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Politics : Welcome to Slider's Dugout

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To: wsw1 who wrote (5731)	8/1/2007 7:30:22 PM
From: SliderOnTheBlack	Read Replies (1) of 50746

Subprime debt: Gentlemen, Wind back the clock about nine - ten years. Do you remember Oriole's pitching star Jim Palmer pitching for subprime lender "The Money Store" - as the daily morning sponsor of the "Today Show"? During the same timeframe - America's highest paid CEO was on the cover of Forbes and he was from subprime "mobile home speciality lender" Greentree Financial. And then there was the darling of the Fidelity Magellan Fund...Cityscape Financial...and scores of others who are no longer with us... all victims of the late 90's suprime meltdown. Subprime is the only business worse than the airline business. It's all about financial engineering. About totally bogus and inflated performance assumptions, deliquency & default rates. Inflated appraisals, sloppy underwriting and uber-aggressive lending practices are not new. In the old days... you had 2 choices: 18% at a finance company like -- "The Associates"...or, the local bank. 18% priced in the reality of the risk of making subprime loans. With risk...must come rate. Then the slicksters from the Investment Banks arrived into the industry in the early 1990's and one big gigantic fraudulent industry - entirely dependant upon bogus financial engineering was created. Nothing has changed. This will not be the last boom and bust cycle. That horse is already out of the barn and will NEVER be corralled again. Sure, underwriting will get tighter. Congress will pass some "feel good" legistlation and regulation. A couple of more subprimes will fold and a few more hedge funds will implode. But, do not ....I repeat: DO NOT - underestimate the will, the resources, or the amount of skin in the game...that Wall Street and the International Financial community has invested in keeping this bubble afloat. More later... SOTB

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