to an idea in the diagrams, I was able to draw connections on an entirely new level—and communicate more effectively.

(Hat tip: Killgore.)

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519 comments

1 FurryOldGuyJeans  Sat, May 2, 2009 4:00:13pm

It’s simple, easy to understand, it’ll get ignored by most people.

2 Nevergiveup  Sat, May 2, 2009 4:00:56pm

Ha?

3 BlueCanuck  Sat, May 2, 2009 4:01:43pm

*mutter mutter* stupid work filters………

4 abolitionist  Sat, May 2, 2009 4:02:28pm

Awsome visual aide. Saw it yesterday.

5 pre-Boomer Marine brat  Sat, May 2, 2009 4:02:32pm

This is a GOOD one!
I’m not High Finance-minded, and I grasped it easily.

6 Sharmuta  Sat, May 2, 2009 4:02:45pm

That was very sobering.

7 pre-Boomer Marine brat  Sat, May 2, 2009 4:02:53pm

Thanks, Killgore!

8 Desert Dog  Sat, May 2, 2009 4:03:19pm

Nice find, KT

9 OldLineTexan  Sat, May 2, 2009 4:03:37pm

I like how the “less responsible” homeowners are fat and have lots more kids.

/

10 Desert Dog  Sat, May 2, 2009 4:04:18pm

re: #9 OldLineTexan

I like how the “less responsible” homeowners are fat and have lots more kids.

/

both parent’s smoking cigs too….

11 Killgore Trout  Sat, May 2, 2009 4:04:42pm

He really did a superb job. It’s a very complicated issue but he made it very easy to understand. There are a few missing details but overall it’s a great presentation.

12 Fenway_Nation  Sat, May 2, 2009 4:04:50pm

I checked the other day for rates on safe/conservative investments like US Savings Bonds (they get ‘re-set’ every May 1st and Nov 1st)- the fixed portion of the variable-rate Series I bond is 0.10% while the interest rate on a zero-coupon Series EE Bond is 1.64%.

Certificates of deposit aren’t much better, altho’ I had a feeling about the piss poor rates of return for the Savings Bonds by looking around at CD Rates prior to May 1st….

13 OldLineTexan  Sat, May 2, 2009 4:04:54pm

The house arrows are cool.

14 abolitionist  Sat, May 2, 2009 4:05:07pm

Oops. Didn’t see it yesterday.

15 Killgore Trout  Sat, May 2, 2009 4:05:11pm

re: #9 OldLineTexan

They are smoking and drinking soda too. Heh

16 pre-Boomer Marine brat  Sat, May 2, 2009 4:06:25pm

re: #6 Sharmuta

That was very sobering.

Makes me glad I’m renting now.

17 Gordon Marock  Sat, May 2, 2009 4:06:34pm

This is a great video, even for people like me who think they know about economics.

18 pre-Boomer Marine brat  Sat, May 2, 2009 4:06:49pm

re: #15 Killgore Trout

They are smoking and drinking soda too. Heh

And their kids are unruly.

19 OldLineTexan  Sat, May 2, 2009 4:07:31pm

OK, neat. Where’s the part about the social engineers making lenders loan to less-worthy risks?

20 Desert Dog  Sat, May 2, 2009 4:07:47pm

re: #12 Fenway_Nation

I checked the other day for rates on safe/conservative investments like US Savings Bonds (they get ‘re-set’ every May 1st and Nov 1st)- the fixed portion of the variable-rate Series I bond is 0.10% while the interest rate on a zero-coupon Series EE Bond is 1.64%.

Certificates of deposit aren’t much better, altho’ I had a feeling about the piss poor rates of return for the Savings Bonds by looking around at CD Rates prior to May 1st….

I would suggest the MJBOITB fund. They are performing just as well.

Mason
Jar
Buried
Out
In
The
Backyard
Fund

21 Desert Dog  Sat, May 2, 2009 4:08:31pm

re: #19 OldLineTexan

OK, neat. Where’s the part about the social engineers making lenders loan to less-worthy risks?

Kinda glossed over those bits. But it lays it out pretty well

22 Sharmuta  Sat, May 2, 2009 4:08:33pm

re: #16 pre-Boomer Marine brat

Makes me glad I’m renting now.

Me too.

23 pre-Boomer Marine brat  Sat, May 2, 2009 4:08:54pm

re: #19 OldLineTexan

OK, neat. Where’s the part about the social engineers making lenders loan to less-worthy risks?

Yes, that’s one of the things which isn’t in there.

24 albusteve  Sat, May 2, 2009 4:09:09pm

re: #19 OldLineTexan

OK, neat. Where’s the part about the social engineers making lenders loan to less-worthy risks?

conveniently left out…that would be partisan you know

25 OldLineTexan  Sat, May 2, 2009 4:09:16pm

re: #18 pre-Boomer Marine brat

And their kids are unruly.

Hmmm, a few perception clues.

You can all relax. My mortgage was paid on time, my kids are ruly, and I don’t smoke unless you set me on fire. But I do drink soda. Tonight is beer, however.

;)

26 BlueCanuck  Sat, May 2, 2009 4:09:31pm

re: #20 Desert Dog

I would suggest the MJBOITB fund. They are performing just as well.

Mason
Jar
Buried
Out
In
The
Backyard
Fund

Me, I am moving more towards the OSUM fund, and the CJF method as well.

/Old Sock Under the Matress and Coin Jar Fund…..

27 dave bean  Sat, May 2, 2009 4:09:44pm

It shows the mechanics but paints the bankers as the ones who started it all. BUT, the sub-prime mortgages was the trigger and a particular group of people wanted Fannie/Freddie to buy sub-prime in order for more “low income” people to purchase houses. Yea, the bankers were following the rules established by the Democrats.

Dave

28 OldLineTexan  Sat, May 2, 2009 4:09:47pm

re: #21 Desert Dog

Kinda glossed over those bits. But it lays it out pretty well

I wanna see the stickman of Bawney Fwank.

29 FurryOldGuyJeans  Sat, May 2, 2009 4:10:19pm

re: #12 Fenway_Nation

I checked the other day for rates on safe/conservative investments like US Savings Bonds (they get ‘re-set’ every May 1st and Nov 1st)- the fixed portion of the variable-rate Series I bond is 0.10% while the interest rate on a zero-coupon Series EE Bond is 1.64%.

Certificates of deposit aren’t much better, altho’ I had a feeling about the piss poor rates of return for the Savings Bonds by looking around at CD Rates prior to May 1st….

With a President and Congress actively trashing America and Capitalism, why should anyone want to invest in our future?

30 Desert Dog  Sat, May 2, 2009 4:10:25pm

re: #26 BlueCanuck

Me, I am moving more towards the OSUM fund, and the CJF method as well.

/Old Sock Under the Matress and Coin Jar Fund…..

Those two are equally safe as the MJBOIYB

31 Killian Bundy  Sat, May 2, 2009 4:10:44pm

Community Reinvestment Act

Youtube Video

/your government at work, pushing sub prime mortgages and then ignoring the problem, NINJA Loans, what could possibly go wrong?

32 FurryOldGuyJeans  Sat, May 2, 2009 4:11:32pm

re: #24 albusteve

conveniently left out…that would be partisan you know

Hard to make a claim of partisanship when both parties had their fingers in the pie.

33 OldLineTexan  Sat, May 2, 2009 4:11:48pm

re: #31 Killian Bundy

Community Reinvestment Act

Youtube Video

/your government at work, pushing sub prime mortgages and then ignoring the problem, NINJA Loans, what could possibly go wrong?

Oh noes, ninja loans sneek up on u and taek ur cheezburger!

/

34 Desert Dog  Sat, May 2, 2009 4:12:23pm

re: #31 Killian Bundy

Community Reinvestment Act

Youtube Video

/your government at work, pushing sub prime mortgages and then ignoring the problem, NINJA Loans, what could possibly go wrong?

But, it’s paved with good intentions

35 Killian Bundy  Sat, May 2, 2009 4:12:38pm

re: #31 Killian Bundy

Community Reinvestment Act

Youtube Video

/your government at work, pushing sub prime mortgages and then ignoring the problem, NINJA Loans, what could possibly go wrong?

Youtube Video

/preview

36 Bagua  Sat, May 2, 2009 4:12:48pm

This animation is rife with exaggeration and bias.

37 pre-Boomer Marine brat  Sat, May 2, 2009 4:13:36pm

re: #27 dave bean

the bankers were following the rules established by the Democrats.

There remains a question in my mind: … how many bankers did exactly what the presentation depicts, WITHOUT further prompting from the Democrats?

/I suspect there were more than a few

38 SasquatchOnSteroids  Sat, May 2, 2009 4:13:45pm

Everybody Rides ! Poor Credit ? No Credit ? NO PROBLEM !

~Joe Isuzu

39 Opilio  Sat, May 2, 2009 4:13:59pm

re: #36 Bagua

This animation is rife with exaggeration and bias.

Do tell.

40 JustMyView  Sat, May 2, 2009 4:14:22pm

I posted several links in response to iLikeCandy’s question on the last thread. Check it out.

41 FurryOldGuyJeans  Sat, May 2, 2009 4:14:56pm

re: #37 pre-Boomer Marine brat

There remains a question in my mind: … how many bankers did exactly what the presentation depicts, WITHOUT further prompting from the Democrats?

/I suspect there were more than a few

Mixing metaphors with abandon:

No matter how you slice it, it’s a crap sandwich all the way down.

42 Bagua  Sat, May 2, 2009 4:15:17pm

He completely misrepresents the decline in the housing market

43 pre-Boomer Marine brat  Sat, May 2, 2009 4:15:56pm

re: #39 Opilio

*grin*
(OT — that avatar !)

44 FurryOldGuyJeans  Sat, May 2, 2009 4:16:01pm

re: #36 Bagua

This animation is rife with exaggeration and bias.

Cite what they are, please, and include links.

45 Bagua  Sat, May 2, 2009 4:16:01pm

And worst of all, he completely misses the accountancy rule which is the actual cause.

46 Soona'  Sat, May 2, 2009 4:16:14pm

re: #19 OldLineTexan

OK, neat. Where’s the part about the social engineers making lenders loan to less-worthy risks?

That’s one of the main cornerstones of this whole mess. But the guy worked for UNICEF. This is more than I would have expected.

47 Desert Dog  Sat, May 2, 2009 4:16:25pm

re: #40 JustMyView

Those are great

48 FurryOldGuyJeans  Sat, May 2, 2009 4:16:44pm

re: #42 Bagua

He completely misrepresents the decline in the housing market

You have verifiable proof it is wrong? Link it.

49 quickjustice  Sat, May 2, 2009 4:17:17pm

Oversimplified, but an excellent video nonetheless. Videos are great teaching tools.

50 Bagua  Sat, May 2, 2009 4:17:45pm

re: #49 quickjustice

And good brainwashing when the goal is propaganda

51 quickjustice  Sat, May 2, 2009 4:17:57pm

re: #45 Bagua

Mark to market? I don’t think so!

52 JustMyView  Sat, May 2, 2009 4:18:02pm

Another perspective on the CRA.

53 pre-Boomer Marine brat  Sat, May 2, 2009 4:18:17pm

re: #42 Bagua

He completely misrepresents the decline in the housing market

Misrepresents, or (merely, for purposes of illustration) over-simplifies?

I’m out of touch — haven’t owned a house in 13 years.

54 FurryOldGuyJeans  Sat, May 2, 2009 4:18:28pm

re: #50 Bagua

And good brainwashing when the goal is propaganda

You have verifiable proof for what you are saying? Provide a link.

55 SasquatchOnSteroids  Sat, May 2, 2009 4:18:58pm

re: #49 quickjustice

Oversimplified, but an excellent video nonetheless. Videos are great teaching tools.

I try to tell my wife that. She still won’t watch ‘em.

//

56 FurryOldGuyJeans  Sat, May 2, 2009 4:19:06pm

re: #45 Bagua

And worst of all, he completely misses the accountancy rule which is the actual cause.

You have proof? Link it.

57 Killgore Trout  Sat, May 2, 2009 4:19:09pm

I know there’s a more politicized version of the credit crisis but it’s important to understand the basics. There’s a lot of blame to go around. I thought in the back of my mind that this might cause some trouble because it doesn’t blame liberals enough but it a basic depiction of what really happened.

58 quickjustice  Sat, May 2, 2009 4:19:15pm

re: #50 Bagua

If you don’t want downdings, start backing up your assertions.

59 JustMyView  Sat, May 2, 2009 4:20:06pm

re: #47 Desert Dog

Those are great

Yes, both films are very good. I still have to go through some of the other material, but I’ve seen it praised in a lot of different places. The Planet Money guys, in particular, have been getting a lot of press because their explanations are very helpful.

60 Bagua  Sat, May 2, 2009 4:20:31pm

re: #51 quickjustice

Mark to market? I don’t think so!

It is a debatable point, but a strong one and should not be missing.

61 FurryOldGuyJeans  Sat, May 2, 2009 4:21:11pm

re: #58 quickjustice

If you don’t want downdings, start backing up your assertions.

I don’t think they really care, they just want to troll.

62 Killian Bundy  Sat, May 2, 2009 4:21:21pm

re: #52 JustMyView

Another perspective on the CRA.

/go ahead, try and spin Freddie Mac and Fannie Mae now

63 pre-Boomer Marine brat  Sat, May 2, 2009 4:21:29pm

re: #57 Killgore Trout

I know there’s a more politicized version of the credit crisis but it’s important to understand the basics. There’s a lot of blame to go around. I thought in the back of my mind that this might cause some trouble because it doesn’t blame liberals enough but it a basic depiction of what really happened.

It’s good as that basic starting point. Every structure (and analysis) needs a foundation.

Thanks again.

64 FurryOldGuyJeans  Sat, May 2, 2009 4:21:52pm

re: #60 Bagua

It is a debatable point, but a strong one and should not be missing.

Since you are so knowledgeable, provide some links to enlighten and educate us poor deluded rubes.

65 Killgore Trout  Sat, May 2, 2009 4:22:36pm

re: #45 Bagua

It also didn’t address things like the Glass Steagall act and the uptick rule. A more important missing piece was what the hedge funds were doing with their unrated high risk CDO’s.

66 Killian Bundy  Sat, May 2, 2009 4:22:49pm

re: #57 Killgore Trout

I know there’s a more politicized version of the credit crisis but it’s important to understand the basics. There’s a lot of blame to go around. I thought in the back of my mind that this might cause some trouble because it doesn’t blame liberals enough but it a basic depiction of what really happened.

/it just misses the government enabling

67 FurryOldGuyJeans  Sat, May 2, 2009 4:22:50pm

re: #62 Killian Bundy

/go ahead, try and spin Freddie Mac and Fannie Mae now

That is all JMV is all about; spin, spin, spin, and even more spin. He covers a dick real well.

68 Bagua  Sat, May 2, 2009 4:23:07pm

re: #54 FurryOldGuyJeans

It’s an opinion, I’d be happy to explain.

And I never said anyone was a rube, just that the video author showed a lot of liberal bias and missed several key points.

69 itellu3times  Sat, May 2, 2009 4:23:22pm

re: #19 OldLineTexan

OK, neat. Where’s the part about the social engineers making lenders loan to less-worthy risks?

This is a pretty good little clip. He slides over a couple of issues, like the one you mention, but he also slides over a much bigger one, that the price levels became a bubble, people taking out oversized mortgages on tiny houses as speculators. He even touches on “market collapse”, although he doesn’t use the term. Doesn’t mention “mark to market”. Doesn’t delve into the fact that the houses still stand, through it all. Doesn’t mention bear raids and naked shorts against the banks. And I’d quibble on a couple of the numbers he uses in his examples.

However, he touches on more points, in as straightforward a manner, as I’ve ever seen.

70 eon  Sat, May 2, 2009 4:23:39pm

re: #45 Bagua

And worst of all, he completely misses the accountancy rule which is the actual cause.

In fact, the accountancy rule is being routinely ignored, at the behest of both politicians and the investment bankers- a fact that you won’t see mentioned in the MSM.

I found it in the Calgary Herald.

cheers

eon

71 Simply Me  Sat, May 2, 2009 4:24:05pm

re: #10 Desert Dog

re: #15 Killgore Trout

But married couples with more children haven’t been shown to be a problem, have they? This seems like an ugly dig at large families.

And even drinking sodas and smoking have nothing to do with mortgage risk, does it? I am thinking this is spreading the author’s personal stereotypes.

And the role of the government in encouraging the subprimes for low income minority homeowners is ignore. And where is ACORN?

Also, why are the investors depicted as if it weren’t us, our pensions and our IRA’s that take a hit.

72 ladycatnip  Sat, May 2, 2009 4:24:32pm

Charles,

What’s with muslima.com - a muslim matrimonial ad on your blog? I checked again to make sure I wasn’t seeing things and it was gone. But it was there.

73 pre-Boomer Marine brat  Sat, May 2, 2009 4:24:36pm

re: #41 FurryOldGuyJeans

Mixing metaphors with abandon:

No matter how you slice it, it’s a crap sandwich all the way down.

*crickets*
/just waiting for the thread to pass 100

74 FurryOldGuyJeans  Sat, May 2, 2009 4:25:01pm

re: #68 Bagua

It’s an opinion, I’d be happy to explain.

And I never said anyone was a rube, just that the video author showed a lot of liberal bias and missed several key points.

So you want us to accept your bias instead of someone else’s. Ok, I prefer to do the research and make up my own mind on the issues. But I can’t do that since you won’t provide links.

75 itellu3times  Sat, May 2, 2009 4:25:32pm

re: #65 Killgore Trout

It also didn’t address things like the Glass Steagall act and the uptick rule. A more important missing piece was what the hedge funds were doing with their unrated high risk CDO’s.

Right. They leveraged the leverages, and the CDS he mentioned collapsed on their own right (AIG). And some other stuff. Even so, a good clip on the basics.

76 quickjustice  Sat, May 2, 2009 4:25:39pm

re: #57 Killgore Trout

The politics start with who and what caused the creation of the subprime mortgages. As a conservative, I’d love to blame the CRA for forcing banks to make subprime mortgages, but statistically speaking, they were only about 10% of the problem.

The CRA did create a perverse incentive that galvanized competitors in the mortgage markets. Everyone had to compete with CRA mortgage rates and methodology (lack of sound underwriting), so everyone imitated them. And as the video pointed out, people packaging the toxic paper initially made a lot of money. So the problem spiraled out of control. Stupidity and greed are a toxic combination. And the politicians don’t have clean hands either.

77 Opilio  Sat, May 2, 2009 4:26:21pm

re: #65 Killgore Trout

It also didn’t address things like the Glass Steagall act and the uptick rule. A more important missing piece was what the hedge funds were doing with their unrated high risk CDO’s.

From the videographer’s site:

The Crisis of Credit Visualized distills the economic crisis into a short and simple story by giving it form.

To add a discussion of Mark-to-Market accountancy, Glass-Steagall, etc. would defeat his purpose in creating it.

78 pre-Boomer Marine brat  Sat, May 2, 2009 4:26:38pm

re: #72 ladycatnip

Charles,

What’s with muslima.com - a muslim matrimonial ad on your blog? I checked again to make sure I wasn’t seeing things and it was gone. But it was there.

I believe those are automatically stuck there, by the advertising provider.

79 albusteve  Sat, May 2, 2009 4:26:58pm

re: #66 Killian Bundy

/it just misses the government enabling

mostly democrats, on the take

80 itellu3times  Sat, May 2, 2009 4:27:12pm

re: #76 quickjustice

The politics start with who and what caused the creation of the subprime mortgages. As a conservative, I’d love to blame the CRA for forcing banks to make subprime mortgages, but statistically speaking, they were only about 10% of the problem.

The CRA did create a perverse incentive that galvanized competitors in the mortgage markets. Everyone had to compete with CRA mortgage rates and methodology (lack of sound underwriting), so everyone imitated them. And as the video pointed out, people packaging the toxic paper initially made a lot of money. So the problem spiraled out of control. Stupidity and greed are a toxic combination. And the politicians don’t have clean hands either.

I still assert that the basic concept of slicing CDOs into tranches, is flawed. And on top of the basic flaw, the interest paid on the risky trance, was waaaaay underpriced, and even Paulson said as much.

81 FurryOldGuyJeans  Sat, May 2, 2009 4:27:16pm

re: #77 Opilio

To add a discussion of Mark-to-Market accountancy, Glass-Steagall, etc. would defeat his purpose in creating it.

Something a few posters here seem to want to ignore so they can bash the bias of the piece.

82 Soona'  Sat, May 2, 2009 4:27:39pm

re: #62 Killian Bundy

/go ahead, try and spin Freddie Mac and Fannie Mae now

I just flashed on a memory of about six years ago about a local news report here in Okla. City that was flush with praises on the “new and imaginative” ways that mortgages were being financed. Funny how things change.

83 itellu3times  Sat, May 2, 2009 4:28:27pm
84 Bagua  Sat, May 2, 2009 4:29:40pm

re: #69 itellu3times

Yes, exactly.

Why I’m flagging it as propaganda is it attempts to give the “idiots guide” for the voting public, thus it is very useful to those who would like to overemphasize the responsibility of the fat, evil bankers and minimise the effect of the politicians, Ratings Agencies, Governmental Regulators, NGOs, non-elected international Regulators, the EU, Basel II,… the list goes on.

Meanwhile, he even slips in little visual canards, the responsible home owner is thin and has only one child, the irresponsible home owner is fat, and smoking and drinking and has “horror” three kids.

85 FurryOldGuyJeans  Sat, May 2, 2009 4:30:29pm

Hey, Bagua! You gonna provide us with some links so we all here can decide for ourselves if the video is wrong or not? Or are you going to just fart and depart so we get left with only your troll stink?

86 ladycatnip  Sat, May 2, 2009 4:30:36pm

#78 pre-Boomer Marine brat

I believe those are automatically stuck there, by the advertising provider.

It was creepy and totally out of sync here. Seems one would have some control over what is advertised - it’s certainly never happened before and I’ve been a member here since 2004.

87 Bagua  Sat, May 2, 2009 4:30:42pm

re: #74 FurryOldGuyJeans

So you want us to accept your bias instead of someone else’s. Ok, I prefer to do the research and make up my own mind on the issues. But I can’t do that since you won’t provide links.

Common mate, I’m trying to reply, I can only type so fast.

