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Politics : Mainstream Politics and Economics -- Ignore unavailable to you. Want to Upgrade?

To: Thehammer who wrote (7520)	1/26/2012 9:55:27 AM
From: Jorj X Mckie	5 Recommendations Read Replies (1) \| Respond to of 85487

The public and Congress wants a scapegoat and there is a lot of blame to go around and plenty of incompetence. The one group that nobody wants to point the finger at is the Public itself. At what point do the people who took out the loans that they knew they couldn't repay, have some responsibility? Everyone wants to place blame on the people who provided toxic loans, but the borrowers had a choice. It's like junk food. Eat enough of it and it is going to mess with your belly. Is it McDonald's fault for providing it? or your fault for eating it?

To: Thehammer who wrote (7520)	1/26/2012 2:45:09 PM
From: koan	Read Replies (1) \| Respond to of 85487

As I recall, what happened was the banks were bundling the loans and then selling them around the world, collateralized debt obligations (CDO's). Many of them were sub prime and were sold to Germany and Japan. Then in one day in 07/08? all of the banks quit lending to each other as no one knew what the CDO's were worth; so there was no capability for "mark to market" as no one knew what was in the collateralized debt obligations (CDO's). I.e. it was impossible to tell the worth of the collateral. To compound the problem, AIG had written multiple policies: Credit Default swaps (CDS's) on the same properties and could not pay.That is why Bush gave AIG 82 billion, no questions asked, which they then passed through to Goldman Sachs and other banks around the world. PS AIG had one office in London with 100 employees writing the CDS's with each employee making over a million a year in commissions. In the mean time when the banks froze up and the vix sky rocketed to 4%, the fed was giving trillions to banks behind closed doors, to keep them from collapsing. Rumor has it Paulson got on his knees to plead with Pelosi for the 700 billion congress approved under bush for the banks. The banks were not required for any quid pro quo i.e. and did not pay any penalties. Still are not. It was also rumored bush could not understand what Paulson was telling him as to why there was a need for all of this and simply went up to bed. And even now the banks are getting money for near zero and loaning it out at huge profits. The banks (investment banks) caused this collapse with their gambling, but are profiting big time with record bonuses, even while mainstreet continues to flounder. Even now there is over 700 trillion worldwide in hedge fund gambling with no controls. And no one went to jail, even though much fraud is known. << To illustrate my point that the CDO's did not cause the crash but certainly exacerbated the near financial meltdown. I will use the following charts to illustrate my point: http://www.jparsons.net/housingbubble/