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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: combjelly who wrote (834076)	2/3/2015 7:08:01 PM
From: i-node	Respond to of 1579785

>> The bomb was the vast, unregulated market of derivatives and other creative instruments that flood the global marketplace. Furthering your metaphor, the essential detonator was the insufficiently collateralized loans with no buyer commitment. Period. I do not care what you do with the derivatives or other instruments; if the borrowers are creditworthy and committed to the property, and the collateral is adequate, nothing else matters. I've lived through more than one of these disasters. And I've seen excellent, creditworthy borrowers walk away from real estate because they had insufficient personal commitment to the property. That is, they bought it for next to no money "down". I've seen property collateral crash to 10% of its former value in the course of months because EVERYONE was buying real estate without any money in the deal. This is so important to understand: The collateral value of real estate is protected by the buyer's down payment. It is an essential element. If buyers do not have an investment in the property, it sets the stage for a collapse in property values that is inevitable. It WILL happen. Whatever was going on with CMOs and derivatives did not matter so long as the lending practices were competent. The failure was when government insisted that lending practices be revised to allow ANYONE to buy a property. With Fannie & Freddie seen as "government backed" they were seen as risk-free; meanwhile, they were in charge of setting the lending limits. It was a recipe for disaster and one that the Bush administration REPEATEDLY, and LOUDLY insisted that Congressional oversight was needed for. And Barney Frank and Chris Dodd repeatedly said, "Oh, fuck off. It is not a problem." Meanwhile, first-term Senator Barack Obama received more contributions from Fannie than ANY OTHER POLITICIAN.