88 Bloodnok  Sat, May 2, 2009 4:30:54pm

re: #84 Bagua

Back away from the computer slowly. Take a deep breath. Wipe the dribble from your chin.

Feel better now?

Continue.

89 quickjustice  Sat, May 2, 2009 4:30:59pm

re: #80 itellu3times

You’re right of course, but I’d simplify your points by saying that they completely missed the risks they were assuming.

90 pre-Boomer Marine brat  Sat, May 2, 2009 4:31:00pm

re: #82 Soona’

I just flashed on a memory of about six years ago about a local news report here in Okla. City that was flush with praises on the “new and imaginative” ways that mortgages were being financed. Funny how things change.

Yeah, “new and imaginative”.

Mid-80s, my ex and I had a house come back on us — bought by an extremely-leverage investor who was counting on prices to rise and rise and rise. Greed loves “new and imaginative”.

91 shug  Sat, May 2, 2009 4:31:12pm

So the problem is : fat cigarette smoking parents with too many children

got it

92 Opilio  Sat, May 2, 2009 4:31:33pm

re: #71 Simply Me

re: #15 Killgore Trout

But married couples with more children haven’t been shown to be a problem, have they? This seems like an ugly dig at large families.

And even drinking sodas and smoking have nothing to do with mortgage risk, does it? I am thinking this is spreading the author’s personal stereotypes.

And the role of the government in encouraging the subprimes for low income minority homeowners is ignore. And where is ACORN?

Also, why are the investors depicted as if it weren’t us, our pensions and our IRA’s that take a hit.

When I saw the depiction of the “less responsible” family, I had to smile. In this age of political correctness, any depiction is going to raise someone’s hackles.

93 ibmkeyboard  Sat, May 2, 2009 4:31:41pm

excellent visual

Now I understand how the street vending mortgage dealers
located beside our small town gas station went belly up with my hard earned AIG job and investments.

Now if I can figure out how to box Apple i Phones,
cut them into 3 slices-
have the SEC to approve my idea.

happy days will be here again.

94 Wasta  Sat, May 2, 2009 4:31:46pm

I think if you look at the one image where the cost of the house goes from $300K to $90K is more than a bit of an exaggeration…not saying houses can’t lose 70% in value, but I don’t know of any in my neck of the woods….but give the govt time….

/

95 FurryOldGuyJeans  Sat, May 2, 2009 4:32:49pm

re: #88 Bloodnok

Back away from the computer slowly. Take a deep breath. Wipe the dribble from your chin.

Feel better now?

Continue.

More flatulence about how correct HE is, and yet still wants us to take it on faith because we won’t provide any independently verifiable material.

96 Randall Gross  Sat, May 2, 2009 4:33:06pm

This was very well done, just a couple of ingredients missing in the tale, how the safties came off the CDO’s, and the initial overpressure event that started the cascade to black swandom.

97 Bagua  Sat, May 2, 2009 4:33:16pm

re: #85 FurryOldGuyJeans

Hey, Bagua! You gonna provide us with some links so we all here can decide for ourselves if the video is wrong or not? Or are you going to just fart and depart so we get left with only your troll stink?

Wow, that’s really hostile and unnecessary, I’m happy to explain my views but I’ll not chat on that level.

98 Slumbering Behemoth Stinks  Sat, May 2, 2009 4:33:39pm

re: #72 ladycatnip

Charles is running a mail-order bride service.
////

Internet ads are a funny thing. They pop up according to words used on a blog and the end user’s (you) search terms.

99 Dave the.....  Sat, May 2, 2009 4:33:51pm

Went to the Tax Cut rally in St Paul Minnesota today. A few kooks showed up. The Ron Paul people had a tent. And some guy was handing out flyers that said the income tax is unconstitutional so you don’t have to pay it.

But otherwise it was fine. The governor spoke. And the center-right candidate for mayor, one Eva Ng, talked. She was quite impressive. But as a minority female, I hope she is ready for personal attacks by the left.

evaformayor.com

100 Bagua  Sat, May 2, 2009 4:34:26pm

re: #94 Wasta

I think if you look at the one image where the cost of the house goes from $300K to $90K is more than a bit of an exaggeration…not saying houses can’t lose 70% in value, but I don’t know of any in my neck of the woods….but give the govt time….

/

Exactly, that was one of them, elsewhere he called the mortgages “worthless”. Lots of exaggerations like that.

101 quickjustice  Sat, May 2, 2009 4:34:28pm

re: #92 Opilio

Saturday Night Live did something similar. I thought it was humorous. How do you graphically depict an unemployed homeowner who’s been given a no down payment mortgage loan on a home he or she obviously can’t afford? This worked as well as anything.

102 FurryOldGuyJeans  Sat, May 2, 2009 4:35:07pm

re: #97 Bagua

Wow, that’s really hostile and unnecessary, I’m happy to explain my views but I’ll not chat on that level.

You make some very sharp claims. By the rules here you need to provide links to back up what you are saying. I am harsh because you keep making the same claim over and over again with no way to verify what you say. If you find that harsh, not my problem, tis the rules of the game here.

103 pre-Boomer Marine brat  Sat, May 2, 2009 4:36:26pm

re: #86 ladycatnip

#78 pre-Boomer Marine brat


It was creepy and totally out of sync here. Seems one would have some control over what is advertised - it’s certainly never happened before and I’ve been a member here since 2004.

A few days ago, we were seeing ads for creationist stuff.
Google Ads, I think.

104 abolitionist  Sat, May 2, 2009 4:36:52pm

re: #83 itellu3times

The Onion.

105 Slumbering Behemoth Stinks  Sat, May 2, 2009 4:37:18pm

re: #92 Opilio

When I saw the depiction of the “less responsible” family, I had to smile. In this age of political correctness, any depiction is going to raise someone’s hackles.

People looking for offense will always find it.

106 FurryOldGuyJeans  Sat, May 2, 2009 4:37:28pm

re: #104 abolitionist

The Onion.

The title of the article made no sense otherwise, typical for the Onion. ;)

107 Sharmuta  Sat, May 2, 2009 4:37:29pm

re: #103 pre-Boomer Marine brat

A few days ago, we were seeing ads for creationist stuff.
Google Ads, I think.

I see Ann Coulter on the “On Hating Nazis” thread.

108 Soona'  Sat, May 2, 2009 4:38:04pm

re: #98 Slumbering Behemoth

Charles is running a mail-order bride service.
////

Internet ads are a funny thing. They pop up according to words used on a blog and the end user’s (you) search terms.

Is it like Beetlejuice? Islamic marriage. Islamic marriage. Islamic marriage.

109 FurryOldGuyJeans  Sat, May 2, 2009 4:38:09pm

re: #105 Slumbering Behemoth

People looking for offense will always find it.

What you mean by that?!? I am DEEPLY offended by what you just said! ;)

110 Slumbering Behemoth Stinks  Sat, May 2, 2009 4:38:38pm

re: #107 Sharmuta

I see Ann Coulter on the “On Hating Nazis” thread.

Ha! Coincidence? You decide.
/

111 FurryOldGuyJeans  Sat, May 2, 2009 4:38:41pm

re: #107 Sharmuta

I see Ann Coulter on the “On Hating Nazis” thread.

The real one, or a lizard named Ann?

112 Simply Me  Sat, May 2, 2009 4:38:59pm

re: #84 Bagua

I would add one more responsible party — the liars who signed mortgage documents claiming income and assets they did not have. These were called “liar loans” for a reason. I have no knowledge that the people were overweight or smoked or had lots of children, BUT I do know that they were lying and committing fraud when they signed legal documents attesting to those lies.

113 Bagua  Sat, May 2, 2009 4:39:11pm

re: #102 FurryOldGuyJeans

You make some very sharp claims. By the rules here you need to provide links to back up what you are saying. I am harsh because you keep making the same claim over and over again with no way to verify what you say. If you find that harsh, not my problem, tis the rules of the game here.

Look my friend, Shrug just made one of my points, Wasta made one, you made one, and I’m happy to explain any point I made… and I’m happy to have you disagree and chat, but I don’t need orders or to respond to hostility when I’m only offering an opinion to those I enjoy exchanging ideas with.

114 pre-Boomer Marine brat  Sat, May 2, 2009 4:39:35pm

re: #104 abolitionist

The Onion.

Aw, come on! Don’t spoil it!
:D

115 JacksonTn  Sat, May 2, 2009 4:39:38pm

re: #111 FurryOldGuyJeans

The real one, or a lizard named Ann?

FOGJ … is there a “real” Ann? … I am not so sure about that …

116 Slumbering Behemoth Stinks  Sat, May 2, 2009 4:40:09pm

re: #109 FurryOldGuyJeans

What you mean by that?!? I am DEEPLY offended by what you just said! ;)

I am gravely offended by your offense!

/perpetual motion

117 eon  Sat, May 2, 2009 4:40:14pm

re: #94 Wasta

I think if you look at the one image where the cost of the house goes from $300K to $90K is more than a bit of an exaggeration…not saying houses can’t lose 70% in value, but I don’t know of any in my neck of the woods….but give the govt time….

/

Once such a local housing value “bubble” collapses, the usual next step by local government is to try to avoid a downturn in property tax revenues by either (a) raising existing tax percentages, (b) creating new “temporary” property taxes, (c) artificially inflating the assessed value of homes to force their owners to pay more in property taxes at the existing rates, or (d) some combination of two or more of the above.

Around here, we’ve seen all of the above in the last decade, often repeatedly. According to my local treasurer, my property is now worth a third more that I actually paid for it- in a declining housing market.

/ Fortunately for me, my mortgage is much smaller than the original purchase price. Other people are not so fortunate.

cheers

eon

118 pre-Boomer Marine brat  Sat, May 2, 2009 4:41:44pm

re: #107 Sharmuta

I see Ann Coulter on the “On Hating Nazis” thread.

Yeah. Coulter at the top of one of those pages DOES open up my eyes.

119 BlueCanuck  Sat, May 2, 2009 4:41:54pm

re: #116 Slumbering Behemoth

I am gravely offended by your offense!

/perpetual motion

I am offended at your offense to the offended.

/now what were we offended at again.
//*scratches head*

120 Slumbering Behemoth Stinks  Sat, May 2, 2009 4:42:08pm

re: #108 Soona’

Is it like Beetlejuice? Islamic marriage. Islamic marriage. Islamic marriage.

Pretty much. Internet ad services will target ads at the end user based on search terms and website visits.

121 Noam Sayin'  Sat, May 2, 2009 4:43:02pm

re: #99 Dave the…..

I got a pocket constitution.

122 ladycatnip  Sat, May 2, 2009 4:43:06pm

#98 Slumbering Behemoth

#72 ladycatnip

Charles is running a mail-order bride service.
////

LOL - have to admit I almost fell off my chair when I saw the pic of a woman in a headscarf and “Matrimonial Service” attached to it. I wonder if muslim sites get Jewish ads on them. I doubt it.

It was bizarre. It doesn’t belong on this site any more than a Jewish dating service on a muslim site or an ad for James Dobson on Daily Kos.

123 Noam Sayin'  Sat, May 2, 2009 4:43:21pm

Constitution.

124 FurryOldGuyJeans  Sat, May 2, 2009 4:43:21pm

Ok, the sky is REALLY falling here. Hailstones galore. :

125 Soona'  Sat, May 2, 2009 4:43:35pm

re: #117 eon

Once such a local housing value “bubble” collapses, the usual next step by local government is to try to avoid a downturn in property tax revenues by either (a) raising existing tax percentages, (b) creating new “temporary” property taxes, (c) artificially inflating the assessed value of homes to force their owners to pay more in property taxes at the existing rates, or (d) some combination of two or more of the above.

Around here, we’ve seen all of the above in the last decade, often repeatedly. According to my local treasurer, my property is now worth a third more that I actually paid for it- in a declining housing market.

/ Fortunately for me, my mortgage is much smaller than the original purchase price. Other people are not so fortunate.

cheers

eon

That’s exactly what’s happening in my area also.

126 JacksonTn  Sat, May 2, 2009 4:43:58pm

re: #124 FurryOldGuyJeans

Ok, the sky is REALLY falling here. Hailstones galore. :

FOGJ … you better duck … tornado coming …

127 FurryOldGuyJeans  Sat, May 2, 2009 4:44:00pm

re: #115 JacksonTn

FOGJ … is there a “real” Ann? … I am not so sure about that …

By real I mean the one that writes the books and pimps them on Fox.

128 Slumbering Behemoth Stinks  Sat, May 2, 2009 4:44:04pm

re: #119 BlueCanuck

And I am offended by your offense of being offended by…

Aw nuts! I lost my place. Let’s start over.
/

129 Dr. Shalit  Sat, May 2, 2009 4:44:29pm

re: #1 FurryOldGuyJeans

It’s simple, easy to understand, it’ll get ignored by most people.

FurryOldGuyJeans -

I RAN on a platform of extending Home Ownership for the NJ Assembly in 1981. My Platform assumed a working John and Jane who “didn’t have the downstroke” and were otherwise OK. THAT PROGRAM would have worked, in fact it DID. Everything after that was a risk, like DUH!

-S-

130 Fenway_Nation  Sat, May 2, 2009 4:44:36pm

re: #118 pre-Boomer Marine brat

The Muslim Matrimonial ads can’t be any worse than the 0bama-worshipping books on Amazon that were posted up there immediately after his coronation.

Altho’ I did chuckle when the same books showed up in another ad a few weeks later anywhere from 33% to 75% off.

131 Cato the Elder  Sat, May 2, 2009 4:45:02pm

For those interest in graphic depictions of complex realities as an art and a science, you really owe it to yourselves to check out the work of Edward Tufte. He is unbelievably good.

If you attend one of his famous seminars, you get a suitable-for-framing facsimile of one of the most stunning graphics ever created, Charles Minard’s 1861 chart of Napoleon’s catastrophic Russian campaign.

The creator, Charles Joseph Minard, captured four different changing variables that contributed to the failure, in a single two-dimensional image: the army’s direction as they traveled, the location the troops passed through, the size of the army as troops died from hunger and wounds, and the freezing temperatures they experienced.

And here is a witty article by Tufte on why PowerPoint is evil.

Science!

132 pre-Boomer Marine brat  Sat, May 2, 2009 4:45:18pm

re: #128 Slumbering Behemoth

And I am offended by your offense of being offended by…

Aw nuts! I lost my place. Let’s start over.
/

“offend” just went off the end

133 FurryOldGuyJeans  Sat, May 2, 2009 4:45:24pm

re: #119 BlueCanuck

I am offended at your offense to the offended.

/now what were we offended at again.
//*scratches head*

You show just disrespect to the great turtle stack by your display of offense! Ai-ai-ai-ai-ai!

134 JacksonTn  Sat, May 2, 2009 4:45:25pm

re: #127 FurryOldGuyJeans

By real I mean the one that writes the books and pimps them on Fox.

FOGJ … that is who I was talking about too … not so sure she is a “real” person … robot maybe … she is crazy … just my opinion … (before Ann people bash me)

135 Bagua  Sat, May 2, 2009 4:45:26pm

re: #112 Simply Me

I would add one more responsible party — the liars who signed mortgage documents claiming income and assets they did not have. These were called “liar loans” for a reason. I have no knowledge that the people were overweight or smoked or had lots of children, BUT I do know that they were lying and committing fraud when they signed legal documents attesting to those lies.

Yup, them too.

And, it is a good animation, and it does describe several elements well, but it also leaves out some telling ones and no surprise this guy worked for the UN.

136 Slumbering Behemoth Stinks  Sat, May 2, 2009 4:45:39pm

re: #122 ladycatnip

Ad money is ad money. Charles doesn’t get to decide what the ad service pimps.

137 Dave the.....  Sat, May 2, 2009 4:46:42pm

Noam…..I got three. They were so nice that I couldn’t turn them down.

Best signs?

“Nationalized health care….do you want Barney Frank given you a colonospacy” (that is so far off, that not even Charles spell checker can fix it).

And something about “A community organizer of CEO of a car company is as bad as a B list comedian as a Minnesota Senator”.

138 FurryOldGuyJeans  Sat, May 2, 2009 4:46:42pm

re: #126 JacksonTn

FOGJ … you better duck … tornado coming …

More like an earthquake since this is the Great NorthWet here.

Not that tornadoes have never been seen here, just rarer than earthquakes.

139 JacksonTn  Sat, May 2, 2009 4:46:50pm

re: #136 Slumbering Behemoth

Ad money is ad money. Charles doesn’t get to decide what the ad service pimps.

SB … do you get paid per click … so if we just click on it he gets paid … if so click away … or do you have to purchase something …

140 vxbush  Sat, May 2, 2009 4:47:01pm

re: #131 Cato the Elder

For those interest in graphic depictions of complex realities as an art and a science, you really owe it to yourselves to check out the work of Edward Tufte. He is unbelievably good.

If you attend one of his famous seminars, you get a suitable-for-framing facsimile of one of the most stunning graphics ever created, Charles Minard’s 1861 chart of Napoleon’s catastrophic Russian campaign.

And here is a witty article by Tufte on why PowerPoint is evil.

Science!

Tufte is absolutely fantastic. A thousand updings for mentioning him. I’ve studied his work to avoid the big errors.

141 rain of lead  Sat, May 2, 2009 4:47:01pm

re: #134 JacksonTn

FOGJ … that is who I was talking about too … not so sure she is a “real” person … robot maybe … she is crazy … just my opinion … (before Ann people bash me)

you got sumpthin against crazy robots? ;)

142 ladycatnip  Sat, May 2, 2009 4:47:22pm

#130 Fenway_Nation

The Muslim Matrimonial ads can’t be any worse than the 0bama-worshipping books on Amazon that were posted up there immediately after his coronation.

Amazon is more of a neutral site - it carries books from every walk of life, religion etc. For an advertiser to put a muslim matrimonal service on this site is ridiculous. Right under the ad there was an anti-jihad link. Kinda fries the mind.

143 JacksonTn  Sat, May 2, 2009 4:47:59pm

re: #141 rain of lead

you got sumpthin against crazy robots? ;)

RoL …no … actually I would prefer a crazy robot to Ann …

144 Slumbering Behemoth Stinks  Sat, May 2, 2009 4:48:29pm

re: #139 JacksonTn

SB … do you get paid per click … so if we just click on it he gets paid … if so click away … or do you have to purchase something …

I am not really sure, and Charles has stated that his contract with the service forbids him to talk about that.

145 FurryOldGuyJeans  Sat, May 2, 2009 4:48:30pm

re: #134 JacksonTn

FOGJ … that is who I was talking about too … not so sure she is a “real” person … robot maybe … she is crazy … just my opinion … (before Ann people bash me)

Oh, I am just so OFFENDED by your disrespect for the Great and Terrible Ann Coulter! (Ignore the *whatthehellisit* behind the curtain!)

146 pre-Boomer Marine brat  Sat, May 2, 2009 4:48:31pm

re: #130 Fenway_Nation

The Muslim Matrimonial ads can’t be any worse than the 0bama-worshipping books on Amazon that were posted up there immediately after his coronation.

Altho’ I did chuckle when the same books showed up in another ad a few weeks later anywhere from 33% to 75% off.

Sales? Oh, they’re fine.
We’re merely giving the faithful a price break.
They’re fine … they really are … yes, they are … *crickets*

147 BlueCanuck  Sat, May 2, 2009 4:48:40pm

re: #133 FurryOldGuyJeans

Turtle stack? Is that a new menu item at IHOP?

148 Randall Gross  Sat, May 2, 2009 4:49:16pm

Just to correct some misconceptions: while there is and was some mortgage fraud out there, it’s a percent of a percent, it’s not the norm. (great blog for tracking mortgage scams here.)

Most of the mortgages were to people who could in theory afford them, but they weren’t the best risk for credit. What started the Black Swan downstream towards them was a couple of years of highly inflated energy prices. Those peak oil chaps didn’t help, but it would have occurred even without them. Once people were paying four to five times their mortgage rate in energy every month the default cascade started. Had energy prices lowered for a long period, this would not have been as bad or it might not have happened at all. So energy prices created overpressure, leading to defaults. Not the cause of this, just the straw so to speak.

Second many of the CDO’s themselves got over-rated, and the safety checks and monitoring that should have prevented that was asleep at the wheel.

149 FurryOldGuyJeans  Sat, May 2, 2009 4:49:35pm

re: #147 BlueCanuck

Turtle stack? Is that a new menu item at IHOP?

You have offended the great turtle stack! Into a pool full of warm yogurt with you!

150 MacDuff  Sat, May 2, 2009 4:50:04pm

re: #100 Bagua

Exactly, that was one of them, elsewhere he called the mortgages “worthless”. Lots of exaggerations like that.

In all fairness, I think that the point of this clip was to give people who are not steeped in the acronyms, intricacies and arcane workings of financial markets a basic idea of why we are up to our ears in shit at this particular moment. Identifying whose shit it is, wasn’t really the point.

I think that goal was achieved.

151 Slumbering Behemoth Stinks  Sat, May 2, 2009 4:50:04pm

re: #147 BlueCanuck

Turtle stack? Is that a new menu item at IHOP?

Now you’ve done it! I’m telling JCM about you, infidel!

152 SasquatchOnSteroids  Sat, May 2, 2009 4:50:08pm

re: #141 rain of lead

you got sumpthin against crazy robots? ;)

Robot Repair

It’s NOT about repairing robots !

153 bungie  Sat, May 2, 2009 4:50:55pm

re: #94 Wasta

I think if you look at the one image where the cost of the house goes from $300K to $90K is more than a bit of an exaggeration…not saying houses can’t lose 70% in value, but I don’t know of any in my neck of the woods….but give the govt time….

/

I don’t know where your “neck of the woods” is, but they have here in Arizona. Depending on where, there are houses in Maricopa, Arizona (a suburb of Phoenix) where the house values tanked like that (The New York Times did a long piece on it in their Sunday Magazine 5 or 6 months ago.) And I understand, Nevada is worse.

154 itellu3times  Sat, May 2, 2009 4:51:34pm

re: #84 Bagua

Yes, exactly.

Why I’m flagging it as propaganda is it attempts to give the “idiots guide” for the voting public, thus it is very useful to those who would like to overemphasize the responsibility of the fat, evil bankers and minimise the effect of the politicians, Ratings Agencies, Governmental Regulators, NGOs, non-elected international Regulators, the EU, Basel II,… the list goes on.

Meanwhile, he even slips in little visual canards, the responsible home owner is thin and has only one child, the irresponsible home owner is fat, and smoking and drinking and has “horror” three kids.

