.
Good one Dinah. The Republicans aren't blaming the Democrat's actions enough in this. Obama is much louder than McCain when it comes to placing blame.
It's a shame politicians forced banks starting back in the 80s to give home mortgages to poor people who weren't credit worthy enough. Then, they just started lending mortgages way beyond many people's credit abilities. That's where all this mess started. And also that they didn't regulate Fannie Mae and Freddie Mac like they do other banks.
Alan Greenspan should be exposed for the problems he helped cause by allowing credit quality to be ignored.
Scary, will sanity ever prevail?
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if money were free
it would have no value
- extreme inflation
.
ignore credit scores
give everyone homes
- like musical chairs
to deny a mortgage
must be due to racism
.
absurd thought -
God of the Universe says
forgive all debts
settle all accounts
no one owes anything
.
absurd thought -
God of the Universe says
make housing costs look cheap
go paint a rosy picture
just get people to sign up
.
All real freedom starts with freedom of speech. Without freedom of speech there can be no real freedom.
.
Philosophy of Liberty Cartoon
.
Help Halt Terrorism Today!
.
USpace
:)
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Pure poetry, USpace.
Kipling's got nothing on you!
Awesome breakdown D!
Before I go on, I want to say I'm a simple APICS certified accountant, that's all. No where near the level Dinah has been. That said;
I would add one thing to this, the fact that many companies are approching the end of their fiscal year will also have an impact as banks scramble for cash. Many assets are not liquid and are 30-60 days out until they receive payment. A lot of small businesses are going get calls for payment in full on those lines of credit that help make payroll, buy raw material and pay the electric bill ect.
I agree, the free market must work this out, if not we run the risk of making a small step towards socialism with government running the market. And we all know how that will end up. I don't like the option od a bail-out. Everytime I've been at McCarren airport a few K short, a local tourism offical NEVER came to me and gave me my loses back.
Again, outstanding post!
Miss J-
Thank you for chiming in. Your accounting experience helps fill in the "Main Street" side of the equation - (I'm clueless here!)
The bailing out of all the freeloaders is really ticking me off. You're right. I've never had anybody come running up to me and giving me back my money when in Vegas, either! LOL.
I think if we were younger, provided we have the knowledge we now have, we could open a firm catering to main street via Wall street. Honest poeple doing things within the confines of the law. I would have never lowered mortgage standards to process home loans the same way you would have never purchased a bundle of toxic paper for your clients.
I also did a piece on the root causes of this problem with some very good videos. It just shows one that free markets work and fascist markets do not!
Madame, I salute you. What a superb post. Prior to reading this, I did not know what I did not know. And now I know what I do not know. Obviously Wall St. played a much larger role in this then I previously understood. Now at least I know what rocks to kick under.
So if a single loan is the subject of several credit default swaps, are they in position (i.e., first position pays off, and if not then go to the second in line?)
Thank you so much for doing this post. I was actually dropping by to leave some comments and apologize for the slowness of my response to our e-mail exchange - life sometimes intrudes on my online time, unfortunately. Please do not be offended by my recalcitrance.
Last question. What is your take on the mark to market rule and how deeply it feeds into the current crisis?
P.S. Just to reassure you, it is never silly to talk about pole dancing Muslims with boob jobs.
Last question. Are these multiple CDS's something that should have raised red flags at the SEC? How much of this is a failure of the SEC simply to enforce the regulations as written?
Linked at http://wolfhowling.blogspot.com/...waps-
glass.html
Thank you Dinah, I'm honored, but you're too kind.
:)
And I lied. Not last question. This one is (at least until I send the next) - has repeal of Glass-Steagall been a net plus or net minus. Or is the problem here that it removed a piece of the depression era regulatory framework without putting in another piece of the puzzle to provide for a more modernized regulatory framework?
GW, I can aanswer one of your questions. Dropping the "mark to market" will improve the situation but far from a cure. Mark to market will increase the (paper) value of the toxic loan bundles thus raising the (paper) value of mortgage lenders.
To be clear, mark to market, means a house in forsclosure (w/out a bit on it within a 14 day time period) is worth zero when infact a home has value even when it's in foreclosure.
Hope that helps, along with Dinah's input on this.
that would be BID not BIT, sorry.
Miss J - don't forget to add a "Fighting Dirty Jihadis" division to our firm!
Oh ABOSULTELY!
Never give up the fight!
GW- Thanks for stopping by, sir. Glad this sheds a little more light on the subject. It is a tangle, isn't it?
Like Miss Janice, I think the Mark to Market accounting rule change will improve the situation but it is far from a cure. Ultimately, this is all about confidence and how confident are you with any valuation these guys could come up with at this point???
The repeal of Glass Steagall in 1999 is a contributing factor, how much I'm not sure. It had been eroded somewhat over the years, but I still feel it gave the green light to commercial banks and insurance companies to act like traders and that's problematic.
Especially with financial products that are LARGELY unregulated.
It's a classic case that figures never lie, liars figure. Froma NYT article - but I couldn't say it better.
"That regulation was scaled back was less of a factor than Wall Street’s finding ways around regulation by establishing new products that could work between the cracks. Those new products grew to dominate the financial system, and they turned out to be prone to collapse."
CDS and Hedge Funds are the equivalent of the financial system's black box. They are by and large unregulated... unh-huh.
http://tiny.cc/RwBLH
From what I'm reading, it was a 2000 law that explicitly excluded derivatives, including credit default swaps, from regulation under the Commodity Exchange Act of 1936.
http://tiny.cc/4vPtD
This piece on AIG is excellent. Don't know if you've seen it yet - but I found it helpful in connecting the dots...
http://tiny.cc/RQwoi
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