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1 Interesting Times  Thu, Aug 4, 2011 7:51:43pm

Sorry, but this article reads like glibertarian revisionist wingnut tripe. It also parrots the patently absurd position that loans to poor people caused the financial crisis:

Analysis: Fannie and Freddie Didn't Cause the Financial Crisis

Indeed, Fannie and Freddie didn’t go nearly as far out on a limb as other lenders, and they hadn’t actually created derivative products themselves...“Quants” on the street -- many of them former physicists or other math geniuses -- were always finding complex new ways to repackage assets...The key was to take junk or crap...and disguise them well enough so that pension investors or insurance companies or others thought they were buying investment-grade stuff denominated in dollars.

Private sector loans, not Fannie or Freddie, triggered crisis

Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent...One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.

Bottom line: it was the shady, secretive, unregulated world of credit default swaps - essentially Ponzi schemes wrapped in a faux cloak of manipulated mathematical legitimacy - that shot everything to hell.

2 researchok  Fri, Aug 5, 2011 2:57:35am

re: #1 publicityStunted

Sorry, but this article reads like glibertarian revisionist wingnut tripe. It also parrots the patently absurd position that loans to poor people caused the financial crisis:

Analysis: Fannie and Freddie Didn't Cause the Financial Crisis

Private sector loans, not Fannie or Freddie, triggered crisis

Bottom line: it was the shady, secretive, unregulated world of credit default swaps - essentially Ponzi schemes wrapped in a faux cloak of manipulated mathematical legitimacy - that shot everything to hell.

It wasn't the loans per se that were the problem.

It was the absurd terms (no money down, ridiculous ARM rates, etc) that were issue. Couple that with an overheated housing market and the disaster was inevitable.

As for FANNIE/FREDDIE, the real debacle was not initiated by the poor, as you note. It was initiated by a very greedy middle class, encouraged by lenders.


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