Well, I’m on his side in all of these. I blame the bankers most of all. They have given capitalism a bad name for all time - as stupid and greedy above efficient. I do not expect government to lead (eg, regulate) proactively in these areas. Every senior officer of every major financial institution, should be found both criminally and civilly liable on a dozen counts.

155 BlueCanuck  Sat, May 2, 2009 4:51:41pm

re: #149 FurryOldGuyJeans

Warm yoghurt? *shudder*

/as long as it’s none of that fruit on the bottom stuff I should be okayish…
//is it anything like swamps?

156 FurryOldGuyJeans  Sat, May 2, 2009 4:51:43pm

re: #150 MacDuff

In all fairness, I think that the point of this clip was to give people who are not steeped in the acronyms, intricacies and arcane workings of financial markets a basic idea of why we are up to our ears in shit at this particular moment. Identifying whose shit it is, wasn’t really the point.

I think that goal was achieved.

Economic Crisis for Dummies it is, now comes time for the follow-up: Congressional Economic Fuck-ups 101.

157 BlueCanuck  Sat, May 2, 2009 4:52:06pm

re: #151 Slumbering Behemoth

Go ahead, I have been threatened with worse already. :)

158 FurryOldGuyJeans  Sat, May 2, 2009 4:53:02pm

re: #155 BlueCanuck

Warm yoghurt? *shudder*

/as long as it’s none of that fruit on the bottom stuff I should be okayish…
//is it anything like swamps?

Chock full of proper fermenting fruit, just for such a blasphemer as yourself.

159 Dave the.....  Sat, May 2, 2009 4:53:10pm

Thanos, the whole thing on how much wealth the high energy prices ate up is interesting. How much economic activity was killed by that. Then the reverse…..now that prices have fallen, you would think it is like a massive subsidy to the economy (but one that doesn’t involve borrowing money from the Chinese).

160 eon  Sat, May 2, 2009 4:53:10pm

Well, I’m off for the night, as I have to be up early tomorrow.

Good night, Lizards.

Sleep tight.

cheers

eon

161 Slumbering Behemoth Stinks  Sat, May 2, 2009 4:53:37pm

re: #157 BlueCanuck

You’ll wish you hadn’t said that when the High Priest of The Holy Stack is through with you.

162 FurryOldGuyJeans  Sat, May 2, 2009 4:53:47pm

re: #157 BlueCanuck

Go ahead, I have been threatened with worse already. :)

And, prey (sic) tell, just what would you consider worse, hmm? ;)

163 albusteve  Sat, May 2, 2009 4:54:05pm

Iran…sick mfr’s


foxnews.com

164 itellu3times  Sat, May 2, 2009 4:54:06pm

re: #148 Thanos

Just to correct some misconceptions: while there is and was some mortgage fraud out there, it’s a percent of a percent, it’s not the norm.

Have to disagree there, fraud was a large factor from early in the bubble, and some ridiculous proportion of the loans that Countrywide made in the later months never had even the first payment made!

165 Bagua  Sat, May 2, 2009 4:54:43pm

re: #148 Thanos

Exactly, and add to that lack of coordination by several governmental and quasi-governmental regulators and you have the beginnings of a good overview of the crisis.

“Make everything as simple as possible, but not simpler” ~ Albert Einstein

166 pre-Boomer Marine brat  Sat, May 2, 2009 4:54:43pm

re: #131 Cato the Elder

For those interest in graphic depictions of complex realities as an art and a science, you really owe it to yourselves to check out the work of Edward Tufte. He is unbelievably good.

If you attend one of his famous seminars, you get a suitable-for-framing facsimile of one of the most stunning graphics ever created, Charles Minard’s 1861 chart of Napoleon’s catastrophic Russian campaign.


And here is a witty article by Tufte on why PowerPoint is evil.

Science!

Thanks for that!

167 rain of lead  Sat, May 2, 2009 4:54:53pm

ahhhh…..
kids in the tub
cat is asleep at my feet
nascar on the tube
LGF on the ‘puter
life is good

168 BlueCanuck  Sat, May 2, 2009 4:55:02pm

What I find funny about the whole mortgage crisis and bubble is that no one saw it coming. I mean the signs have been there for years. Remember the late 70’s early 80’s when house prices really started to sky rocket? There was a reason for that. Not enough houses, and too many people looking for houses. Now 20+ years later there is a glut on the market, and not as many people looking for property.

169 BlueCanuck  Sat, May 2, 2009 4:55:54pm

re: #162 FurryOldGuyJeans

And, prey (sic) tell, just what would you consider worse, hmm? ;)

Please, please, don’t throw me in the briar patch Bre’er Fox. Anything but that.

/heh

170 Bloodnok  Sat, May 2, 2009 4:55:55pm

I think the creator of the video was wise not to inject politics into this lest it be attacked by one side or the other on political grounds. It’s from the perspective of the banking industry. And, like it or not, banks will do this kind of thing without politics in mind and the politics will follow where the money goes.

IMO, the CRA and the relaxed lending policies tilled and fertilized the soil that allowed this to grow. But it was the demand from the Investment Bankers and big institutions that made it grow exponentially. The government meddling impact would have topped out at “Really Bad Housing Market” under normal conditions. But the actions of the banks in demanding more and more loans and then lying about the valuations and turning these mortgages into multi-billion dollar pools turned this into a catastrophe of the banking industry.

171 MacDuff  Sat, May 2, 2009 4:56:05pm

re: #156 FurryOldGuyJeans

Economic Crisis for Dummies it is, now comes time for the follow-up: Congressional Economic Fuck-ups 101.

Agreed, and we should be on it like stink on…….well, shit.

172 Cato the Elder  Sat, May 2, 2009 4:56:34pm

re: #112 Simply Me

I would add one more responsible party — the liars who signed mortgage documents claiming income and assets they did not have. These were called “liar loans” for a reason. I have no knowledge that the people were overweight or smoked or had lots of children, BUT I do know that they were lying and committing fraud when they signed legal documents attesting to those lies.

And I personally know one man who got out of the mortgage business and became a writer because it was the real-estate agents, the bankers and mortgage officers and sundry other “respectable” “professions” that not only aided and abetted, but suggested, instigated, encouraged and facilitated the lies, and promised they wouldn’t matter, and told clients that everyone was doing it, and high-pressured people into “going for it” as part of the “American Dream”, and made fortunes in the process.

This particular man couldn’t stand looking at himself in the mirror after a while. The things he did make Jack the Glad-Handing Used Car Salesman look like Mother Teresa. And he was not at all surprised when the bottom fell out.

If you put every shady “realtor” in jail for six weeks on a rotating schedule, we’d still have to build another threescore prisons with the capacity of Attica to manage the influx.

Spit.

173 Soona'  Sat, May 2, 2009 4:56:59pm

re: #154 itellu3times

Well, I’m on his side in all of these. I blame the bankers most of all. They have given capitalism a bad name for all time - as stupid and greedy above efficient. I do not expect government to lead (eg, regulate) proactively in these areas. Every senior officer of every major financial institution, should be found both criminally and civilly liable on a dozen counts.

And Barney Frank, Chris Dodd, Barak Obama, naming only a few democrat politicians who encouraged all this, should go scott free.

174 Irenicum  Sat, May 2, 2009 4:57:05pm

Wow! Thanks for the link. As a visual learner, this helps to conceptualize the whole shebang. There are probably a dozen for sale signs on my block alone. This is a weird time indeed.

175 itellu3times  Sat, May 2, 2009 4:57:34pm

re: #168 BlueCanuck

What I find funny about the whole mortgage crisis and bubble is that no one saw it coming. I mean the signs have been there for years. Remember the late 70’s early 80’s when house prices really started to sky rocket? There was a reason for that. Not enough houses, and too many people looking for houses. Now 20+ years later there is a glut on the market, and not as many people looking for property.

EVERYONE in the business knew a crash was coming, as in the bubble bursting, but what NOBODY foresaw was the market failure that killed off the major institutions.

176 FurryOldGuyJeans  Sat, May 2, 2009 4:57:45pm

re: #168 BlueCanuck

What I find funny about the whole mortgage crisis and bubble is that no one saw it coming. I mean the signs have been there for years. Remember the late 70’s early 80’s when house prices really started to sky rocket? There was a reason for that. Not enough houses, and too many people looking for houses. Now 20+ years later there is a glut on the market, and not as many people looking for property.

The market was supernova hot, at least here in my part of the Great NorthWet, right up until the bubble burst. People expected the bubble to keep growing, not ever burst. Kinda ironic considering we were hurt so bad just a while back when the tech bubble went kablooey.

177 JacksonTn  Sat, May 2, 2009 4:58:00pm

re: #167 rain of lead

ahhhh…..
kids in the tub
cat is asleep at my feet
nascar on the tube
LGF on the ‘puter
life is good

RoL … hmm .. sounds like you just might be a clinging redneck … a happy clinging redneck …

/ that is for the bodybuilder comment !

178 albusteve  Sat, May 2, 2009 4:58:12pm

re: #173 Soona’

And Barney Frank, Chris Dodd, Barak Obama, naming only a few democrat politicians who encouraged all this, should go scott free.

yes but it was not a bipartisan affair we’re told

179 Randall Gross  Sat, May 2, 2009 4:58:15pm

re: #154 itellu3times

I think the risk managers are mostly at fault. That covers the whole chain from the banker to the far investors.

180 FurryOldGuyJeans  Sat, May 2, 2009 4:58:17pm

re: #171 MacDuff

Agreed, and we should be on it like stink on…….well, shit.

I’ve heard like flies on shit. ;)

181 Bagua  Sat, May 2, 2009 4:58:21pm

re: #150 MacDuff

In all fairness, I think that the point of this clip was to give people who are not steeped in the acronyms, intricacies and arcane workings of financial markets a basic idea of why we are up to our ears in shit at this particular moment. Identifying whose shit it is, wasn’t really the point.

I think that goal was achieved.

Maybe I’m being too harsh, but look at the media and politicians using this as a “beneficial crisis” to bring on sweeping changes in finance and capitalism, with the attempt being to blame everything on the evil, fat bankers and capitalists.

While this is an excellent animation, and makes several good points, I do see it as reflecting the bias by way of omission, plus adding a couple of snarky points that other have highlighted, such as who is depicted as fat and thin.

182 rain of lead  Sat, May 2, 2009 4:58:58pm

re: #177 JacksonTn

hahahaha
fair enough.

183 FurryOldGuyJeans  Sat, May 2, 2009 4:59:20pm

re: #175 itellu3times

EVERYONE in the business knew a crash was coming, as in the bubble bursting, but what NOBODY foresaw was the market failure that killed off the major institutions.

Sounds a lot like the total cluelessness when the S&L crisis erupted.

184 jdk971  Sat, May 2, 2009 5:00:14pm

i am 59. i have owned 8 homes in my lifetime. i had to put 20% down or more
every time i bought a home. my first house was bought in 1974, and i had to borrow 1/2 thousand from my parents to make the 20% down payment on a 22k house. today i have one house and one condo. both paid for on a police officers retirement. this including stop working because my wife was dying of ms (2-25-2007). every one should of known you can not loan money to people with no down payment and all those crazy loans. congress knew what was happening and the last admin. went to congress 3 or 4 times to warn them about freddie and fannie mac. barney frank said they were just fine thank you. i do not have sites to prove my statements. you can look it up yourselves if you do not believe me. the above cartoon was semi correct, but left out the c.r.a. jdk971

185 pre-Boomer Marine brat  Sat, May 2, 2009 5:00:16pm

re: #163 albusteve

Iran…sick mfr’s

[Link: www.foxnews.com…]

The overthrow of the Islamic Republic could keep 100,000 Iranian judges and lawyers busy for decades..

186 itellu3times  Sat, May 2, 2009 5:00:28pm

re: #173 Soona’

And Barney Frank, Chris Dodd, Barak Obama, naming only a few democrat politicians who encouraged all this, should go scott free.

Well, I didn’t say that, but they were just doing what politicians always do. I blame da system, that let Fannie and Freddie shower these SOBs with money, effectively taxpayer money. WSJ campaigned sharply about this for five years before the crash, of course nobody listened.

187 Wasta  Sat, May 2, 2009 5:00:37pm

re: #153 bungie

I don’t know where your “neck of the woods” is, but they have here in Arizona. Depending on where, there are houses in Maricopa, Arizona (a suburb of Phoenix) where the house values tanked like that (The New York Times did a long piece on it in their Sunday Magazine 5 or 6 months ago.) And I understand, Nevada is worse.

Not to pour kerosene on the fire for simple entertainment value, but did the price of those houses climb dramatically (…say double in the course of a year or two) before tanking?

And if you were one to believe that housing prices can only shoot skyward, I think there will always be a Madoff around every corner willing to sell you the Brooklyn Bridge or a sweet cabana in the Southwestern U.S. of A.

Caveat Emptor!

188 Empire1  Sat, May 2, 2009 5:00:55pm

re: #115 JacksonTn

FOGJ … is there a “real” Ann? … I am not so sure about that …

I’m not the original scaly one, which is why I didn’t use my real name here, but I’m a real Ann …

189 Fat Bastard Vegetarian  Sat, May 2, 2009 5:01:35pm

re: #20 Desert Dog

I would suggest the MJBOITB fund. They are performing just as well.

Mason
Jar
Buried
Out
In
The
Backyard
Fund

That like the WSIP?

“Wooly Swamp Investment Protocol”?

190 JacksonTn  Sat, May 2, 2009 5:01:46pm

re: #188 Empire1

I’m not the original scaly one, which is why I didn’t use my real name here, but I’m a real Ann …

Empire1 … yes, but do you eat? … if you eat you cannot be the Ann I was talking about …

191 albusteve  Sat, May 2, 2009 5:02:05pm

re: #185 pre-Boomer Marine brat

The overthrow of the Islamic Republic could keep 100,000 Iranian judges and lawyers busy for decades..

their time will come…and it will not be pretty, there will be retribution

192 itellu3times  Sat, May 2, 2009 5:02:20pm

re: #179 Thanos

I think the risk managers are mostly at fault. That covers the whole chain from the banker to the far investors.

That is my real question - SOME of the risk managers must have forecast the disaster - and were overridden by greedy management.

It is a truly historic fail, y’know, and we were there!

193 Soona'  Sat, May 2, 2009 5:02:26pm

re: #168 BlueCanuck

What I find funny about the whole mortgage crisis and bubble is that no one saw it coming. I mean the signs have been there for years. Remember the late 70’s early 80’s when house prices really started to sky rocket? There was a reason for that. Not enough houses, and too many people looking for houses. Now 20+ years later there is a glut on the market, and not as many people looking for property.

Prez Bush saw it and tried to do something about it as early as 2001-2002. John McCain introduced a bill in 2006 to try to apply the brakes on Fannie May and Freddie Mac. Even Glenn Beck was talking about it two years ago. (Yeah. Glenn Beck)

194 Fat Bastard Vegetarian  Sat, May 2, 2009 5:03:01pm

Curious…

Where would you come up with the name “Mine That Bird” for a racehorse?

195 rain of lead  Sat, May 2, 2009 5:03:20pm

re: #190 JacksonTn

Empire1 … yes, but do you eat? … if you eat you cannot be the Ann I was talking about …

unles you eat electricty and drink moter oil

196 UncleRancher  Sat, May 2, 2009 5:03:27pm

Please add car salesmen to the blame list. Can’t buy a car? Let’s just refi that house of yours. I’ll hep ya wit the paperwork. Here you go, my pal over here will get you a little boost for your appraisal, we’ll go to the bank and do the refi and you can have this here nice new rig and some cash to boot. There y’ go, now I’ve got you mortgaged to about 30% over the real actual market value of your house, and your payments are, well, maybe affordable if you keep your job and wifey can get a little overtime, and woops, lookie here, now your house just took a little tumble in the market and you’re foreclosed, and you’re out but you got that nice new car you wanted.

197 MacDuff  Sat, May 2, 2009 5:03:49pm

re: #168 BlueCanuck

What I find funny about the whole mortgage crisis and bubble is that no one saw it coming. I mean the signs have been there for years. Remember the late 70’s early 80’s when house prices really started to sky rocket? There was a reason for that. Not enough houses, and too many people looking for houses. Now 20+ years later there is a glut on the market, and not as many people looking for property.

I never cease to be amazed at the sheer stupidity of those who purport to be experts. I think there are those who did see it coming, but they were dismissed as sophomoric fools. Sometimes people who are so educated and informed as to the details of a process tend to lose sight of the process as a whole.

198 shug  Sat, May 2, 2009 5:04:06pm

re: #194 Fat Bastard Vegetarian

Curious…

Where would you come up with the name “Mine That Bird” for a racehorse?

your answer

199 Truck Monkey  Sat, May 2, 2009 5:04:12pm

re: #176 FurryOldGuyJeans

The market was supernova hot, at least here in my part of the Great NorthWet, right up until the bubble burst. People expected the bubble to keep growing, not ever burst. Kinda ironic considering we were hurt so bad just a while back when the tech bubble went kablooey.

I’ve never looked at my home as anything other than the place I live. I bought my home 11 years ago in another down market and have since seen it appreciate up to 3 times what I bought it for. I thought it was ridiculous that it appreciated sometimes 30% per year and considered it Monopoly money. Prices have since fallen and my house value remains high compared to what I bought it for. I get/got a kick out of all the flippers and speculators I know that thought the good times would never end. Some of them are hurting now.

200 FurryOldGuyJeans  Sat, May 2, 2009 5:04:14pm

re: #181 Bagua

The average person knows less about economics than the Congress Critters that created the mess in the first place. The last thing that needs to be done is throw out a lot of boring facts and figures out that will get instantly shot down as partisan and biased, thus promptly get ignored by most people who only care about American Idol.

201 Bagua  Sat, May 2, 2009 5:04:19pm

re: #192 itellu3times

That is my real question - SOME of the risk managers must have forecast the disaster - and were overridden by greedy management.

It is a truly historic fail, y’know, and we were there!

Many of those risk managers worked for governmental and quasi governmental agencies such as the FASB, The SEC and the IASB, also, the risk managers at the three main credit ratings agencies made a major blunder.

202 Empire1  Sat, May 2, 2009 5:04:39pm

re: #190 JacksonTn

Empire1 … yes, but do you eat? … if you eat you cannot be the Ann I was talking about …

Then I’m not she — I do eat. Omnivore, with strong carvivore preferences … veggies are for emergencies!

203 Slumbering Behemoth Stinks  Sat, May 2, 2009 5:05:03pm

re: #190 JacksonTn

Empire1 … yes, but do you eat? … if you eat you cannot be the Ann I was talking about …

The Ann you’re talking about does eat…. the souls of baby seals.
/just kidding, don’t eat me

204 Kosh's Shadow  Sat, May 2, 2009 5:05:14pm

re: #192 itellu3times

That is my real question - SOME of the risk managers must have forecast the disaster - and were overridden by greedy management.

It is a truly historic fail, y’know, and we were there!


Those that did probably lost their jobs because they weren’t raking in the bucks time bombs that others were.

Glad I bought my house in an inexpensive but good area of Massachusetts; as far as I know, the prices haven’t fallen much here, but then, they never skyrocketed either. (45 miles out of Boston is a bit far, and it is a suburb. The “cities” in this area aren’t doing as well, though.)

205 itellu3times  Sat, May 2, 2009 5:05:33pm

re: #183 FurryOldGuyJeans

Sounds a lot like the total cluelessness when the S&L crisis erupted.

That cluelessness was a similar surprise, but for “better” reasons, when the government opened up money market funds to the public, disintermediating the classic banking system and forcing them into a much stricter financial system.

Arguably, the entire banking system was effectively nationalized at that time, but we only noticed recently. How d’ya like that analysis!

206 FurryOldGuyJeans  Sat, May 2, 2009 5:05:35pm

re: #173 Soona’

And Barney Frank, Chris Dodd, Barak Obama, naming only a few democrat politicians who encouraged all this, should go scott free.

Not just encouraged this, but actively legislated for all this, all in the name of fairnesss.

207 pittrader1988  Sat, May 2, 2009 5:05:48pm

re: #1 FurryOldGuyJeans

It’s almost too simple. They blame Alan Greenspan only. They should also point fingers at Fannie and Freddie. They provided a government backstop for all the mortgages. They also point a finger at mortgage brokers. They were under pressure from the Feds to lend money. (Barney Frank famously said he was willing to take a risk with Fannie and Freddie)

They also need to point a finger at the rating agencies. They rated junk AAA. This allowed the junk to be sold to investors at lower prices than it would normally have been sold at.

Then, they need to blame the Treasury for trying to prop up the banks after the bomb went off-they should have let them go bankrupt. They all would be out of business, and the credit markets would be unfrozen by now. They still are frozen-starting to thaw a little. But we have spent trillions of dollars where application of bankruptcy laws would have been cheaper and quicker. TARP was about saving Goldman and the cabal, nothing else.

Just FYI, From 2001 to 2007, Sub prime and Alt-A loans went from under 10% of the market to over 35% of all mortgages.

I out to know, I trade this shit.

208 SasquatchOnSteroids  Sat, May 2, 2009 5:05:55pm

re: #200 FurryOldGuyJeans

The average person knows less about economics than the Congress Critters that created the mess in the first place. The last thing that needs to be done is throw out a lot of boring facts and figures out that will get instantly shot down as partisan and biased, thus promptly get ignored by most people who only care about American Idol.

American Idol is on ?!

SHIT !

//

209 rain of lead  Sat, May 2, 2009 5:06:10pm

re: #202 Empire1

Then I’m not she — I do eat. Omnivore, with strong carvivore preferences … veggies are for emergencies!

top of the food chain and damn proud of it!

210 itellu3times  Sat, May 2, 2009 5:06:35pm

re: #201 Bagua

Many of those risk managers worked for governmental and quasi governmental agencies such as the FASB, The SEC and the IASB, also, the risk managers at the three main credit ratings agencies made a major blunder.

No doubt the good ones left early, marked as malcontents and crackpots.

211 FurryOldGuyJeans  Sat, May 2, 2009 5:06:54pm

re: #205 itellu3times

That cluelessness was a similar surprise, but for “better” reasons, when the government opened up money market funds to the public, disintermediating the classic banking system and forcing them into a much stricter financial system.

Arguably, the entire banking system was effectively nationalized at that time, but we only noticed recently. How d’ya like that analysis!

Biased and conveniently leaving out a lot of facts.

