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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (173042)	12/22/2008 2:08:05 PM
From: bentway	Read Replies (2) \| Respond to of 306849

I think the entire "Ownership Society" went like this: Investment banks started packaging mortgages to see if they'd sell. American mortgages! Safe as fckin' HOUSES! They sold like hotcakes! But, there weren't ENOUGH to satisfy the demand! Flakier mortgages and looser qualify was urged. Almost every pol had a reason to be for it. Watchdogs were chained, regulators told to look elsewhere. Legions of new mortgage brokers who had been flipping burgers were born. Got a pulse? You QUALIFY! Then, the mortgage might be sold several times, eventually ending up in a Mortgage Backed Security. Everyone was happy! But, some really stinky apples lurked in those MBS "barrels". Since the whole enterprise was almost totally unregulated, no one knew who had the stinky mortgages, but the owners knew that even a few stinky mortgages could fck up their whole MBS. The insurance companies saw their chance. Since the whole enterprise was unregulated, they could sell insurance on the MBS's, in the form of Credit Default Swaps - a magical kind of insurance that required NO backing! Most of those MBS's were as safe as American Houses! They'd never have to pay anywhere NEAR what they earned on the CDS's! Then, a lot of wealthy investors saw that THEY could buy these CDS's, not to insure a MBS, but to place a bet that an MBS would fail. The CDS,s were cheap, the payout huge. It was like a lottery ticket that cost $10k! They sold like hotcakes too! Everyone was happy! It's like a giant tower of greed, bound to fall, and here we are NOW. The end result of accepting Republican values, ideology, market principles and politics since Ronald Reagan. Have we learned ANYTHING yet?