The coming US dollar crisis Message Board

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Strategies & Market Trends : The coming US dollar crisis

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To: Don Earl who wrote (11453)	9/20/2008 3:28:55 PM
From: JBTFD	Read Replies (1) of 71475

As I see it securitization is what shot the whole thing to hell. Back then the loans were kept in one piece, and many times the bank was keeping the loan on it's books. In other words they had a reason to care whether the person taking out the loan had the ability to make the payments. With securitization and an army of willing hucksters to sell of the CDO's or CMO's to unsuspecting dupes the whole scenario changed. Now there was no longer any reason to really care about whether the buyer could make the payments. As long as the debt could be sold you got your money back and were able to do the process all over again. The rating companies also failed miserably to correctly assess the risk in these "investments". I remember a few years back one guy at a firm which shall remain nameless was trying to sell me one of the CDOs. I told him about my concerns and he said "we only deal with triple a rated debt" or something to that effect trying to sell me on the idea that there was little to no risk involved. Probably the same line of BS they used when selling these "investments" to pension funds and every other sucker they could find.

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