/ sorry, just couldn’t resist. ;)

212 Fat Bastard Vegetarian  Sat, May 2, 2009 5:07:10pm

re: #198 shug

Wow. I have no earthly idea what I just read. But, wow.

213 JacksonTn  Sat, May 2, 2009 5:07:12pm

re: #206 FurryOldGuyJeans

Not just encouraged this, but actively legislated for all this, all in the name of fairnesss.

FOGJ .. I know this may sound cold … but some people should not own homes … they should rent … there is so much more to owning a home than just paying the mortgage (and some of them should not have been qualified for a loan) … there is nothing wrong with renting … the American Dream is so much more than just owning a home … but that gets played over and over …

214 Kosh's Shadow  Sat, May 2, 2009 5:07:53pm

BTW, I saw this coming when all the no deposit and interest only mortgages starting showing up.
They might have their uses (someone I know used an interest-only mortgage as a bridge when he was selling one house and buying another), but they were advertised to people who had no business with one.

215 Randall Gross  Sat, May 2, 2009 5:07:55pm

re: #164 itellu3times

Have to disagree there, fraud was a large factor from early in the bubble, and some ridiculous proportion of the loans that Countrywide made in the later months never had even the first payment made!

Why pick on Countrywide? There was a whole chain and some buyouts that led up to that. Greentree, Canseco, and others were players too, and CW was just who bought the bad slices when they folded… That said, Countrywide and the other questionable entities are still a small fragment of the whole.

216 pittrader1988  Sat, May 2, 2009 5:08:07pm

re: #170 Bloodnok

bullshit. he could have pointed the finger at both parties. there are criminals on each side of the aisle, and in all bureaucratic agencies.

217 pre-Boomer Marine brat  Sat, May 2, 2009 5:08:35pm

re: #191 albusteve

their time will come…and it will not be pretty, there will be retribution

I was going to add (above) something about a surge in the mobile crane market … but … uh … I didn’t want to mix the construction industry in with the judicial system.

/is that subtle enough? … … … heh

218 Soona'  Sat, May 2, 2009 5:08:36pm

re: #186 itellu3times

Well, I didn’t say that, but they were just doing what politicians always do. I blame da system, that let Fannie and Freddie shower these SOBs with money, effectively taxpayer money. WSJ campaigned sharply about this for five years before the crash, of course nobody listened.

And who created Fannie and Freddie in the first place. Which party opened the PC floodgates.

219 Bagua  Sat, May 2, 2009 5:08:50pm

re: #200 FurryOldGuyJeans

The average person knows less about economics than the Congress Critters that created the mess in the first place. The last thing that needs to be done is throw out a lot of boring facts and figures out that will get instantly shot down as partisan and biased, thus promptly get ignored by most people who only care about American Idol.

Yes, that is exactly right, however, this is a major issue that effects most everyone and is heavily covered in the news, and as the average person is a voter, as well as may be a user of credit or have retirement accounts and so on, it is important to further education.

A video like this would be far more valuable if it did not reinforce a simplistic view on a complex subject. The designer may not even be aware of his bias as it is the line being pushed by the MSM, the UN, the EU and the Democrats.

220 itellu3times  Sat, May 2, 2009 5:09:09pm

re: #204 Kosh’s Shadow

Those that did probably lost their jobs because they weren’t raking in the bucks time bombs that others were.

Glad I bought my house in an inexpensive but good area of Massachusetts; as far as I know, the prices haven’t fallen much here, but then, they never skyrocketed either. (45 miles out of Boston is a bit far, and it is a suburb. The “cities” in this area aren’t doing as well, though.)

Hey, I lived out in Westboro for a while, back in the day, and later my brother spend a few years in Sterling.

Apparently the biggest swings from before to bubble to now, were in the lower-priced areas in and near the highest-priced areas. The upper-middle class areas have mostly not suffered terribly, and the areas way out probably never inflated much.

221 bungie  Sat, May 2, 2009 5:09:12pm

re: #148 Thanos

Just to correct some misconceptions: while there is and was some mortgage fraud out there, it’s a percent of a percent, it’s not the norm. (great blog for tracking mortgage scams here.)

Most of the mortgages were to people who could in theory afford them, but they weren’t the best risk for credit… .

You are overgeneralizing based on your own experience which may be true but is limited. Here, it is common to have streets with six vacant, foreclosed houses which were previously owned by undocumented immigrants who only spoke Spanish from Mexico, and their families and cousins. Suddenly, they left and these homes went to foreclosure.

No one believes there wasn’t fraud involved. Sounds similar to what happened in Detroit. Banks looked the other way. Freddie Mac and Fannie Mae pushed and Acorn threatened… .

222 FurryOldGuyJeans  Sat, May 2, 2009 5:09:14pm

re: #207 pittrader1988

I hate to say it but this video is really what is going to get the attention span of the average voter nowadays. Look at what the majority voted for in the last election and the campaign that was run to achieve it.

Get their attention with something like this first, and after their appetites are whet for more meat we can give them more.

223 [deleted]  Sat, May 2, 2009 5:09:32pm
224 shug  Sat, May 2, 2009 5:09:37pm

re: #212 Fat Bastard Vegetarian

Wow. I have no earthly idea what I just read. But, wow.

His father was named birdstone and his mother was mining my own

Interesting, I just discovered reading his pedigree that both his great great grandfather ( Unbridled ) and his grandfather ( grindstone) won the kentucky derby.


that’s some family!

225 Fat Bastard Vegetarian  Sat, May 2, 2009 5:09:41pm

re: #215 Thanos

The Chris Dodd thing makes CountryWide an easy mark; doesn’t it?

226 albusteve  Sat, May 2, 2009 5:09:47pm

re: #218 Soona’

And who created Fannie and Freddie in the first place. Which party opened the PC floodgates.

ignore the partisan aspect…it’s irrelevant
/

227 pre-Boomer Marine brat  Sat, May 2, 2009 5:10:13pm

re: #196 UncleRancher

Please add car salesmen to the blame list. Can’t buy a car? Let’s just refi that house of yours. I’ll hep ya wit the paperwork. Here you go, my pal over here will get you a little boost for your appraisal, we’ll go to the bank and do the refi and you can have this here nice new rig and some cash to boot. There y’ go, now I’ve got you mortgaged to about 30% over the real actual market value of your house, and your payments are, well, maybe affordable if you keep your job and wifey can get a little overtime, and woops, lookie here, now your house just took a little tumble in the market and you’re foreclosed, and you’re out but you got that nice new car you wanted.

up-ding
Greed is an omnivore.

228 FurryOldGuyJeans  Sat, May 2, 2009 5:10:29pm

re: #213 JacksonTn

FOGJ .. I know this may sound cold … but some people should not own homes … they should rent … there is so much more to owning a home than just paying the mortgage (and some of them should not have been qualified for a loan) … there is nothing wrong with renting … the American Dream is so much more than just owning a home … but that gets played over and over …

I totally agree with you, I am one of those who never even remotely be allowed. Just as I strongly believe not everyone is college material.

229 freetoken  Sat, May 2, 2009 5:10:35pm

Got to say… love the image of flying bags of money.

Very funny.

230 SasquatchOnSteroids  Sat, May 2, 2009 5:10:53pm

re: #224 shug

His father was named birdstone and his mother was mining my own

Interesting, I just discovered reading his pedigree that both his great great grandfather ( Unbridled ) and his grandfather ( grindstone) won the kentucky derby.

that’s some family!

Did he raise his hoof to the heavens when he passed the finish line ?

/all the rage

231 Fat Bastard Vegetarian  Sat, May 2, 2009 5:10:55pm

re: #224 shug

Fifty to freakin’ one. Wow.

232 albusteve  Sat, May 2, 2009 5:11:44pm

re: #231 Fat Bastard Vegetarian

Fifty to freakin’ one. Wow.

somebody fucked up….that maybe has never happened

233 Empire1  Sat, May 2, 2009 5:11:46pm

re: #209 rain of lead

top of the food chain and damn proud of it!

You got it! As long as it doesn’t get me first, it’s dinner. ::evil grin::

234 itellu3times  Sat, May 2, 2009 5:12:01pm

re: #215 Thanos

Why pick on Countrywide? There was a whole chain and some buyouts that led up to that. Greentree, Canseco, and others were players too, and CW was just who bought the bad slices when they folded… That said, Countrywide and the other questionable entities are still a small fragment of the whole.

Countrywide is an interesting case because they stayed OUT of the bad loans right until the end, and then were amazed at how fast and completely things fell apart (coincidentally, I guess) once they finally succumbed. Not to mention they were #1 or #2 in the overall market.

235 JacksonTn  Sat, May 2, 2009 5:12:30pm

re: #228 FurryOldGuyJeans

I totally agree with you, I am one of those who never even remotely be allowed. Just as I strongly believe not everyone is college material.

FOGJ … I totally agree … they should have more programs for trades in schools … some kids are not for college … and if they don’t go they feel less than or are made to feel that way … there is nothing at all wrong with having a trade … we need plumbers, electricians, etc. just as much as professors, lawyers, etc. …

236 rain of lead  Sat, May 2, 2009 5:13:01pm

re: #228 FurryOldGuyJeans

I totally agree with you, I am one of those who never even remotely be allowed. Just as I strongly believe not everyone is college material.

agreed, I have a nephew that is living proof that the world needs ditch diggers

237 FurryOldGuyJeans  Sat, May 2, 2009 5:13:07pm

re: #226 albusteve

ignore the partisan aspect…it’s irrelevant
/

Keep on harping on such things before we get the average voters attention and we will keep on losing elections. People were tired of partisan bullshit in 2008, and with the uncertainty about their futures even less likely to listen if all we do is point fingers.

238 JacksonTn  Sat, May 2, 2009 5:13:27pm

re: #232 albusteve

somebody fucked up….that maybe has never happened

albusteve … f*cked up how? …

239 Kosh's Shadow  Sat, May 2, 2009 5:13:58pm

re: #220 itellu3times

Hey, I lived out in Westboro for a while, back in the day, and later my brother spend a few years in Sterling.

Apparently the biggest swings from before to bubble to now, were in the lower-priced areas in and near the highest-priced areas. The upper-middle class areas have mostly not suffered terribly, and the areas way out probably never inflated much.

I don’t want to say exactly where, but we bought when house prices were low due to the closure of Fort Devens (that gives several towns as possiblities).
1.1 acres, 2200 sq ft, $167,000 10 years ago. And they built a new house down the street a few months ago, so this town can’t be doing too bad.

And I did not look at it as an investment, but at a way of controlling housing and housing costs. I figure if I need to move and prices have gone down, at least what I get will be enough to buy a house where I’m going.

240 itellu3times  Sat, May 2, 2009 5:14:04pm

re: #218 Soona’

And who created Fannie and Freddie in the first place. Which party opened the PC floodgates.

I suspect it all would have happened exactly the same even in the absence of F&F, but we’ll never really know, will we.

241 Dr. Shalit  Sat, May 2, 2009 5:14:18pm

re: #140 vxbush

vxbush -

Power Point is no more evil than your Uncle’s Slide Show. Unfortunately it is at least as boring - if not Moreso. not Evil, Just Banal.

-S-

242 Fat Bastard Vegetarian  Sat, May 2, 2009 5:14:22pm

re: #236 rain of lead

Thanks Judge Smails.

243 SasquatchOnSteroids  Sat, May 2, 2009 5:14:30pm

re: #236 rain of lead

agreed, I have a nephew that is living proof that the world needs ditch diggers

Upding for the Judge Smails shoutout.

244 JCM  Sat, May 2, 2009 5:15:12pm

re: #117 eon

Once such a local housing value “bubble” collapses, the usual next step by local government is to try to avoid a downturn in property tax revenues by either (a) raising existing tax percentages, (b) creating new “temporary” property taxes, (c) artificially inflating the assessed value of homes to force their owners to pay more in property taxes at the existing rates, or (d) some combination of two or more of the above.

Around here, we’ve seen all of the above in the last decade, often repeatedly. According to my local treasurer, my property is now worth a third more that I actually paid for it- in a declining housing market.

/ Fortunately for me, my mortgage is much smaller than the original purchase price. Other people are not so fortunate.

cheers

eon

Given local home comps I’ve last about 15% in value. Seattle’s bubble is still artificially inflated by regulations and growth management. While I’ve lost value, I just my county assessment and it went up the maximum of 7% which it has every year I’ve been in the house.

245 rain of lead  Sat, May 2, 2009 5:15:15pm

re: #238 JacksonTn

if that is the derby and a horse won at 50 to 1
yeah sombody f*&^#$ up

246 FurryOldGuyJeans  Sat, May 2, 2009 5:15:28pm

re: #236 rain of lead

agreed, I have a nephew that is living proof that the world needs ditch diggers

We also need a change of tone that doesn’t denigrate those who do physical labor as something lower class. Get back to the days when taking pride in the work one did was a good thing, no matter what the work was.

247 pre-Boomer Marine brat  Sat, May 2, 2009 5:15:35pm

Thanks for posting this video, Charles.

I’m out for the evening, all.
Everyone have a good night.

248 JacksonTn  Sat, May 2, 2009 5:16:00pm

re: #245 rain of lead

if that is the derby and a horse won at 50 to 1
yeah sombody f*&^#$ up

RoL .. I was not watching it … but I wish I had placed a wager …

249 Kosh's Shadow  Sat, May 2, 2009 5:16:16pm

re: #235 JacksonTn

FOGJ … I totally agree … they should have more programs for trades in schools … some kids are not for college … and if they don’t go they feel less than or are made to feel that way … there is nothing at all wrong with having a trade … we need plumbers, electricians, etc. just as much as professors, lawyers, etc. …

And we need plumbers and electricians more than some of the more educated professions. No electricians, no power, so what would software engineers do?
And everyone needs to use the toilet.

250 Randall Gross  Sat, May 2, 2009 5:16:17pm

re: #221 bungie

You are overgeneralizing based on your own experience which may be true but is limited. Here, it is common to have streets with six vacant, foreclosed houses which were previously owned by undocumented immigrants who only spoke Spanish from Mexico, and their families and cousins. Suddenly, they left and these homes went to foreclosure.

No one believes there wasn’t fraud involved. Sounds similar to what happened in Detroit. Banks looked the other way. Freddie Mac and Fannie Mae pushed and Acorn threatened… .

This is one of those pot / kettle things. I am not overgeneralizing. I am basing my statements on the whole market, you are overgeneralizing from your own anectdotal experience. That’s not the shape the entire country is in. Please watch this video and then come back.

251 JCM  Sat, May 2, 2009 5:16:36pm

re: #138 FurryOldGuyJeans

More like an earthquake since this is the Great NorthWet here.

Not that tornadoes have never been seen here, just rarer than earthquakes.

Friends from Kansas didn’t like the Nisqually quake….
As they put it, “with tornados they warn you!”

252 rain of lead  Sat, May 2, 2009 5:16:51pm

re: #242 Fat Bastard Vegetarian

caddyshack. truly a work of art

253 FurryOldGuyJeans  Sat, May 2, 2009 5:16:59pm

re: #240 itellu3times

I suspect it all would have happened exactly the same even in the absence of F&F, but we’ll never really know, will we.

If F&F had never been created Congress Critters would have tried some other Ponzi scheme trying to garner votes.

254 albusteve  Sat, May 2, 2009 5:17:30pm

re: #237 FurryOldGuyJeans

Keep on harping on such things before we get the average voters attention and we will keep on losing elections. People were tired of partisan bullshit in 2008, and with the uncertainty about their futures even less likely to listen if all we do is point fingers.

I could care less…it’s the truth and you know it…the democrats need to be exposed for their insidious role in the demise of the market…and further, BOs contrived reluctance to deal with this mess realistically….how does turning a blind eye to the fact enhance the GOP?…if it does I want no part of them

255 JCM  Sat, May 2, 2009 5:17:32pm

re: #232 albusteve

somebody fucked up….that maybe has never happened

Second longest shot in Derby history is what I heard from one of the talking heads.

256 shug  Sat, May 2, 2009 5:18:16pm

Second time in 4 years that a 50:1 horse won the race.

just sayin’

It happens.

257 FurryOldGuyJeans  Sat, May 2, 2009 5:18:18pm

re: #251 JCM

Friends from Kansas didn’t like the Nisqually quake….
As they put it, “with tornados they warn you!”

The Nisqually quake was both fun and terrifying. To see a thick(!) concrete floor slab ripple and roll like water was something else.

258 Killian Bundy  Sat, May 2, 2009 5:18:34pm

White House Denies Charge By Attorney that Administration Threatened to Destroy Investment Firm’s Reputation

A leading bankruptcy attorney representing hedge funds and money managers told ABC News Saturday that Steve Rattner, the leader of the Obama administration’s Auto Industry Task Force, threatened one of the firms, an investment bank, that if it continued to oppose the administration’s Chrysler bankruptcy plan, the White House would use the White House press corps to destroy its reputation.

The White House said the story was false.

/odd

259 JacksonTn  Sat, May 2, 2009 5:18:51pm

re: #254 albusteve

I could care less…it’s the truth and you know it…the democrats need to be exposed for their insidious role in the demise of the market…and further, BOs contrived reluctance to deal with this mess realistically….how does turning a blind eye to the fact enhance the GOP?…if it does I want no part of them

albusteve … I have had this conversation with democrats before … I was called a racists … it is perceived as keeping the black man down … not my words … he said it to me …

260 SasquatchOnSteroids  Sat, May 2, 2009 5:19:00pm

re: #252 rain of lead

caddyshack. truly a work of art

nananananananananananananana

Heard on every golf course, every day, every place someone sinks a 20 footer.

/guilty as charged

261 MacDuff  Sat, May 2, 2009 5:19:01pm

re: #181 Bagua

Maybe I’m being too harsh, but look at the media and politicians using this as a “beneficial crisis” to bring on sweeping changes in finance and capitalism, with the attempt being to blame everything on the evil, fat bankers and capitalists.

While this is an excellent animation, and makes several good points, I do see it as reflecting the bias by way of omission, plus adding a couple of snarky points that other have highlighted, such as who is depicted as fat and thin.

Well, I can’t disagree that Congress’ part in the debacle seemed to have been left out and it did smack of PC with the smoking parents with too many kids being portrayed as undesirables. Maybe I’m just too desensitized to these tactics to even notice any more.

Once this is over, I would like to see a good post-mortem as to the real causations of this crisis, both political and financial.

Yeah, like that’s going to happen………

262 rain of lead  Sat, May 2, 2009 5:19:08pm

re: #246 FurryOldGuyJeans

that wasn’t a slap at ditch diggers, it was a slap at my lazyass nephew

263 Dr. Shalit  Sat, May 2, 2009 5:19:23pm

re: #256 shug

Second time in 4 years that a 50:1 horse won the race.

just sayin’

It happens.

shug -

Follow the money. That is all.

-S-

264 FrogMarch  Sat, May 2, 2009 5:19:32pm

Someone posted it in the comments section here at LGF about a month or so back. I’m trying to remember who posted it? It’s interesting.

265 Bloodnok  Sat, May 2, 2009 5:19:46pm

re: #216 pittrader1988

bullshit. he could have pointed the finger at both parties. there are criminals on each side of the aisle, and in all bureaucratic agencies.

Of course they could have. There was a political component. I’m not denying that. But I do not believe that the investment companies cared about the politics behind the loans they were selling. They were doing it because it made money. And if they knew the risk was bad they lied about the rating. My opinion is that that the politicians followed the banking industry, not the other way around.

266 albusteve  Sat, May 2, 2009 5:20:01pm

re: #255 JCM

Second longest shot in Derby history is what I heard from one of the talking heads.

just think…a measly $100 bet….somebody is gonna be puttin on a big “I told you so!”….I love it

267 shug  Sat, May 2, 2009 5:20:01pm

re: #264 FrogMarch

Someone posted it in the comments section here at LGF about a month or so back. I’m trying to remember who posted it? It’s interesting.

Somebody posted it ?

who?

268 JCM  Sat, May 2, 2009 5:20:11pm

re: #257 FurryOldGuyJeans

The Nisqually quake was both fun and terrifying. To see a thick(!) concrete floor slab ripple and roll like water was something else.

I was in a post office, the front widows started shaking first, they the lights started swing, then the roller coaster started. You could see the swell race down the road.

269 FurryOldGuyJeans  Sat, May 2, 2009 5:20:41pm

re: #254 albusteve

I could care less…it’s the truth and you know it…the democrats need to be exposed for their insidious role in the demise of the market…and further, BOs contrived reluctance to deal with this mess realistically….how does turning a blind eye to the fact enhance the GOP?…if it does I want no part of them

So you want to keep the Dems in power? Because that is where things will stand if we don’t offer real solutions to all the bullshit Hope and Change the Dems foist.

I am not talking about turning a blind eye, not at all. I am talking about offering real solutions and options, something the GOP understood in 1994.

270 Soona'  Sat, May 2, 2009 5:21:12pm

BBL

271 JCM  Sat, May 2, 2009 5:21:14pm

re: #266 albusteve

just think…a measly $100 bet….somebody is gonna be puttin on a big “I told you so!”….I love it

I like a shoe string operation, a $9500 dollar horse, and BINGO! Big time!

272 Fat Bastard Vegetarian  Sat, May 2, 2009 5:21:29pm

re: #268 JCM

Cowboy’s practice facility collapsed today in a thunderstorm.

273 FurryOldGuyJeans  Sat, May 2, 2009 5:22:06pm

re: #262 rain of lead

that wasn’t a slap at ditch diggers, it was a slap at my lazyass nephew

I know, but too many people do sneer and look down on doing such work. That needs to change.

274 rain of lead  Sat, May 2, 2009 5:22:08pm

re: #260 SasquatchOnSteroids

nananananananananananananana

Heard on every golf course, every day, every place someone sinks a 20 footer.

/guilty as charged

don’t play golf but I have hunted gophers

275 shug  Sat, May 2, 2009 5:22:32pm

re: #272 Fat Bastard Vegetarian

Cowboy’s practice facility collapsed today in a thunderstorm.

usually they don’t collapse until December

276 Fat Bastard Vegetarian  Sat, May 2, 2009 5:22:38pm

re: #274 rain of lead

Varmits?

277 albusteve  Sat, May 2, 2009 5:22:45pm

re: #259 JacksonTn

albusteve … I have had this conversation with democrats before … I was called a racists … it is perceived as keeping the black man down … not my words … he said it to me …

when votes become more valuable than principle, then we are just like them…some call it fingerpointing as if it has little weight, I call it facing responsibility for your actions….getting called out is part of the proccess that nobody seems to want to do anymore…on both sides

278 Dr. Shalit  Sat, May 2, 2009 5:23:03pm

re: #271 JCM

I like a shoe string operation, a $9500 dollar horse, and BINGO! Big time!

jcm -

Follow the money. That is all.

-S-

279 Bagua  Sat, May 2, 2009 5:24:00pm

re: #261 MacDuff

Thank you

280 quickjustice  Sat, May 2, 2009 5:24:06pm

re: #258 Killian Bundy

The lawyer’s stoery is completely consistent with what President Obama himself publicly said in attacking the holdout investors.

It’s extraordinary for the President of the United State to directly attack private citizens in this manner, especially citizens who are asserting their property rights and contractual rights. Obama really is attacking the property rights part of the Constitution itself.

281 rain of lead  Sat, May 2, 2009 5:24:20pm

re: #276 Fat Bastard Vegetarian

Varmits?

yep, but I never tried dynamite

282 FurryOldGuyJeans  Sat, May 2, 2009 5:24:28pm

re: #268 JCM

I was in a post office, the front widows started shaking first, they the lights started swing, then the roller coaster started. You could see the swell race down the road.

When my ex and I were still together, and shortly after changing Navy duty stations from Hawaii to San Diego, late one night she started screaming and thumping on me about an earthquake. All I did was ask her, “Is it over? Is anyone hurt? Is anything damaged? No? THEN GO BACK TO SLEEP!” ;)

283 kay1212  Sat, May 2, 2009 5:24:50pm

re: #175 itellu3times

EVERYONE in the business knew a crash was coming, as in the bubble bursting, but what NOBODY foresaw was the market failure that killed off the major institutions.

Quite right. You alluded to it earlier. The bear raids and naked shorts exacerbated the problem. The shorts started picking off institutions one at a time. They sold shares short and also drove their debt to lower ratings, requiring additional capital to be put up in an escalating downward spiral. Accounting rules required mark-downs using current market prices although there were almost no transactions occurring and those that were were at fire sale prices due to the distress of an institution. Since a majority of Bear Stearns revenues had been from trafficking in mortgages, the shorts targeted Bear early and, in my opinion, took it down. Then they turned on Lehman, then various banks. Again, these insitutions brought a lot of the trouble on themselves but no one was preventing fuel from being thrown on the fire.

284 Fat Bastard Vegetarian  Sat, May 2, 2009 5:24:56pm

re: #274 rain of lead

don’t play golf but I have hunted gophers

Carl Spackler: License to kill gophers by the government of the United Nations. Man, free to kill gophers at will. To kill, you must know your enemy, and in this case my enemy is a varmint. And a varmint will never quit - ever. They’re like the Viet Cong - Varmint Cong. So you have to fall back on superior intelligence and superior firepower. And that’s all she wrote.

285 FrogMarch  Sat, May 2, 2009 5:25:17pm

re: #267 shug

Somebody posted it ?

who?

it = the video
who = 3 wood or gmsc?

286 JCM  Sat, May 2, 2009 5:25:20pm

re: #272 Fat Bastard Vegetarian

Cowboy’s practice facility collapsed today in a thunderstorm.

I saw some pictures, dang!

287 JacksonTn  Sat, May 2, 2009 5:25:20pm

re: #277 albusteve

when votes become more valuable than principle, then we are just like them…some call it fingerpointing as if it has little weight, I call it facing responsibility for your actions….getting called out is part of the proccess that nobody seems to want to do anymore…on both sides

albusteve … well, you say “when” … I say now … votes are already more valuable than principle … American Idol Campaigns … Obama ran one and HE WON! … just ask him …

288 Fat Bastard Vegetarian  Sat, May 2, 2009 5:25:44pm

re: #275 shug

Now, was that nice?

289 shug  Sat, May 2, 2009 5:25:57pm

re: #287 JacksonTn

albusteve … well, you say “when” … I say now … votes are already more valuable than principle … American Idol Campaigns … Obama ran one and HE WON! … just ask him …

Let’s hope Obama is a one hit wonder like Ruben Studdard

290 Bagua  Sat, May 2, 2009 5:25:57pm

And in this case we have to move beyond the Democrat/Republican thing, we have many international players who share blame, some governmental and several quasi-governmental.

291 albusteve  Sat, May 2, 2009 5:26:11pm

re: #269 FurryOldGuyJeans

So you want to keep the Dems in power? Because that is where things will stand if we don’t offer real solutions to all the bullshit Hope and Change the Dems foist.

I am not talking about turning a blind eye, not at all. I am talking about offering real solutions and options, something the GOP understood in 1994.

I see your point…I just want the perps to hang, won’t happen because they write the rules…which is why I become more jaded by the day

292 SasquatchOnSteroids  Sat, May 2, 2009 5:26:34pm

re: #274 rain of lead

don’t play golf but I have hunted gophers

Excuse me,sir, but if I kill all the golfers they’re gonna lock me up and throw away the key..

293 albusteve  Sat, May 2, 2009 5:27:03pm

re: #271 JCM

I like a shoe string operation, a $9500 dollar horse, and BINGO! Big time!

storybook finish…see what happens next

294 Fat Bastard Vegetarian  Sat, May 2, 2009 5:27:06pm

re: #292 SasquatchOnSteroids

Was just thinking of that…

295 Cato the Elder  Sat, May 2, 2009 5:27:23pm

re: #245 rain of lead

if that is the derby and a horse won at 50 to 1
yeah sombody f*&^#$ up

Not hardly.

It’s called a long shot. Sometimes they pull it off. That’s why they get 50-to-1 odds.

Also known as a horse race.

296 quickjustice  Sat, May 2, 2009 5:27:26pm

Greed and stupidity are a toxic combination. And I’m no fan of Paulson’s either. His bailout of Goldman saved his multi-million dollar pension, a fact that was conveniently omitted.

297 FurryOldGuyJeans  Sat, May 2, 2009 5:27:47pm

re: #277 albusteve

when votes become more valuable than principle, then we are just like them…some call it fingerpointing as if it has little weight, I call it facing responsibility for your actions….getting called out is part of the proccess that nobody seems to want to do anymore…on both sides

Without votes putting people of principle into office, your principles might as well be a bucket of warm spit. The opposition sure won’t care about your principles since they get to set the agenda.

298 reine.de.tout  Sat, May 2, 2009 5:27:48pm

re: #258 Killian Bundy

White House Denies Charge By Attorney that Administration Threatened to Destroy Investment Firm’s Reputation

/odd

What is this “White House press corps” that was supposed to be used?

299 albusteve  Sat, May 2, 2009 5:28:27pm

re: #289 shug

Let’s hope Obama is a one hit wonder like Ruben Studdard

he will not be re-elected….bet me

300 rain of lead  Sat, May 2, 2009 5:28:29pm

re: #292 SasquatchOnSteroids

Excuse me,sir, but if I kill all the golfers they’re gonna lock me up and throw away the key..


“hide the bodies in the sandtraps”

301 quickjustice  Sat, May 2, 2009 5:28:39pm

re: #295 Cato the Elder

I didn’t bet the winner in the Derby today. Unlike those CDOs, too much risk! ;-)

302 JacksonTn  Sat, May 2, 2009 5:28:39pm

re: #296 quickjustice

Greed and stupidity are a toxic combination. And I’m no fan of Paulson’s either. His bailout of Goldman saved his multi-million dollar pension, a fact that was conveniently omitted.

QJ … yeah, well, I am still waiting on some investigation into that Raines guys bonus …not gonna happen …

303 FrogMarch  Sat, May 2, 2009 5:28:42pm
304 Fat Bastard Vegetarian  Sat, May 2, 2009 5:28:43pm

re: #295 Cato the Elder

Upset was the name of the only horse who beat Man of War?

305 freetoken  Sat, May 2, 2009 5:28:57pm

re: #57 Killgore Trout

I know there’s a more politicized version of the credit crisis but it’s important to understand the basics. There’s a lot of blame to go around. I thought in the back of my mind that this might cause some trouble because it doesn’t blame liberals enough but it a basic depiction of what really happened.

Well, yes and no. Out here in California, housing prices peaked a few years back (late 2005 I believe). Two phenomena out here mushroomed simultaneously: overbuilding (the stock of houses outstripped what could actually be sold), and the housing prices became so high (well beyond 3x family income) that even those people with good jobs could not afford a down payment of 20% (or even 10%). Southern California has for many many decades had housing prices well above the national average, but the prices got to be so high that the system was beginning to lock like a Sci-fi thriller.

I sold my house on the way up (about 18 months before peak). If I would had waited those 18 months I could have gotten at least $150,000 more for the house (perhaps even more) - that is how “bubbly” the housing market became out here.

Bubble mentality is a well studied and discussed phenomenon. It ends with busts.

So yes, the CDS hustle created its own noose for the bankers, but the horse on which the condemned man was sitting under the tree was a good ol’ bubble that popped.

306 Bagua  Sat, May 2, 2009 5:29:01pm

re: #283 kay1212

Not exactly but on the right track, it was more the rumours that took Bear Sterns down, the redemption and the Fair Valuations.

Shorts are just losing trades when the underlying goes up or stays level, they can’t actually “force” anything down in a normal, liquid market; the CDO/CDS market on the other hand, became illiquid.

307 SasquatchOnSteroids  Sat, May 2, 2009 5:29:19pm

re: #294 Fat Bastard Vegetarian

Was just thinking of that…

Well, duh, I AM your sockpuppet.

/

308 FurryOldGuyJeans  Sat, May 2, 2009 5:29:29pm

re: #291 albusteve

I see your point…I just want the perps to hang, won’t happen because they write the rules…which is why I become more jaded by the day

The problem is just throwing a temper tantrum and pointing fingers is no better than what the Left did for 8 years. It doesn’t get candidates of principle elected who can make a difference.

309 JCM  Sat, May 2, 2009 5:29:43pm

re: #293 albusteve

storybook finish…see what happens next

It’s gonna be hyped like crazy until the Preakness. There will be a huge interest.
And this is one case where I don’t mind one bit. And if Mine That Bird wins again it will be crazy.

310 shug  Sat, May 2, 2009 5:30:32pm

re: #299 albusteve

he will not be re-elected….bet me

that would put me in an awkward position of rooting for his reelection.


I think he’ll get reelected though.

311 albusteve  Sat, May 2, 2009 5:30:48pm

re: #297 FurryOldGuyJeans

Without votes putting people of principle into office, your principles might as well be a bucket of warm spit. The opposition sure won’t care about your principles since they get to set the agenda.

yes I know…it’s an uphill fight…we need to win the House in 2010 and hopefully BO will help it happen…but with the attention span of the voters and the MSM for cover it’s daunting at best

312 quickjustice  Sat, May 2, 2009 5:31:00pm

re: #298 reine.de.tout

The White House Press corps were used as a megaphone for Obama when he attacked the holdout creditors in the Chrysler bankruptcy. Heaven forbid that creditors should assert their property rights and contract rights in a bankruptcy! /

313 Bagua  Sat, May 2, 2009 5:31:00pm

re: #305 freetoken

Yes, it is a well understood phenomenon, except in this case regulators played a big part in slapping the horses rump.

314 avanti  Sat, May 2, 2009 5:31:08pm

re: #290 Bagua

And in this case we have to move beyond the Democrat/Republican thing, we have many international players who share blame, some governmental and several quasi-governmental.

The one thing some on the right keeps harping on is blaming the community reinvestment act for the mortgage collapse when if fact less the 20% of the losses came from those loans. It is a complicated issue, with plenty of blame to go around.

315 FurryOldGuyJeans  Sat, May 2, 2009 5:31:41pm

re: #299 albusteve

he will not be re-elected….bet me

The same was said of BJ Clinton, and look how well that prophesy turned out.

316 SasquatchOnSteroids  Sat, May 2, 2009 5:31:49pm

re: #309 JCM

It’s gonna be hyped like crazy until the Preakness. There will be a huge interest.
And this is one case where I don’t mind one bit. And if Mine That Bird wins again it will be crazy.

Mine that Gold.

Via certain extraction techniques.

317 bungie  Sat, May 2, 2009 5:32:19pm

re: #187 Wasta

Not to pour kerosene on the fire for simple entertainment value, but did the price of those houses climb dramatically (…say double in the course of a year or two) before tanking?

And if you were one to believe that housing prices can only shoot skyward, I think there will always be a Madoff around every corner willing to sell you the Brooklyn Bridge or a sweet cabana in the Southwestern U.S. of A.

Caveat Emptor!

No, I’ve been in my house for 16 years and wasn’t affected (other than on paper equity only.) I spent the last 5 years trying to tell the generation X’ers in my office that trees don’t grow to the sky. There was a real estate bubble here from about 2003-2007. Some houses did double in value. But the houses I described in Maricopa were all newly-built homes in an area that was just desert wilderness prior to about 2002 or 2003. The developers just came in and created a town- I understand they built something like 14,000 homes- and these were beautiful homes- tile roofs, stucco, pools, square footage anywhere from 1600-4500 or so. Three, four, five bedroom. Three car garages.
A lot of house for $250,000 or $300,000. People came from the mid-west or Mexico and bought houses and then everything crashed. Foreclosures. Boarded-up houses. People beginning to make jokes about people coming from Chicago or New Jersey to burn the houses down. It is really something. (Google the NYTimes article about the Real Estate Boom in Maricopa if you are interested. I don’t know how to link or I would find it for you.)

318 JacksonTn  Sat, May 2, 2009 5:32:21pm

re: #310 shug

that would put me in an awkward position of rooting for his reelection.

I think he’ll get reelected though.

shug … there are many days before the next election … anything can happen … somebody may really f*ck up … they cannot hide their true intentions forever … I just hope enough people come to their senses and realize their end game … before it is too late ….

319 FurryOldGuyJeans  Sat, May 2, 2009 5:33:01pm

re: #311 albusteve

yes I know…it’s an uphill fight…we need to win the House in 2010 and hopefully BO will help it happen…but with the attention span of the voters and the MSM for cover it’s daunting at best

Daunting, yes, but so was climbing Mt. Everest the first time, or winning back the House in 1994. Did the sheer enormity of the task scare off Newt?

320 quickjustice  Sat, May 2, 2009 5:33:52pm

re: #314 avanti

I’ve said this upthread, but the CRA did extend easy credit without any sound underwriting to poor credit risks that competitors felt compelled to match. In that sense, it was a catalyst for much that followed.

321 itellu3times  Sat, May 2, 2009 5:34:10pm

re: #306 Bagua

Shorts are just losing trades when the underlying goes up or stays level, they can’t actually “force” anything down in a normal, liquid market.

Done on a sufficient scale, naked shortselling can saturate demand, until the short-seller can cover at the lower price. And among other reasons (namely, fear that naked shorts never will be able to cover) that is why it is illegal.

I think regulators (insofar as they are competent or awake) never anticipated the short-sellers could marshall that much money - nor that anyone with that much money would so blatently flout the law, so that major institutions would be at risk. Well, we know better now, perhaps.

322 JacksonTn  Sat, May 2, 2009 5:34:12pm

re: #315 FurryOldGuyJeans

The same was said of BJ Clinton, and look how well that prophesy turned out.

FOGJ .. the odds may be against us … but I will never give up fighting to keep him from being elected again … never … no ODS … I just do not like his socialist plans for this country …. oh, yeah, and Michelle is still not getting another piece of my pie …

323 Bagua  Sat, May 2, 2009 5:34:18pm

re: #314 avanti

The one thing some on the right keeps harping on is blaming the community reinvestment act for the mortgage collapse when if fact less the 20% of the losses came from those loans. It is a complicated issue, with plenty of blame to go around.

Exactly right, the “right” is also to blame for oversimplification and missing the complexity and major influences. The actual mortgage defaults were a small component allowed to have a greatly over sized result.

324 FurryOldGuyJeans  Sat, May 2, 2009 5:35:02pm

re: #314 avanti

So you admit there have been a lot of governmental fuckups that caused this crisis? Whoa!

325 Fat Bastard Vegetarian  Sat, May 2, 2009 5:35:04pm

Who’s that red-haired goofy ginger looking dude playing for the Celtics?

326 [deleted]  Sat, May 2, 2009 5:35:23pm
327 Killgore Trout  Sat, May 2, 2009 5:35:24pm

re: #320 quickjustice

CRA loans were a pretty tiny percentage of troubled mortgages. There is a much bigger picture.

328 albusteve  Sat, May 2, 2009 5:35:36pm

re: #308 FurryOldGuyJeans

The problem is just throwing a temper tantrum and pointing fingers is no better than what the Left did for 8 years. It doesn’t get candidates of principle elected who can make a difference.

no, but a cool level headed review of the facts that cannot be denied seems appropriate…conservatives need to reflect on the history of it to take a stand otherwise…this is what happened and this is how we can fix it….I’m not advocating hysteria but I don’t want history whitewashed either

329 MacDuff  Sat, May 2, 2009 5:35:58pm

re: #298 reine.de.tout

What is this “White House press corps” that was supposed to be used?

Sycophants Of Barack. SOBs is the acronym.

330 itellu3times  Sat, May 2, 2009 5:36:21pm

re: #325 Fat Bastard Vegetarian

Who’s that red-haired goofy ginger looking dude playing for the Celtics?

Who cares? No KG, they may as well fold now.

331 albusteve  Sat, May 2, 2009 5:36:53pm

re: #309 JCM

It’s gonna be hyped like crazy until the Preakness. There will be a huge interest.
And this is one case where I don’t mind one bit. And if Mine That Bird wins again it will be crazy.

I hope he does…what a story eh?…Barbaro would have won the Preakness, I just know it!

332 rain of lead  Sat, May 2, 2009 5:36:57pm

re: #326 momcat

Someone needs to break out the smelling sauce and snap them out of ther hyptonic state.

uhh….what flavor is smelling sauce?

333 avanti  Sat, May 2, 2009 5:36:57pm

re: #324 FurryOldGuyJeans

So you admit there have been a lot of governmental fuckups that caused this crisis? Whoa!

Yes, and not just out government.

334 Bagua  Sat, May 2, 2009 5:37:13pm

re: #321 itellu3times

Done on a sufficient scale, naked shortselling can saturate demand, until the short-seller can cover at the lower price. And among other reasons (namely, fear that naked shorts never will be able to cover) that is why it is illegal.

I think regulators (insofar as they are competent or awake) never anticipated the short-sellers could marshall that much money - nor that anyone with that much money would so blatently flout the law, so that major institutions would be at risk. Well, we know better now, perhaps.


Naked shorts are not illegal, so they do not flout the law.

Yes they can “saturate” the buy side but they also provide beneficial liquidity to those who want to buy. They are the suckers when things go up.

335 albusteve  Sat, May 2, 2009 5:37:43pm

re: #310 shug

that would put me in an awkward position of rooting for his reelection.

I think he’ll get reelected though.

no way…not gonna happen

336 FurryOldGuyJeans  Sat, May 2, 2009 5:37:47pm

re: #322 JacksonTn

FOGJ .. the odds may be against us … but I will never give up fighting to keep him from being elected again … never … no ODS … I just do not like his socialist plans for this country …. oh, yeah, and Michelle is still not getting another piece of my pie …

Oh, don’t get me wrong, I want to see O become a single term POTUS myself. But to discount he will be one beyond a shadow of a doubt is folly. We need a Reagan as candidate, not a Bush 41, Dole or McCain.

And I NEVER vote against someone, I always vote for a candidate. One of the reasons why I voted for Perot, twice.

337 JacksonTn  Sat, May 2, 2009 5:37:50pm

re: #327 Killgore Trout

CRA loans were a pretty tiny percentage of troubled mortgages. There is a much bigger picture.

Killgore … I know for a fact that banks tried to get people to not put more down on their mortgages … my son got a loan … he had 20% down … the bank tried to get him to finance 95% … he told them no … but they really dogged him about it … I am not saying all banks do that … but I know many did …

338 Fat Bastard Vegetarian  Sat, May 2, 2009 5:37:52pm

re: #330 itellu3times

I am a Celtics fan.

I dig.

339 Randall Gross  Sat, May 2, 2009 5:38:48pm

re: #314 avanti

The one thing some on the right keeps harping on is blaming the community reinvestment act for the mortgage collapse when if fact less the 20% of the losses came from those loans. It is a complicated issue, with plenty of blame to go around.

Not a challenge but a question: is the “20 percent of the losses” quoted a percent of the number of defaults, or a percent of the total value of defaults?

340 FurryOldGuyJeans  Sat, May 2, 2009 5:38:56pm

re: #333 avanti

Damn, next you might start blaming Obama for being less than perfect!

TRIPLE WHOA!

341 Fat Bastard Vegetarian  Sat, May 2, 2009 5:39:03pm

re: #332 rain of lead

Oh, hush. She knew it’s smelling salts. Don’t be so picky.

342 Opilio  Sat, May 2, 2009 5:39:08pm

re: #187 Wasta

Not to pour kerosene on the fire for simple entertainment value, but did the price of those houses climb dramatically (…say double in the course of a year or two) before tanking?

You make a good point. My house (in the Greater Phoenix area) has surrendered about 25% of its value in the last two years. However, that is part of (most of) the speculation-driven vapor value that it had acquired the year before. It’s still worth more than it was 5 years ago, more than it was when I bought it, and far more than I owe on it. :-)

343 albusteve  Sat, May 2, 2009 5:40:02pm

re: #315 FurryOldGuyJeans

The same was said of BJ Clinton, and look how well that prophesy turned out.

BC was not a communist and was a fairly savvy pol….big difference

344 JacksonTn  Sat, May 2, 2009 5:40:12pm

re: #336 FurryOldGuyJeans

Oh, don’t get me wrong, I want to see O become a single term POTUS myself. But to discount he will be one beyond a shadow of a doubt is folly. We need a Reagan as candidate, not a Bush 41, Dole or McCain.

And I NEVER vote against someone, I always vote for a candidate. One of the reasons why I voted for Perot, twice.

FOGJ .. no disrespect to Reagan … but there will be no new Reagan … if everyone is compared to him and people will not vote for a republican unless he is a Reagan … it will be hard … I am not saying compromise but some things have changed since Reagan … and if you cannot go with it even some … it will be so very hard …

345 FurryOldGuyJeans  Sat, May 2, 2009 5:40:16pm

re: #339 Thanos

Not a challenge but a question: is the “20 percent of the losses” quoted a percent of the number of defaults, or a percent of the total value of defaults?

Does it really matter? One fifth is one fifth, and such a toxic level is going to ripple across the economy.

346 FurryOldGuyJeans  Sat, May 2, 2009 5:41:14pm

re: #343 albusteve

BC was not a communist and was a fairly savvy pol….big difference

I don’t see Obama as being a political noob either. Underestimate him and we will lose.

347 SpaceJesus  Sat, May 2, 2009 5:41:21pm

no mention of the government’s hand in creating the sub prime bubble eh?

348 rain of lead  Sat, May 2, 2009 5:41:41pm

re: #341 Fat Bastard Vegetarian

hey, if you can’t tease your own wife a little bit who can you tease?

349 itellu3times  Sat, May 2, 2009 5:41:42pm

re: #334 Bagua

Naked shorts are not illegal, so they do not flout the law.

By “naked shorts” here we mean selling shares you do not have - and have not borrowed. You’re supposed to borrow existing shares, which limits the scale and stabilizes prices. Only, there is no market or government tracking of who is naked and who is not, even after the fact, AFAIK. That kind of nakedness is illegal. If you call your broker and “nakedly” short a stock, broker borrows the shares from somewhere else to sell - or at least, is supposed to, not to mention charging you hefty interest for the “loan”. That, is the law. In some markets there are no loose shares to borrow, that was common at the top of the Internet bubble, you couldn’t short any of the really overheated stocks.

350 [deleted]  Sat, May 2, 2009 5:41:51pm
351 shug  Sat, May 2, 2009 5:41:58pm

re: #343 albusteve

BC was not a communist and was a fairly savvy pol….big difference

Obama isn’t a communist either.
and he whipped the Clinton machine in the primary so I’d say he’s pretty savvy

352 MacDuff  Sat, May 2, 2009 5:42:24pm

re: #279 Bagua

Thank you

You’re welcome.

353 kay1212  Sat, May 2, 2009 5:42:26pm

re: #306 Bagua

Not exactly but on the right track, it was more the rumours that took Bear Sterns down, the redemption and the Fair Valuations.

Shorts are just losing trades when the underlying goes up or stays level, they can’t actually “force” anything down in a normal, liquid market; the CDO/CDS market on the other hand, became illiquid.

Bear also went down because two of its largest accounts withdrew. Whether that was a rumor started by the shorts or whether those accounts were actually transferred to another institution, I’m not sure. But that started the “run on the bank”. I agree that simply shorting can’t take a strong company down but the combo of the rumors, the trading in the company’s debt, and the {probably} naked shorting did a lot of damage. Plus, what was Bear’s business model anyway? They were getting a majority of their revenues from trading in the mortage backed securities.

354 Slumbering Behemoth Stinks  Sat, May 2, 2009 5:42:30pm

re: #332 rain of lead

uhh….what flavor is smelling sauce?

You don’t want to know. Trust me, the flavor stinks.

355 albusteve  Sat, May 2, 2009 5:43:32pm

re: #338 Fat Bastard Vegetarian

I am a Celtics fan.

I dig.

Bird was a punk…no shot, can’t jump

356 Fat Bastard Vegetarian  Sat, May 2, 2009 5:43:44pm

re: #348 rain of lead

whaaaaaaa?

You know, I was being all protective and all.

Wink, wink. Nudge, nudge.

357 FurryOldGuyJeans  Sat, May 2, 2009 5:43:44pm

re: #344 JacksonTn

FOGJ .. no disrespect to Reagan … but there will be no new Reagan … if everyone is compared to him and people will not vote for a republican unless he is a Reagan … it will be hard … I am not saying compromise but some things have changed since Reagan … and if you cannot go with it even some … it will be so very hard …

Ahem, that is why I said A Reagan, someone with clear vision and direction for where to head. Whoever that person is, if they exist.

358 Bagua  Sat, May 2, 2009 5:43:46pm

re: #349 itellu3times

Yes, so what naked shorts were you referring to?

359 okiej  Sat, May 2, 2009 5:44:02pm

Subprime scam explained with some not exactly PC humor by a pair of Britts.

Youtube Video

Lots of info in an election cycle video. You’ll need to stop it to see some of the documents.

Youtube Video

360 Fat Bastard Vegetarian  Sat, May 2, 2009 5:44:09pm

re: #355 albusteve

Bird was a punk…no shot, can’t jump

Oh yeah? The Rolling Stones suck.

361 JacksonTn  Sat, May 2, 2009 5:44:14pm

re: #351 shug

Obama isn’t a communist either.
and he whipped the Clinton machine in the primary so I’d say he’s pretty savvy

shug … savvy yes … but if you take a good look at what the caucuses were like … I would say more like pushing the envelope as to what was fair … Iowa was the key and they knew it all along … all their focus was on that victory … and South Carolina … they played that hand … all in …

362 Opilio  Sat, May 2, 2009 5:44:22pm

re: #317 bungie

No, I’ve been in my house for 16 years and wasn’t affected (other than on paper equity only.) I spent the last 5 years trying to tell the generation X’ers in my office that trees don’t grow to the sky. There was a real estate bubble here from about 2003-2007. Some houses did double in value. But the houses I described in Maricopa were all newly-built homes in an area that was just desert wilderness prior to about 2002 or 2003. The developers just came in and created a town- I understand they built something like 14,000 homes- and these were beautiful homes- tile roofs, stucco, pools, square footage anywhere from 1600-4500 or so. Three, four, five bedroom. Three car garages.
A lot of house for $250,000 or $300,000. People came from the mid-west or Mexico and bought houses and then everything crashed. Foreclosures. Boarded-up houses. People beginning to make jokes about people coming from Chicago or New Jersey to burn the houses down. It is really something. (Google the NYTimes article about the Real Estate Boom in Maricopa if you are interested. I don’t know how to link or I would find it for you.)

NYT article on the Real Estate Bust in Maricopa, AZ

363 Randall Gross  Sat, May 2, 2009 5:44:43pm

re: #342 Opilio

You make a good point. My house (in the Greater Phoenix area) has surrendered about 25% of its value in the last two years. However, that is part of (most of) the speculation-driven vapor value that it had acquired the year before. It’s still worth more than it was 5 years ago, more than it was when I bought it, and far more than I owe on it. :-)

I’m pretty much in the same shape in KS, and don’t see any more down trend headed our way. Long term investment Roxxxorz all other types over a lifetime.
We still live in one of the best countries in the world to own land in, population is going to 9 billion over the next forty years, and worldwide growth of capital still trends 3-4 percent per annum over the long term trend line.

364 albusteve  Sat, May 2, 2009 5:44:44pm

re: #351 shug

Obama isn’t a communist either.
and he whipped the Clinton machine in the primary so I’d say he’s pretty savvy

it’s all a fraud….a fantasy he can not make come true…the MSM will turn on him

365 JacksonTn  Sat, May 2, 2009 5:45:10pm

re: #357 FurryOldGuyJeans

Ahem, that is why I said A Reagan, someone with clear vision and direction for where to head. Whoever that person is, if they exist.

FOGJ … I did not see the “A” …

366 Killgore Trout  Sat, May 2, 2009 5:45:12pm

It’s been a while since I looked into it but it seems the CRA thing is a myth.

Community Reinvestment Act had nothing to do with subprime crisis

Did Liberals Cause the Sub-Prime Crisis?

Where did this myth come from? Like most sources of bad right wing information it seems to have come from Lew Rockwell….
Google Search: cra mortgage defaults

367 rain of lead  Sat, May 2, 2009 5:45:28pm

re: #356 Fat Bastard Vegetarian

whaaaaaaa?

You know, I was being all protective and all.

Wink, wink. Nudge, nudge.

grin,grin, know what I mean, Know what I mean…say no more!

368 Bagua  Sat, May 2, 2009 5:45:59pm

re: #353 kay1212

Bear also went down because two of its largest accounts withdrew. Whether that was a rumor started by the shorts or whether those accounts were actually transferred to another institution, I’m not sure. But that started the “run on the bank”. I agree that simply shorting can’t take a strong company down but the combo of the rumors, the trading in the company’s debt, and the {probably} naked shorting did a lot of damage. Plus, what was Bear’s business model anyway? They were getting a majority of their revenues from trading in the mortage backed securities.

Yes, those are the redemptions I mentioned, essentially, there was a rumour driven run on the bank.

However, there was also accountancy that forced massive margin call based upon Fair Valuation. They didn’t actually “lose” any money and , as others have mentioned, mortgage defaults only played a minor role.

369 freetoken  Sat, May 2, 2009 5:46:07pm

re: #359 okiej

Yes, very funny videos. Posted them here before, but I suspect that the vids are a bit too… well, left-leaning… for some lizards.

370 JacksonTn  Sat, May 2, 2009 5:46:24pm

re: #364 albusteve

it’s all a fraud….a fantasy he can not make come true…the MSM will turn on him

albusteve … yes, they might but they would have to get out from under his desk first …

371 FurryOldGuyJeans  Sat, May 2, 2009 5:46:28pm

re: #328 albusteve

no, but a cool level headed review of the facts that cannot be denied seems appropriate…conservatives need to reflect on the history of it to take a stand otherwise…this is what happened and this is how we can fix it….I’m not advocating hysteria but I don’t want history whitewashed either

But if all you do is analyze what went wrong without having a clear idea of what to do to FIX the problem, again nothing is achieved.

372 albusteve  Sat, May 2, 2009 5:46:37pm

re: #360 Fat Bastard Vegetarian

Oh yeah? The Rolling Stones suck.

okay…so Bird made a coupla baskets

373 Killgore Trout  Sat, May 2, 2009 5:46:42pm

re: #366 Killgore Trout

If anyone can dig up an article before September 6, 2007 post a link.

374 FurryOldGuyJeans  Sat, May 2, 2009 5:47:19pm

re: #365 JacksonTn

FOGJ … I did not see the “A” …

I thought you hadn’t so I thought I should politely point it out. :)

375 okiej  Sat, May 2, 2009 5:48:16pm

re: #369 freetoken

Yes, very funny videos. Posted them here before, but I suspect that the vids are a bit too… well, left-leaning… for some lizards.

Left leaning? Forgive me but not in those two.

376 Fat Bastard Vegetarian  Sat, May 2, 2009 5:48:20pm

re: #367 rain of lead

grin,grin, know what I mean, Know what I mean…say no more!

Is your wife interested in…uh…photography?

377 JCM  Sat, May 2, 2009 5:48:52pm

re: #366 Killgore Trout

It’s been a while since I looked into it but it seems the CRA thing is a myth.

Community Reinvestment Act had nothing to do with subprime crisis

Did Liberals Cause the Sub-Prime Crisis?

Where did this myth come from? Like most sources of bad right wing information it seems to have come from Lew Rockwell….
Google Search: cra mortgage defaults

A different POV.

Why the Mortgage Crisis Happened

378 albusteve  Sat, May 2, 2009 5:48:59pm

re: #371 FurryOldGuyJeans

But if all you do is analyze what went wrong without having a clear idea of what to do to FIX the problem, again nothing is achieved.

right…like I said

379 FurryOldGuyJeans  Sat, May 2, 2009 5:49:06pm

re: #364 albusteve

it’s all a fraud….a fantasy he can not make come true…the MSM will turn on him

The FMSM never was for Reagan and he still won re-election quite handily.

380 kay1212  Sat, May 2, 2009 5:49:28pm

re: #349 itellu3times

By “naked shorts” here we mean selling shares you do not have - and have not borrowed. You’re supposed to borrow existing shares, which limits the scale and stabilizes prices. Only, there is no market or government tracking of who is naked and who is not, even after the fact, AFAIK. That kind of nakedness is illegal. If you call your broker and “nakedly” short a stock, broker borrows the shares from somewhere else to sell - or at least, is supposed to, not to mention charging you hefty interest for the “loan”. That, is the law. In some markets there are no loose shares to borrow, that was common at the top of the Internet bubble, you couldn’t short any of the really overheated stocks.

Shorting is legal. Naked shorting is illegal. There is an attempt to see how much naked shorting exists by the publication of the Fail to Deliver list, Reg SHO.

That being said, naked shorting can’t cause extensive damage to a strong company because if the oversupply of sellers drives a share price down, theoretically buyers would step in for the bargain.

But everything came together in a perfect storm.

381 JacksonTn  Sat, May 2, 2009 5:50:33pm

re: #379 FurryOldGuyJeans

The FMSM never was for Reagan and he still won re-election quite handily.

FOGJ … we did not 365/24/7 million channels then … the media is out of control … it is all one big reality series on news channels now … I do not watch them if I can help it …

382 rain of lead  Sat, May 2, 2009 5:50:39pm

re: #376 Fat Bastard Vegetarian

Is your wife interested in…uh…photography?

caandid photos
is she a go er ?

383 Fat Bastard Vegetarian  Sat, May 2, 2009 5:50:40pm

re: #372 albusteve

You Can’t Always Get What You Want, was okay.

384 FurryOldGuyJeans  Sat, May 2, 2009 5:50:41pm

re: #380 kay1212

Shorting is legal. Naked shorting is illegal. There is an attempt to see how much naked shorting exists by the publication of the Fail to Deliver list, Reg SHO.

That being said, naked shorting can’t cause extensive damage to a strong company because if the oversupply of sellers drives a share price down, theoretically buyers would step in for the bargain.

But everything came together in a perfect storm.

A lot of shit when on, end of story. Too many crooks, not enough cops to watch ‘em all.

385 [deleted]  Sat, May 2, 2009 5:51:11pm
386 albusteve  Sat, May 2, 2009 5:51:32pm

re: #379 FurryOldGuyJeans

The FMSM never was for Reagan and he still won re-election quite handily.

that was then…it’s a new and improved MSM and their agenda is obvious…once they wake up to the fact that they are being used they will turn

387 FurryOldGuyJeans  Sat, May 2, 2009 5:51:40pm

re: #381 JacksonTn

FOGJ … we did not 365/24/7 million channels then … the media is out of control … it is all one big reality series on news channels now … I do not watch them if I can help it …

No more so than in 1984, there was no opposition voice. The benefit now is that there ARE alternatives.

388 Dark_Falcon  Sat, May 2, 2009 5:51:47pm

re: #366 Killgore Trout

It’s been a while since I looked into it but it seems the CRA thing is a myth.

Community Reinvestment Act had nothing to do with subprime crisis

Did Liberals Cause the Sub-Prime Crisis?

Where did this myth come from? Like most sources of bad right wing information it seems to have come from Lew Rockwell….
Google Search: cra mortgage defaults

Why do people keep listening to that nutcase?

389 Fat Bastard Vegetarian  Sat, May 2, 2009 5:52:00pm

re: #385 momcat

I can picture this as a Monty Python Skit.

Howabout this?…

390 albusteve  Sat, May 2, 2009 5:52:14pm

re: #383 Fat Bastard Vegetarian

You Can’t Always Get What You Want, was okay.

get out

391 Bagua  Sat, May 2, 2009 5:52:15pm

re: #380 kay1212

We may be in Semantics here, a “naked short” is selling short a vehicle without actually owning it, it can be done in a variety of very legal ways, all of which have regulations. There is much lively debate on its actual effect on the markets.

392 itellu3times  Sat, May 2, 2009 5:53:17pm

re: #358 Bagua

Yes, so what naked shorts were you referring to?

The illegal ones, on an unprecedentedly large scale. I never have heard names named. As a small effort to counter them, the markets temporarily reinstituted the uptick rule, but that wasn’t really the problem, and I believe it can be circumvented anyway, especially by agents already bent on ignoring the laws.

Bear, Lehman, and after their prices fell naturally, Citi and BAC were all rumored to be under such attacks. I don’t know the truth, but I suspect many people do, and the facts could probably be assembled from the records even now.

393 Fat Bastard Vegetarian  Sat, May 2, 2009 5:53:29pm

re: #390 albusteve

That’s probably the one Stones song that you hate.

394 [deleted]  Sat, May 2, 2009 5:53:41pm
395 FurryOldGuyJeans  Sat, May 2, 2009 5:53:42pm

re: #386 albusteve

that was then…it’s a new and improved MSM and their agenda is obvious…once they wake up to the fact that they are being used they will turn

And the FMSM had a tighter stranglehold on public opinion back then because any media info was said with one voice. There was no talk radio, no internet. The reason why the media is so obvious with their agenda now is because they are not only one available.

396 funky chicken  Sat, May 2, 2009 5:54:10pm

re: #235 JacksonTn

FOGJ … I totally agree … they should have more programs for trades in schools … some kids are not for college … and if they don’t go they feel less than or are made to feel that way … there is nothing at all wrong with having a trade … we need plumbers, electricians, etc. just as much as professors, lawyers, etc. …

And we need to stop sending our factories overseas….

397 itellu3times  Sat, May 2, 2009 5:54:43pm

re: #380 kay1212

You seem to know stuff, you in the business?

398 FurryOldGuyJeans  Sat, May 2, 2009 5:54:59pm

re: #396 funky chicken

And we need to stop sending our factories overseas….

A whole ‘nother story there.

399 JacksonTn  Sat, May 2, 2009 5:56:00pm

re: #383 Fat Bastard Vegetarian

You Can’t Always Get What You Want, was okay.

FBV … Love the total band … Mick not so much solo … love Keith …

Youtube Video

400 Fat Bastard Vegetarian  Sat, May 2, 2009 5:56:13pm

re: #396 funky chicken

And we need to stop sending our factories overseas….

Silly! We don’t send our factories overseas. We board them up, put chain link fences around them and watch them decay.

Send our factories overseas. Preposterous.

401 Bagua  Sat, May 2, 2009 5:57:00pm

re: #392 itellu3times

I’ve never seen that documented either. Regardless, even if it did happen, it had no actual effect on Bear Stearns nor Lehmans.

However, in Bear Stearns case, the rumour mill helped sink them as it led to redemption, at which point they generated margin calls they could not meet, and in vehicles that had become illiquid so they couldn’t be sold, the cascading effect sunk Bear Stearns.

402 kay1212  Sat, May 2, 2009 5:57:16pm

re: #368 Bagua

Yes, those are the redemptions I mentioned, essentially, there was a rumour driven run on the bank.

However, there was also accountancy that forced massive margin call based upon Fair Valuation. They didn’t actually “lose” any money and , as others have mentioned, mortgage defaults only played a minor role.

Well, I agree with you that it started that way. I think the accounting rules obliterated AIG because they had to post collateral with every institution they had insured against “losses”. Those institutions were using the insurance from AIG as required minimum equity and when the accounting rules caused them losses and those losses flowed through to their equity, they then called on AIG to make good on the insurance against loss they had purchased [which AIG sold to them for fractions of pennies in the dumbest move ever] and AIG was forced to give cash to the institution as collateral against the ultimate realized losses. Will never figure out why AIG was allowed to write that insurance at the holding company level. What a mess.

403 Fat Bastard Vegetarian  Sat, May 2, 2009 5:57:16pm

We’ve got another barn burner…Celtics/Bulls.

404 rain of lead  Sat, May 2, 2009 5:57:41pm

re: #400 Fat Bastard Vegetarian

Silly! We don’t send our factories overseas. We board them up, put chain link fences around them and watch them decay.

Send our factories overseas. Preposterous.

“unpossable”

405 Killian Bundy  Sat, May 2, 2009 5:58:05pm
406 Randall Gross  Sat, May 2, 2009 5:58:40pm

re: #366 Killgore Trout

Actually KT some of it came from me. CRA helped create some of the lowering of standards by Risk Managers. It wasn’t just CRA areas that took advantage of those lower standards however.
Lower standards enabled some of the risk, it just wasn’t all in CRA areas.

Other things occurred at the top of the stack - 125 percent to value loans to borrowers with medium to good credit were offered by several institutions, those attracted they yuppie and D.I.N.K. house flipping types, who went upside down quicker in the crunch due to the 125 percent to value.

407 bravesoat  Sat, May 2, 2009 5:58:47pm

I am not going to bother trying to understand the credit crisis. All that is important is that The One knows the causes and solutions to all of our problems. That is why I am buying a Chrysler on Monday.

408 pink freud  Sat, May 2, 2009 5:59:33pm

re: #405 Killian Bundy

Ridge considering campaign against Specter

/buh bye Benedict Arlen

I like the sound of this.

409 Bagua  Sat, May 2, 2009 5:59:39pm

re: #402 kay1212

Yes that’s right, they obliterated Lehmans, and Bear Stearns and other good companies. The whole thing was unnecessary, the S&L crisis was much bigger in real terms and had the rules been in effect then it would have sunk the entire banking industry, just like what is happening now with far less actual defaults.

410 albusteve  Sat, May 2, 2009 5:59:45pm

re: #393 Fat Bastard Vegetarian

That’s probably the one Stones song that you hate.

wrong…don’t make me post it…
I saw the old Celtics twice up at the Palace…he would get the ball 20’ from the basket and just move around as if nobody (Rodman) was guarding him….his balance was unreal and he’d shoot from any angle, leaning left or right or falling back etc…just unbelievable…that was his shot, right hand or left..didn’t much matter

411 shug  Sat, May 2, 2009 5:59:52pm

re: #407 bravesoat

let me loan you a sarc tag

412 Fat Bastard Vegetarian  Sat, May 2, 2009 6:00:34pm

re: #405 Killian Bundy

Ridge considering campaign against Specter

/buh bye Benedict Arlen

You think so? I hope so. You really think so?

413 FurryOldGuyJeans  Sat, May 2, 2009 6:00:36pm

re: #400 Fat Bastard Vegetarian

Silly! We don’t send our factories overseas. We board them up, put chain link fences around them and watch them decay.

Send our factories overseas. Preposterous.

We really don’t send them overseas. We do as you say and then sell them to some foreign concern who proceed to box it all up and ship it to home for them.

414 kay1212  Sat, May 2, 2009 6:01:03pm

re: #391 Bagua

We may be in Semantics here, a “naked short” is selling short a vehicle without actually owning it, it can be done in a variety of very legal ways, all of which have regulations. There is much lively debate on its actual effect on the markets.

No. A “short” is selling shares you do not own. All reputable brokers require you “borrow” the shares before shorting. A “naked short” is due to selling share you have not first borrowed.

415 Opilio  Sat, May 2, 2009 6:01:03pm

re: #407 bravesoat

I am not going to bother trying to understand the credit crisis. All that is important is that The One knows the causes and solutions to all of our problems. That is why I am buying a Chrysler on Monday.

Why buy a Chrylser on Monday when you can buy a Cadillac tomorrow?

416 Killian Bundy  Sat, May 2, 2009 6:01:04pm

re: #408 pink freud

I like the sound of this.

/if the Bonkey primary doesn’t kill him, Ridge will

417 albusteve  Sat, May 2, 2009 6:01:17pm

re: #399 JacksonTn

FBV … Love the total band … Mick not so much solo … love Keith …


[Video]

Richards is a genius…like that

418 Dark_Falcon  Sat, May 2, 2009 6:01:28pm

re: #405 Killian Bundy

Ridge considering campaign against Specter

/buh bye Benedict Arlen


Good riddance to him and the jackass he rode in on!

419 pink freud  Sat, May 2, 2009 6:01:36pm

Since this isn’t too terribly OT ….

What the heck’s happened to cognito? Not a whiff of him lately. Did something happen that I missed?

420 shug  Sat, May 2, 2009 6:01:39pm

I’ll gladly pay your Tuesday for a subprimeburger today

421 JacksonTn  Sat, May 2, 2009 6:02:06pm

re: #417 albusteve

Richards is a genius…like that

albusteve … lol … you channeling tfk … like that …

422 FurryOldGuyJeans  Sat, May 2, 2009 6:02:44pm

Oh, noes! The sign of the Apocalypse! It is raining in the Seattle area!

I am so sick of rain. *grumble*

423 itellu3times  Sat, May 2, 2009 6:02:50pm

re: #407 bravesoat

I am not going to bother trying to understand the credit crisis. All that is important is that The One knows the causes and solutions to all of our problems. That is why I am buying a Chrysler on Monday.

I misread that at first, just -a- Chrysler, as opposed to the whole company?
/

424 pittrader1988  Sat, May 2, 2009 6:02:54pm

re: #265 Bloodnok

No, you might see that on the surface, but as Dick Durbin said-Goldman owns DC.

He didn’t say Goldman, but said Investment banks or Wall Street. Guess what, Goldman is the only thing left standing on Wall Street. Why? Because Paulsen set it up that way. Bear and Lehmann were its biggest competitors. Both are gone.

JP was always a bank, and more interested in credit cards and other types of financing than prop trading and investment banking.

Morgan Stanley didn’t have the prop trading shop Goldman had. That’s where the money is on Wall Street.

the more order flow you can internalize, the more money you can make. simple fact. Goldman controls all the order flow on Wall Street. You need to be an insider to recognize that fact. The details are pretty wonky to the average investor-but that’s where the hardball game is played.

425 Fat Bastard Vegetarian  Sat, May 2, 2009 6:03:07pm

re: #410 albusteve

Larry, The Chief, Herman Munster, and DJ.

Ugly Buggars, weren’t they.

I swear. If it wasn’t for Danny Ainge, none of them would have ever gotten laid.

426 kay1212  Sat, May 2, 2009 6:03:19pm

re: #397 itellu3times

You seem to know stuff, you in the business?


I am a CPA, an NASD Certified Financial and Operatings Principal and ran the back office of a regional brokerage firm for a number of years.

427 Fat Bastard Vegetarian  Sat, May 2, 2009 6:03:35pm

re: #419 pink freud

I like Cog.

428 pink freud  Sat, May 2, 2009 6:03:46pm

re: #416 Killian Bundy

/if the Bonkey primary doesn’t kill him, Ridge will

However it goes, he is the master of his own demise. Good riddance.

429 FurryOldGuyJeans  Sat, May 2, 2009 6:03:49pm

re: #423 itellu3times

I misread that at first, just -a- Chrysler, as opposed to the whole company?
/

Right now the whole company might be cheaper than one of their vehicles.

430 Randall Gross  Sat, May 2, 2009 6:03:56pm

KT: One thing you need to learn about agitprop - good agitprop always contains grains of truth or it doesn’t travel very far. LR is probably exaggerating greatly, but CRA helped along with many other factors. It was terminal ineptitude across the board hit by black swan.

431 Bagua  Sat, May 2, 2009 6:04:29pm

re: #414 kay1212

No. A “short” is selling shares you do not own. All reputable brokers require you “borrow” the shares before shorting. A “naked short” is due to selling share you have not first borrowed.

I see your point, the one naked is the seller who does not himself own the stock, the regulations are what requires the broker to borrow the actual sales. Should the broker falsify the transaction, then that would be fraud, the actual seller would be doing nothing wrong by himself being a naked short.

Also, shares are only one aspect, there are options and other derivatives which are completely legal to sell naked short. (Not very smart, but 100% legal)

432 albusteve  Sat, May 2, 2009 6:04:46pm

re: #425 Fat Bastard Vegetarian

Larry, The Chief, Herman Munster, and DJ.

Ugly Buggars, weren’t they.

I swear. If it wasn’t for Danny Ainge, none of them would have ever gotten laid.

super tough on the court…those were my golden years back then…the Pistons could play with all those guys

433 freetoken  Sat, May 2, 2009 6:04:47pm

re: #377 JCM

A different POV.

Why the Mortgage Crisis Happened

That is a polemic, not an analysis. The author is selectively pulling out of 70 years of US history a few decisions by politicians.

The author appears to be a religious writer who ventured into politics when President Obama begin to look like he was going to win.

434 itellu3times  Sat, May 2, 2009 6:05:02pm

re: #410 albusteve

wrong…don’t make me post it…
I saw the old Celtics twice up at the Palace…he would get the ball 20’ from the basket and just move around as if nobody (Rodman) was guarding him….his balance was unreal and he’d shoot from any angle, leaning left or right or falling back etc…just unbelievable…that was his shot, right hand or left..didn’t much matter

Bird was a freak of nature, with what he could do.

I’ve known a few (amateur) atheletes like that, just magical skills, and you can’t quite ever figure out how they do it.

435 pink freud  Sat, May 2, 2009 6:05:16pm

re: #427 Fat Bastard Vegetarian

I like Cog.

So do I.

436 TheMatrix31  Sat, May 2, 2009 6:05:18pm

re: #422 FurryOldGuyJeans

Oh, noes! The sign of the Apocalypse! It is raining in the Seattle area!

I am so sick of rain. *grumble*

I’ll gladly switch with you. How does Los Angeles-style weather sound for ya?

437 Killgore Trout  Sat, May 2, 2009 6:06:30pm

re: #430 Thanos

LR is probably exaggerating greatly, but CRA helped along with many other factors. It was terminal ineptitude across the board hit by black swan.


True. There were a lot of factors. In the big picture CRA played a pretty minor role.

438 albusteve  Sat, May 2, 2009 6:07:00pm

re: #434 itellu3times

Bird was a freak of nature, with what he could do.

I’ve known a few (amateur) atheletes like that, just magical skills, and you can’t quite ever figure out how they do it.

right…you just shake your head in wonder

439 Killian Bundy  Sat, May 2, 2009 6:07:17pm

re: #431 Bagua

there are options and other derivatives which are completely legal to sell naked short. (Not very smart, but 100% legal)

/um, how do you short an option?

440 Killgore Trout  Sat, May 2, 2009 6:07:38pm

re: #433 freetoken

I stopped reading when he mentioned Obama and Lehman Brothers in the 2nd paragraph.

441 avanti  Sat, May 2, 2009 6:08:01pm

re: #377 JCM

A different POV.

Why the Mortgage Crisis Happened

What will sell on the right, government screw ups by both parties for decades, and greedy investors or blaming minorities for buying homes they can’t afford ?. Forget the fact that those mortgages are tiny percentage of the problem, blaming it on the minorities is a slam dunk since the right does not have their vote regardless.
“If it wasn’t for those bleeding heart liberals forcing banks to loan to minority’s, we’d be just peachy.” Not at all true, but a easy sell. Both parties sat on their hands watching the bubble grow and grow, now it’s finger pointing time from both sides.

442 Bloodnok  Sat, May 2, 2009 6:09:25pm

re: #424 pittrader1988

No, you might see that on the surface, but as Dick Durbin said-Goldman owns DC.

He didn’t say Goldman, but said Investment banks or Wall Street. Guess what, Goldman is the only thing left standing on Wall Street. Why? Because Paulsen set it up that way. Bear and Lehmann were its biggest competitors. Both are gone.

JP was always a bank, and more interested in credit cards and other types of financing than prop trading and investment banking.

Morgan Stanley didn’t have the prop trading shop Goldman had. That’s where the money is on Wall Street.

the more order flow you can internalize, the more money you can make. simple fact. Goldman controls all the order flow on Wall Street. You need to be an insider to recognize that fact. The details are pretty wonky to the average investor-but that’s where the hardball game is played.

I’m in the financial services industry and work with asset managers, but I appreciate what you are saying as an insider.

443 itellu3times  Sat, May 2, 2009 6:09:29pm

re: #377 JCM

A different POV.

Why the Mortgage Crisis Happened

Also a pretty good timeline, but it underplays one element that is in the video, Alan Greenspan’s toxic role in setting government rates below inflation.

444 Killian Bundy  Sat, May 2, 2009 6:10:44pm

re: #441 avanti

Forget the fact that those mortgages are tiny percentage of the problem

Less than 10% of all mortgages in fact.

/and yet here we are, caught in a “subprime crisis”

445 pittrader1988  Sat, May 2, 2009 6:11:07pm

re: #431 Bagua

shorts are not the problem. it’s the collusion of the shorts that is the problem.

Here is the solution. First, no one can borrow stock to short that is more than the outstanding float. Second, the uptick rule is a good thing, bring it back. Third, make stocks trade in .05 increments to foster arbitrage between markets. You will also have more volume at each price (more liquidity) Fourth, ban proprietary trading in the investment banks, and force all orders to go to some type of regulated exchange. Sunshine is good. Fifth, if you prop trade, you can’t be public. You have to be closely held. Partners watch other partners risk taking closer than shareholders do. Sixth, The default when you buy a stock is that it shouldn’t be allowed to be borrowed. Make the shareholder check a box to allow it to be borrowed. Less stock available means less shorting and less probability of a colluded attack.

Again, I am in the industry. I have seen where bodies are buried.

446 Bagua  Sat, May 2, 2009 6:11:21pm

re: #439 Killian Bundy

I’m simplify the terms a bit, but if I sell a call without owning the stock, or another call, it is “selling a naked call” or a naked option which I am shorting as I expect the option to expire worthless.

If I sell a put without owning another put it is a naked short also, in both cases I am short the option with cover, one has unlimited risk and the other can go to zero.

447 itellu3times  Sat, May 2, 2009 6:11:24pm

re: #439 Killian Bundy

/um, how do you short an option?

Sell a call, comes to about the same thing, but people know they are dealing with a derivative, the price of money is figured into the price of the instrument, and it is aboveboard. Plus, brokers require a certain amount of capital and signed forms, before they allow you to do it. And they keep records.

448 Dark_Falcon  Sat, May 2, 2009 6:12:18pm

re: #441 avanti

What will sell on the right, government screw ups by both parties for decades, and greedy investors or blaming minorities for buying homes they can’t afford ?. Forget the fact that those mortgages are tiny percentage of the problem, blaming it on the minorities is a slam dunk since the right does not have their vote regardless.
“If it wasn’t for those bleeding heart liberals forcing banks to loan to minority’s, we’d be just peachy.” Not at all true, but a easy sell. Both parties sat on their hands watching the bubble grow and grow, now it’s finger pointing time from both sides.

A bit liberal slanted, but essentially correct.

449 pittrader1988  Sat, May 2, 2009 6:12:21pm

re: #444 Killian Bundy

sub prime and alt-a loans went from less than 10% of the market in 2001, to over 35% in 2007.

cheap fuel for the fire.

450 Killian Bundy  Sat, May 2, 2009 6:13:19pm

re: #446 Bagua

I’m simplify the terms a bit, but if I sell a call without owning the stock, or another call, it is “selling a naked call” or a naked option which I am shorting as I expect the option to expire worthless.

If I sell a put without owning another put it is a naked short also, in both cases I am short the option with cover, one has unlimited risk and the other can go to zero.

That’s writing an uncovered call or put.

/it has nothing to do with shorting

451 JCM  Sat, May 2, 2009 6:14:12pm

re: #441 avanti

What will sell on the right, government screw ups by both parties for decades, and greedy investors or blaming minorities for buying homes they can’t afford ?. Forget the fact that those mortgages are tiny percentage of the problem, blaming it on the minorities is a slam dunk since the right does not have their vote regardless.
“If it wasn’t for those bleeding heart liberals forcing banks to loan to minority’s, we’d be just peachy.” Not at all true, but a easy sell. Both parties sat on their hands watching the bubble grow and grow, now it’s finger pointing time from both sides.

Can’t argue with that.

CRA was just a one step of many. Sub-primes just a part, leveraging, and all all the other financial shenanigans. Plenty of guilt to go around.

I don’t blame minorities. I blame buyers who bought more than they could afford, the lenders who pushed people into loans they couldn’t afford, and the rest of the financial industry that did check itself and government that either pushed or looked the other way.

452 bungie  Sat, May 2, 2009 6:14:19pm

re: #250 Thanos

This is one of those pot / kettle things. I am not overgeneralizing. I am basing my statements on the whole market, you are overgeneralizing from your own anectdotal experience. That’s not the shape the entire country is in. Please watch this video and then come back.

I find that video and your suggestion that I watch it, sophomoric and offensive. Shall we all just give each other respect and assume that the other knows the difference between an anecdote and a generalization? I had hoped your video was something backing up your generalizations about the mortgage/credit crisis.

For you to be basing your statements “on the whole market” means there is no real life in that statement at all. It is just a model or a statistic gleaned from other statistics. It is all generalization. You don’t know what the market as a whole looks like out in the field because you haven’t been to the entire market. The trouble with global generalizations like this is that they average out or minimize data and in the end are misleading. California, Arizona, Florida and Nevada are together a very significant percentage of the US in population, in GDP, etc. If you think you are separate from us and what happens in these places can’t drag you down you are mistaken. Its sort of like necrotic tissue eventually killing the whole organism. (My very first job 38 years ago was as a statistician for the US Dept of Labor analyzing census data so that it would say what they wanted it to say, so don’t get me started on “the market as a whole.”)

You are correct though that I do not know what the rest of the real estate market looks like in other parts of the country. And I do think Arizona and Nevada are prone to boom or bust cycles.

453 pittrader1988  Sat, May 2, 2009 6:14:46pm

re: #450 Killian Bundy

listed options are regulated. There should be unlimited amounts of trading here.
If a guy wants to go naked short puts or calls, they ought to be able to do it as long as they have the capital. If they don’t, the clearing house blows them out.

454 JCM  Sat, May 2, 2009 6:15:14pm

re: #444 Killian Bundy

Less than 10% of all mortgages in fact.

/and yet here we are, caught in a “subprime crisis”

That 10% was leveraged into tens of billions of other loans.

455 funky chicken  Sat, May 2, 2009 6:16:19pm

re: #406 Thanos

Actually KT some of it came from me. CRA helped create some of the lowering of standards by Risk Managers. It wasn’t just CRA areas that took advantage of those lower standards however.
Lower standards enabled some of the risk, it just wasn’t all in CRA areas.

Other things occurred at the top of the stack - 125 percent to value loans to borrowers with medium to good credit were offered by several institutions, those attracted they yuppie and D.I.N.K. house flipping types, who went upside down quicker in the crunch due to the 125 percent to value.

125% LTV loans were absolutely insane. We have excellent credit and got all kinds of crazy come-on letters from banks trying to sell us on those. The appeals were incredible….”impress your neighbors with your fabulous vacations and a new home theater. your house can pay for it all!”

and the people who took 125% LTV to “invest” the money in the stock market, etc. Jeez. It was gambling every bit as much as if they’d just taken the money and come to Vegas.

456 Fat Bastard Vegetarian  Sat, May 2, 2009 6:17:44pm

re: #432 albusteve

Piston/Celtics/Lakers… 80’s my favorite pro-basketball. Those were the damn days. Where’s Hoosier?

457 avanti  Sat, May 2, 2009 6:17:57pm

re: #448 Dark_Falcon

A bit liberal slanted, but essentially correct.

I try to control that, but I am a leftie after all. :)

458 Bagua  Sat, May 2, 2009 6:17:59pm

re: #445 pittrader1988

shorts are not the problem. it’s the collusion of the shorts that is the problem.

Here is the solution. First, no one can borrow stock to short that is more than the outstanding float. Second, the uptick rule is a good thing, bring it back. Third, make stocks trade in .05 increments to foster arbitrage between markets. You will also have more volume at each price (more liquidity) Fourth, ban proprietary trading in the investment banks, and force all orders to go to some type of regulated exchange. Sunshine is good. Fifth, if you prop trade, you can’t be public. You have to be closely held. Partners watch other partners risk taking closer than shareholders do. Sixth, The default when you buy a stock is that it shouldn’t be allowed to be borrowed. Make the shareholder check a box to allow it to be borrowed. Less stock available means less shorting and less probability of a colluded attack.

Again, I am in the industry. I have seen where bodies are buried.

All good points. And the collusion fed the rumour mill which caused the redemption which caused the margin call which Bear Stearns couldn’t meet because of Fair Valuation.

Yet it all gets boiled down to blame the short sellers by the simplistic and lazy hacks in the MSM.

I agree there are valid opinions on the uptick rule.

/you may not be alone

459 Killian Bundy  Sat, May 2, 2009 6:18:37pm

re: #453 pittrader1988

listed options are regulated. There should be unlimited amounts of trading here.
If a guy wants to go naked short puts or calls, they ought to be able to do it as long as they have the capital. If they don’t, the clearing house blows them out.

Yep, I get it, that’s how I manage to stay retired.

/did I mention I caught the 20 point move in GMCR in a three day trade last week?

460 Bagua  Sat, May 2, 2009 6:19:33pm

re: #450 Killian Bundy

That’s writing an uncovered call or put.

/it has nothing to do with shorting

That’s correct, and “writing an uncovered call or put” is being “naked short” that is why I mentioned this may be down to semantics.

461 avanti  Sat, May 2, 2009 6:20:37pm

re: #459 Killian Bundy

Yep, I get it, that’s how I manage to stay retired.

/did I mention I caught the 20 point move in GMCR in a three day trade last week?

I need you to play backjack with me, that’s a amazing deal. I’m doing well in the market, but that’s a hell of a play.

462 Killian Bundy  Sat, May 2, 2009 6:21:21pm

re: #460 Bagua

That’s correct, and “writing an uncovered call or put” is being “naked short” that is why I mentioned this may be down to semantics.

/you can’t “short” options

463 funky chicken  Sat, May 2, 2009 6:21:53pm

re: #441 avanti

What will sell on the right, government screw ups by both parties for decades, and greedy investors or blaming minorities for buying homes they can’t afford ?. Forget the fact that those mortgages are tiny percentage of the problem, blaming it on the minorities is a slam dunk since the right does not have their vote regardless.
“If it wasn’t for those bleeding heart liberals forcing banks to loan to minority’s, we’d be just peachy.” Not at all true, but a easy sell. Both parties sat on their hands watching the bubble grow and grow, now it’s finger pointing time from both sides.

BS race card play.

CRA was about forcing banks to give money to people who could never and would never pay it back.

That’s not sustainable as a business model.

464 Bagua  Sat, May 2, 2009 6:22:38pm

re: #453 pittrader1988

listed options are regulated. There should be unlimited amounts of trading here.
If a guy wants to go naked short puts or calls, they ought to be able to do it as long as they have the capital. If they don’t, the clearing house blows them out.

Right, and that’s what was missing in the swaption market, a regulated exchange that ensured the counter parties could pay, however, the Lehmans settlement demonstrated that the market was well hedged and the counter-parties settled without problem.

465 kay1212  Sat, May 2, 2009 6:23:44pm

re: #459 Killian Bundy

Yep, I get it, that’s how I manage to stay retired.

/did I mention I caught the 20 point move in GMCR in a three day trade last week?

Well, please post some of the tips in advance, OK? I also trade options in my own account.

466 bungie  Sat, May 2, 2009 6:24:20pm

re: #362 Opilio

Thank you!

I’ve stared at 3-5-5/1-1-3 trying to figure it out…

467 Bagua  Sat, May 2, 2009 6:24:34pm

re: #462 Killian Bundy

/you can’t “short” options

The seller is short, either naked or covered or hedged. The buyer is long.

468 avanti  Sat, May 2, 2009 6:27:01pm

re: #463 funky chicken

BS race card play.

CRA was about forcing banks to give money to people who could never and would never pay it back.

That’s not sustainable as a business model.

Not so, it just prevented “redlining” neighborhoods . Banks were asked to weigh credit worthiness of the individual borrower and not the neighborhood they lived in. Even if you thought it was based on giving minorities a better break, the loans were a small part of the problem regardless of what Rush and others are hyping.

469 Randall Gross  Sat, May 2, 2009 6:28:13pm

re: #452 bungie

You make a lot of assumptions in that. I have a better picture than you do of the market (I read financial rags regularly including the arcane ones, and read real estate blogs like the Mortgage Fraud blog I linked above, my wife’s been in banking, underwriting, and processing for 30 years, and has led teams in packing CDO’s and loan package buyouts, she’s been an expert witness at some trials - we talk about each others business a lot)
If you are wondering about the video it’s because you were stretching your anecdote to fit the whole country, and I perceived some cognitive bias in your reply.
e.g. How do you know those families were Illegal immigrants? How do you know all the houses were foreclosed? Are you operating on hearsay from neighbors who might have cognitive bias, or are you operating under your own assumptions here?

470 Killian Bundy  Sat, May 2, 2009 6:28:18pm

re: #461 avanti

but that’s a hell of a play.

/yeah that trade’ll pay the bills for several months

471 The Sanity Inspector  Sat, May 2, 2009 6:28:44pm

It is indeed a good tutorial on how we got into this mess. I notice it leaves out the work of ACORN and similar groups, though.

472 pittrader1988  Sat, May 2, 2009 6:32:17pm

re: #464 Bagua

the big guys, Goldman et al don’t want a regulated exchange, unless they own it.
They own ICE, lock stock and barrel.
I am on twitter now, pittrader 1988

473 Velvet Elvis  Sat, May 2, 2009 6:32:42pm

Might have helped to keep Glass-Steagall in place too. The myopic frenzy of bipartisan deregulation that happened over the past 20 years can’t be overlooked.

I’m not one for a heavy regulatory hand, but sometimes common-sense regulation is required to keep people from getting crazy. Derivatives trading is an area where people got crazy. Somebody, somewhere should have stood up and said stuff like CDOs squared were crazy ideas.

474 Bagua  Sat, May 2, 2009 6:33:37pm

re: #472 pittrader1988

Agreed.

475 Randall Gross  Sat, May 2, 2009 6:36:00pm

Avanti: The CRA took away mandatory insurance in CRA areas for high risk loans. With that gone the risk needle moved higher for those loans, and those loans helped in the cascade. They certainly weren’t all of it or the major part, but CRA created conditions and loosening of standards that were then extended to all areas.

476 freetoken  Sat, May 2, 2009 6:36:22pm

re: #440 Killgore Trout

I stopped reading when he mentioned Obama and Lehman Brothers in the 2nd paragraph.

Mr. Wells’ one published religious essay, found here:
books.google.com
gives me insight to his belief system.

Put simply, in a world with many many variables affecting our economy, to single out the CRA the way he did simply does not do justice to the problems at hand. The essay of his, which not only was in AmericanThinker but was picked up by the usual suspects (Heartland, IBD), reads like talking points against Obama as used by partisans.

Understanding the CRA very well may be important to understanding what is going on in the larger context, but to single it out as the cause appears to me to be more partisan and political rather than analytical.

477 Randall Gross  Sat, May 2, 2009 6:40:17pm

Heh, I shoulda taken a screen shot. Chuckie Schumer pulled down his 2001 CRA website after I linked to it….

478 funky chicken  Sat, May 2, 2009 6:41:41pm

I heard Bob Brinker in October 2008 SHOUTING about the fact that Chris Cox’s SEC had killed the uptick rule, I believe back in February. I don’t do the stock market, so I had no idea what that was…so I started googling.

Chris Cox, “conservative” hero turned out to be just another Bush appointee who was put into his position purely as political cronyism, apparently. And he, Paulson, Bernanke and the rest of the bunch were asleep at the switch until the train was hanging half off the broken bridge, or something.

479 Bagua  Sat, May 2, 2009 6:41:59pm

re: #476 freetoken

Yes, most issues suffer when they get reduced to over simplistic and partisan bias, which can involve both omission and selection.

480 funky chicken  Sat, May 2, 2009 6:44:42pm

My dad’s told me that lots of AIG guys should be in prison for the ? insured something or other that they created that somehow spread the bad sub-prime loan risk throughout the entire system.

I’m a biochemist, not an accountant, but I trust my dad’s take on this kind of stuff.

481 kay1212  Sat, May 2, 2009 6:47:53pm

re: #480 funky chicken

My dad’s told me that lots of AIG guys should be in prison for the ? insured something or other that they created that somehow spread the bad sub-prime loan risk throughout the entire system.

I’m a biochemist, not an accountant, but I trust my dad’s take on this kind of stuff.

I’ve gotta run but I agree with your Dad. If they were going to pass Sarbanes-Oxley, they should have intended to prosecute offenders. Those AIG officers signed SEC filings that did not disclose and did not fairly represent what was happening in that company. It’s a travesty. But there’s blame all around.

482 Bagua  Sat, May 2, 2009 6:48:13pm

re: #480 funky chicken

He’s referring to the Credit Default Swaps also known as CDS and Swaptions.

They have a valid place, without them, we see the dry up in the Corporate Bond markets, a big part of the so called “credit crunch.”

483 bungie  Sat, May 2, 2009 6:55:28pm

re: #469 Thanos

re: #469 Thanos

You make a lot of assumptions in that. I have a better picture than you do of the market (I read financial rags regularly including the arcane ones, and read real estate blogs like the Mortgage Fraud blog I linked above, my wife’s been in banking, underwriting, and processing for 30 years, and has led teams in packing CDO’s and loan package buyouts, she’s been an expert witness at some trials - we talk about each others business a lot)
If you are wondering about the video it’s because you were stretching your anecdote to fit the whole country, and I perceived some cognitive bias in your reply.
e.g. How do you know those families were Illegal immigrants? How do you know all the houses were foreclosed? Are you operating on hearsay from neighbors who might have cognitive bias, or are you operating under your own assumptions here?

You seem to have made a lot of assumptions about me. How do you presume to know what I know about the market? You do like to talk down to people, don’t you? “I perceived some cognitive bias in your reply.” What the hell does that mean?

I have practiced law for 35 years and at present I practice in area of tax assessing as well as several other areas. I related the story of six empty houses which I learned directly from law enforcement personnel.

I’m not wondering about the video, which I thought was high school level at best, but I am wondering why you are so threatened by comments about how bad it is in Arizona and several other states.. Why do I think it is exactly like people like you who “read all the financial rags daily” and talk about the” market as a whole” who got us into this mess.

484 Bagua  Sat, May 2, 2009 6:58:38pm

re: #472 pittrader1988

I am on twitter now, pittrader 1988

Twitter says “No results for “pittrader 1988”

485 funky chicken  Sat, May 2, 2009 7:01:26pm

re: #468 avanti

Not so, it just prevented “redlining” neighborhoods . Banks were asked to weigh credit worthiness of the individual borrower and not the neighborhood they lived in. Even if you thought it was based on giving minorities a better break, the loans were a small part of the problem regardless of what Rush and others are hyping.

Another BS race card play. Twice in a row, huh?

And something sure lead banks to not weigh the credit worthiness of borrowers. Didn’t you see all the ads for “no doc” mortgages? WTF…my husband and I have bought houses all over the country, and every time it was a financial colonoscopy.

The CRA was an important piece of the puzzle.

And I don’t listen to Limbaugh, so take that line somewhere else.

486 Liberal Classic  Sat, May 2, 2009 7:08:41pm

LOL @ the “sub-prime” family 7:26 minutes in. They both smoke, have 4 kids, and the fat guy has some kind of drink in his hand.

487 Bagua  Sat, May 2, 2009 7:09:57pm

re: #473 Conservative Moonbat

Sorry to disagree, but the De-regulation canard is only a bit player, though certainly favoured by the MSM and those who want more regulation. Over-regulation and mis-regulation were far more to blame.

488 Orangutan  Sat, May 2, 2009 7:15:12pm

re: #19 OldLineTexan

OK, neat. Where’s the part about the social engineers making lenders loan to less-worthy risks?


Exactly. And the part about the destruction of the accounting profession ten years earlier….. Dodd wrecked the reporting infrastructure, Frank wrecked the underlying on the derivatives with Acorn and other things with Fannie and Freddie.

489 Orangutan  Sat, May 2, 2009 7:17:51pm

re: #36 Bagua

This animation is rife with exaggeration and bias.

Yes, much. It’s made by a budding social engineer. I wonder what else they want Fannie and Freddie (or some new gov’t “sister”) to fund?

490 Liberal Classic  Sat, May 2, 2009 7:18:13pm

Overall, I think the video was pretty good, but it seemed to me that it de-emphasized the role of the government in controlling the the regulatory environment in which the lenders operated.

491 Bagua  Sat, May 2, 2009 7:20:01pm

re: #489 Orangutan

Thanks Orangutan, but it looks like the thread died!

492 Orangutan  Sat, May 2, 2009 7:22:50pm

re: #491 Bagua

Thanks Orangutan, but it looks like the thread died!


Much obliged. There is a lot of oblique marketing in economics these days, and little of it good.

493 Bagua  Sat, May 2, 2009 7:25:09pm

Oblique marketing?

494 Orangutan  Sat, May 2, 2009 7:28:22pm

re: #493 Bagua

Oblique marketing?

Using the crisis as an opportunity to package part of the truth and market it as the whole, for example. Taking a side or incomplete view of a situation and trying to generalize it to others.

495 Bagua  Sat, May 2, 2009 7:29:11pm

re: #494 Orangutan

Thank, yes I agree strongly.

496 lostlakehiker  Sat, May 2, 2009 7:40:21pm

One thing he doesn’t mention is that the Community Reinvestment Act required loans at ever lower standards. Having standards, even minimal standards, for lending makes it impossible to meet the quotas set by the federal government for lending to groups that have lower incomes and poorer credit ratings.

Throwing out standards makes it possible to meet the quota. Have the borrower invent some income. Waive down payments. Do whatever it takes to stay within the letter of that crazy law.

Of course, once you’ve thrown standards out the window for one group, you may as well throw them out for everybody else. After all, the risks you’re taking aren’t as bad as the risks you’ve already taken. Plus, you might get in trouble for treating one group differently from another.

And now, here we are.

497 Randall Gross  Sat, May 2, 2009 8:03:19pm

re: #483 bungie

Not threatened at all. I suppose the “member of law enforcement” also told you they were all illegals? Did you verify it? If so, how? Do you always believe everything you are told? Could that be a bias?

Do some more reading on cognitive bias before you reply. I am not talking about racial bias, which is probably another false assumption you are making.

yudkowsky.net

498 Velvet Elvis  Sat, May 2, 2009 8:09:13pm

re: #487 Bagua

Sorry to disagree, but the De-regulation canard is only a bit player, though certainly favoured by the MSM and those who want more regulation. Over-regulation and mis-regulation were far more to blame.

Seeing as how the derivatives market was completely unregulated it’s pretty hard to say that it was either mis or over regulated but I am willing to conceed that in some cases (AIG) there was a lot of misregulation going on as well.

499 Bagua  Sat, May 2, 2009 8:15:42pm

re: #498 Conservative Moonbat

Also sorry to disagree but it is not accurate to say the “derivatives market was completely unregulated” most derivatives are regulated in some manner, some more than others and there are those who argue that there is too much or not enough, but certainly not none.

500 hurricane567  Sat, May 2, 2009 8:42:17pm

re: #19 OldLineTexan

OK, neat. Where’s the part about the social engineers making lenders loan to less-worthy risks?

Found ‘em, about 7:23 in. Good stuff, all the way around.

“But what about those huge AIG bonuses, and the bus tour to executive’s houses?” some might steam.
“If AIG desk jockey did what he was contractually obligated to do to get the the fat bonus, it dosen’t matter if the company is bust, he still has to get paid.”
“But…but…”
“Unless AIG declares bankruptcy, in which case they might be able to get out of that.”
“Then they should do that!”
“But isn’t that what BHO has been trying to avoid?”
[HEAD ASSPLODE]

501 bungie  Sat, May 2, 2009 8:45:22pm

re: #497 Thanos

I do not want to give out identifying information but you can trust that I knew their immigration status. Illegal immigration status is not anything unusual at all in Arizona, as you may have heard.

Did you think I was making a racial comment? Is that what triggered your response? Race has nothing to do with this. What this is about is the reality in the field versus looking at numbers on paper.

When the lenders did not require documentation for the loans, what that meant in Arizona (and probably California, Nevada, and Florida) is they ended up giving loans to people who 1) were not citizens, 2) had little commitment to the community, 3) could easily leave the country, and 4) were especially at risk of being arrested, losing their jobs, and being deported. As jobs disappeared, as people were arrested, as real estate values declined, these people were abandoned their homes. Many homes have been stripped as well.

In my humble opinion, this is fraud. And since I see so much of this here, I am highly skeptical that the amount of fraud involved in the credit crisis is a “percent of a percent.” I think everyone at all levels knew: Bankers, Risk Managers, Investors, Congress, the Executive Branch and the buyers themselves. Everyone knew many of the people buying homes with no documentation could not afford these houses and would bolt. They just thought they wouldn’t be holding the hot potato when the music ended.

I have made no false assumptions. I have no cognitive bias; I am merely relating unpleasant but real facts. I don’t really have any conclusions at all other than that the bankers, the credit industry, and the investors were living in an unreal world and I think it is fair to say that the past seven months have proven me prescient. If you choose to deny these facts, or defend against them, perhaps you should examine your own cognitive biases.

By the way, why would you ever ask a lawyer if they “believe everything [they] are told?”

502 Randall Gross  Sat, May 2, 2009 8:48:20pm

re: #501 bungie

You seem intent on misinterpreting everything I say, and are getting very defensive, not a good trait in a lawyer. Did you even visit the link on cognitive bias?

503 funky chicken  Sat, May 2, 2009 8:52:25pm

re: #396 funky chicken

And we need to stop sending our factories overseas….

Wow…got downdinged for wanting to retain US manufacturing capability by pittrader. That’s one reason I don’t do the stock market….all through the Clinton years when a big corporation announced they were closing their plants in the US and building new ones in China, the stock would go way up. Sure it’s better for corporate bosses and stockholders, but it’s worse for communities and citizens of the USA.

504 funky chicken  Sat, May 2, 2009 8:54:28pm

re: #501 bungie

Everyone knew many of the people buying homes with no documentation could not afford these houses and would bolt. They just thought they wouldn’t be holding the hot potato when the music ended.

exactly

505 Randall Gross  Sat, May 2, 2009 9:02:39pm

re: #501 bungie

A “percent of a percent” would logically be some one hundreths of one percent n’est ce pas? The bolded figure below is the default rate for CRA loans held in portfolio in the areas mentioned, the chart flows on like this forever.

Riverside, CA 20,664 838,093 0.0247 570 0.00068
Detroit 22,876 1,261,188 0.0181 1,210 0.00096
Miami 24,144 1,357,812 0.0178 1,583 0.00117
Atlanta 18,940 1,261,351 0.0150 1,428 0.00113
Phoenix 11,242 979,314 0.0115 862 0.00088
Los Angeles 22,338 2,170,255 0.0103 2,401 0.00111
San Francisco 8,988 906,476 0.0099 1,023 0.00113
Dallas 11,618 1,327,280 0.0088 1,718 0.00129

506 Randall Gross  Sat, May 2, 2009 9:05:50pm

Your “six” houses that you tried to imply a nationwide trend with were part of a default rate in PHX for CRA of 0.0115 percent. So your anecdotal exception that you try to stretch to a nationwide generalization is totally bogus.

507 spudman  Sun, May 3, 2009 6:50:20am

re: #281 rain of lead

yep, but I never tried dynamite

Take a look at the Varmit Getter. Propane injection and ignition. They have videos. My brother-in-law has one.

508 zuckerlilly  Sun, May 3, 2009 7:23:46am

A more unbiased and detailed view of the financial crisis:

On the Political Economy of the
Financial Crisis and Bailout of 2008

(pdf/49 pages - download here)

509 Orangutan  Sun, May 3, 2009 7:53:39am

re: #499 Bagua

Also sorry to disagree but it is not accurate to say the “derivatives market was completely unregulated” most derivatives are regulated in some manner, some more than others and there are those who argue that there is too much or not enough, but certainly not none.

Yes! and as far as AIG goes, they sold a lot of insurance priced too low - hoarding the cash reserves (and increasing them as they aggregated more risk) would have boosted the prices on these strips…sending the market the information that the risk capacity was being used up by tranche after tranche of these … and thereby eliminating the up-front “profits” shown by a lot of banks. AIG instead marked major “profits” on curves signed off by accountants who were “in the tank” and have been since the mid-’90s when Andersen (now simply a defunct criminal enterprise) pushed through a lot of legislation through their favorite senator.

510 Orangutan  Sun, May 3, 2009 8:07:30am

re: #473 Conservative Moonbat

Might have helped to keep Glass-Steagall in place too. The myopic frenzy of bipartisan deregulation that happened over the past 20 years can’t be overlooked.

I’m not one for a heavy regulatory hand, but sometimes common-sense regulation is required to keep people from getting crazy. Derivatives trading is an area where people got crazy. Somebody, somewhere should have stood up and said stuff like CDOs squared were crazy ideas.

The really sad part about it was the idiot accountants who let them take MTM profits off vapor curves (for example, the sham of “auction rate” bonds….). The regulatory construct depends heavily on high-quality accounting review which includes impairment for liquidity rather than simply rubber-stamping low-quality earnings while you take fees and rich consulting contracts. Without proper accounting, NO regulatory construct of a free market will work.

To summarize - although the SEC is horribly understaffed and underfunded, all they really do is review earnings statements. The first line of defense for all of us, on those earnings statements, is the accounting profession, which seems (through repetitive examples … Enron/energy crisis, this mortgage mess) to have compromised itself.

511 MrSoCal  Sun, May 3, 2009 9:18:56am

There is no mention of the gov’t role in this mess. Here is the list of blame game (not in any order): politicians, the Fed, main street mania, rating agencies, mortgage banks (et al), Wall Street banks, insurance/pensions/quasi-gov’t (Fannie, Freddie) and other investors.

Wall Street is out to make money. If they can package a deal and sell it within days for a nice profit, that is what they will do. They did not write the bad mortgages. (The first to crack were mortgages written by private brokers… where is the mention of their role?) Wall Street is simply the middlemen, bridging the gap between the home owner and the lowest credit rate available.

Many on Wall Street who held on to some of the toxic assets did so because, as investors became scarce, they couldn’t sell them as quick, leaving more and more of it on their books. If the quasi-gov’t agencies hadn’t cooked their books (which made the former administration place limits on amount/type of mortgages it can hold) the gov’t—not Wall Street—would have directly own many more bad mortgages, especially subprime.

I rate this clip: C

512 the1sgjohns  Sun, May 3, 2009 9:53:26am

A little simple, for a complex plan, but nicely done and nicely packaged to understand a complex issue. I did not get the sense it was there to identify the people responsible for the failure. I would recommend this to anyone with the caveat to check it out further. Thank you for producing it. I can now at least explain it to my teenagers.

513 zuckerlilly  Sun, May 3, 2009 9:56:12am

The Political, Regulatory and Market Failures that Caused the
US Financial Crisis: What are the Lessons

I. Summary

In 2008, the US is in the worst financial crisis since the Great Depression. The core of the crisis is that forty-four percent of all home mortgages (or 25 million mortgages) are default prone, a figure that is unprecedented in US history.2 Why did financial institutions and
homeowners acquire so many mortgages that are in default or in danger of wider default? I argue that the crisis is a result of regulatory failure, market failure and, most of all, political failure.

(pdf/17 pages - download here)

514 elclynn  Sun, May 3, 2009 10:32:50am

Economy may be tanking, but at least I found a site that revels in common decency and honesty. I’m not an economist but I know when Ive been duped by all of Congress.

515 Bagua  Sun, May 3, 2009 3:51:21pm

re: #510 Orangutan

Orangatan,

Excellent points, you also highlight the “double edged sword” problem with the MTM rule; on the one hand, it sank companies such and Lehmans, Bear Stearns, and AIG, when the market liquidity dried up, yet there were no significant increase in actual defaults on the contracts they held, on the other hand as you note, it also permitted companies such as AIG to take early profits based also upon MTM paper “profits” when the market liquidity was high. And as you point out, as a major player they could actually inflate the market prices, and then take profits based upon those temporary numbers. In both case they were illusory, letting them take profits before they were closed and later causing them to have paper insolvency when in fact, the actual default rates on the CDOs & CDS had not increased significantly, simply the current market price for these long term contracts had frozen.

To the extent there was actual fraud or intentional manipulation is also worrying, as was the apparent collusion with the ratings agencies who have managed to emerge smelling like roses, but at its heart, this crisis was caused not so much by the failure of accounting but by accounting rules that were foisted upon the companies by non-elected regulators such as the IASB, and those rule changes essentially pulled the carped from under the companies affected, changing the game and very predictably leading to this crisis as soon as there was a market pull back in what was widely recognized as a bubble.

Yet we see a lot of partisan political posturing and oversimplification by both sides, who are simply ignorant of the actual complexity, and content to argue till their blue in the face based upon their limited understanding. On the one side: blame it all on Bush and the Republicans because they had the POTUS at the time and favoured less regulation, so blame it all (falsely) on lack of regulation.

On the other side the Republicans, blame it all on CRA and the Democrats for pushing irresponsible lending, again, falsely, though this was an influence and definitely problematic, the actual default rates were not high, as Thanos correctly pointed out, and did not in themselves cause the crisis.

516 Bagua  Sun, May 3, 2009 4:02:44pm

re: #511 MrSoCal

Yes, but to your list of the quasi-gov’t (quangos) we need to add the international quangos to your list, for that we have to trace back to Basell II and the IASB, which unlike our own FASB which is a governmental agency, the IASB is of the self appointed international expert type that is increasingly controlling our rules and even laws.

Earlier in the thread;

#70 Eon linked to an article warning against the US changing the Fair Value laws calling it ‘crazy’, and heavily quoting Tom Jones, who just happens to be vice-chairman of the quango IASB (International Accounting
Standards Board), so of course he is defending his turf and deflecting the IASB role in the crisis. They, along with the Credit Ratings Agencies got off Scott free and yet it was they who share the lions share of the blame, the Democrats at most share the jackals or the crows share.

517 Bill Dalasio  Mon, May 4, 2009 2:37:22am

The first four minutes or so were an excellent assessment of the basic process by which overleverage happened. It weakened somewhat in the discussion of structured products. CDOs were generally second order products of MBS structured securities. And they were almost universally not insured by CDS contracts, at least within the structures.

What the presentation leaves unsaid was why exactly did the process break down the way it did. Leverage is hardly new to Wall Street. And the financial system has gone through periods of low interest rates before without the catastrophic breakdown of lending standards. Unless one believes that investors, including some of the Street’s best and brightest on the most sensitive risky end, were systematically bilked by their peers at the banks, it’s hard to buy that the entire situation can be adequately explained by lack of concern for risk that can be passsed on.

518 Bill Dalasio  Mon, May 4, 2009 3:45:04am

re: #476 freetoken

I think you’re right that it’s inaccurate to blame the CRA for the entire subprime mess, I think the greater danger is to pretend that neither CRA (or more importantly its 1995 revisions) nor Fannie/Freddie policy had anything to do with it. And that pretending is what I’m seeing both from the MSM, some of the commenters here, and to some extent, the video.

519 Bagua  Mon, May 4, 2009 11:35:39am

re: #517 Bill Dalasio

Bill Dalasio,

You are correct that the Swap options were not incorporated in the CDO structure, however, the buyer of a CDO would often try to swap away part of the risk for part of the profit by buying a related Swap Option.

Regardless, actual defaults did not trigger the failures, it was the collapse of the market value to trade those contracts and the resulting margin calls from accountancy rules that did the damage and broke the banks, when those contracts mature in years to come they may prove profitable, which is why they often mention that the bailouts could end up earning a profit for the government.

The Lehman settlement also proved that “Wall Street” did in fact use good risk management and once the counter parties were netted out the actual money that traded hands was small in relation to the total and was not defaulted on.


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