Watching "Inside Job." So. Horrified.

[TheManWithAUsername]

Anonymous wrote:the smaller the governmenr, the more we will kick ass economically.

...which is, of course, the only goal we should ever consider. As long as the average wealth increases, that's great, even if, say, every cent of it goes to the richest 1% while everyone else suffers. We can still look at our GNP scorecard and chant, "USA! USA!"

Anonymous wrote:socialist/centralized countries really fear unbridled capitalist countries...they get trounced, economically.

The cold war is over, you know. There are many more important things than trouncing other countries, like maybe providing domestic necessities.

"USA! USA!"

[Anonymous]

Anonymous wrote:

Anonymous wrote:capitalism in it's pure form is very self-regulating. of course, then irresponsible people can't get loans. the govt steps in and takes away the risk of lending to morons while threatening responsible lenders for not lending to enough morons. when the banks find out they can make money lending to morons while the govt absorbs the risk, they love it. govt pretends that regulation can monitor millions of decisions based on faulty and illusionary risk assessments. if they just let people operate on the fear of losing money, the whole thing wouldn't have happened. govt involvement just becomes so conviluted and inefficient. the genious of the country is little government. the smaller the governmenr, the more we will kick ass economically. socialist/centralized countries really fear unbridled capitalist countries...they get trounced, economically.

You don't understand the mortgage market. The proof is all of the loans not backed by Freddie and Fannie. Wall Street created private competition to Freddie and Fannie. Private. Competition. And they created the riskiest classes of loans, funded without Freddie and Fannie. If the market was self-regulating, this would have never occurred.

right, and the crisis didn't become a crisis until Fannie and Freddie started becoming huge players in those markets.

[Anonymous]

I agree most people have no understanding of the markets. The markets are pretty far from true capitalism, more like a bunch of rich grifters. This is why some people were very upset that wall street got bonus. No down side risk. B/c of deals you made, your great capitalist company is a ward of the state and you get your bonus money...for what? B/c grifters always get paid...

[Anonymous]

You know the vast majority of people who applied and got loans did not lie on these m. apps. They told the truth and were approved for loans they could not paid. So, if I give you money and I know you can not pay me back, what should happen? Who should take the blame?

[Anonymous]

Anonymous wrote:You know the vast majority of people who applied and got loans did not lie on these m. apps. They told the truth and were approved for loans they could not paid. So, if I give you money and I know you can not pay me back, what should happen? Who should take the blame?

There's plenty of blame to go around, but let's not go completely absolving mortgage holders. If you take the money, you have to pay it back. If you know you can't, I you certainly get part of the blame. It's not like applicants didn't know their own income.

[Anonymous]

Here's a great radio program about how the whole thing happened from Planet Money which ran on This American Life. It's called The Giant Pool of Money and details how things raced forward at multiple levels. I agree with the pps that it was driven by companies that created exotic unreliable investment vehicles that threatened to bring the world economy down when they failed but it also shows how the average homeowner bought into the circus like mortgage market - the key thing though is that there was enormous amounts of encouragement from people selling mortgages - encouragement to lie and misrepresent. I agree that the homeowners should not have taken the bait but they also were cheered on by unethical sales people.

http://www.thisamericanlife.org/radio-archives/episode/355/the-giant-pool-of-money

And if this doesn't scare you enough, check out the docudrama on HBO - Too Big to Fail.

[Anonymous]

Anonymous wrote:
You know the vast majority of people who applied and got loans did not lie on these m. apps. They told the truth and were approved for loans they could not paid. So, if I give you money and I know you can not pay me back, what should happen? Who should take the blame?


There's plenty of blame to go around, but let's not go completely absolving mortgage holders. If you take the money, you have to pay it back. If you know you can't, I you certainly get part of the blame. It's not like applicants didn't know their own income.

Yes "A fool and his money are soon parted." unless you are a bank, with the smartest, well connected employees you can buy, then it is the fault of the person YOU GAVE THE MONEY TO. Let see, structure the the loan so the payments are low for the first 5 years, tell the person the payments will not go up, hide your incredibly high fees in the loan document, bundle these loans together(collect more fees), pay the rating agencies to rate your bundle junk AAA(what the USA should have done!), sell the bundle loans to someone else(collect more money), repeat. Where id the risk?
I bet you could not tell me how much you paid for your mortgage. The real rate is different when you add in all the fee. An average home sale generates $60K fees, who paid for that? Yes lets blame the bad and evil consumers. They made so much money from this!

[Anonymous]

Anonymous wrote:
Yes "A fool and his money are soon parted." unless you are a bank, with the smartest, well connected employees you can buy, then it is the fault of the person YOU GAVE THE MONEY TO. Let see, structure the the loan so the payments are low for the first 5 years, tell the person the payments will not go up, hide your incredibly high fees in the loan document, bundle these loans together(collect more fees), pay the rating agencies to rate your bundle junk AAA(what the USA should have done!), sell the bundle loans to someone else(collect more money), repeat. Where id the risk?
I bet you could not tell me how much you paid for your mortgage. The real rate is different when you add in all the fee. An average home sale generates $60K fees, who paid for that? Yes lets blame the bad and evil consumers. They made so much money from this!

Exactly. Sales people who were getting rich and having a wonderful ride from the housing bubble were instrumental in getting a lot of people to apply for mortgages they couldn't afford. Thanks for laying it out so clearly, pp.

[Anonymous]

TheManWithAUsername wrote:

Anonymous wrote:the smaller the governmenr, the more we will kick ass economically.

...which is, of course, the only goal we should ever consider. As long as the average wealth increases, that's great, even if, say, every cent of it goes to the richest 1% while everyone else suffers. We can still look at our GNP scorecard and chant, "USA! USA!"

Anonymous wrote:socialist/centralized countries really fear unbridled capitalist countries...they get trounced, economically.

The cold war is over, you know. There are many more important things than trouncing other countries, like maybe providing domestic necessities.

"USA! USA!"

Hello, MWAUN (ok if I abbreviate?).
Even our GNP scorecard is highly deceptive. We pay twice as much as other developed countries for healthcare, and that number goes into GNP figures, but we our outcomes aren't any better (that's assuming we have healthcare in the first place). We have bigger houses (assuming we still have a house) that cost more to maintain (that goes into GNP) but less leisure time (that doesn't). We pay astronomical amounts for education (that goes into GNP) but the outcomes aren't much better (and sometimes worse).
The financial sector amounts to something like 30% of the economy, but who benefits from it? The top 1%, for the most part. Maybe we should chant "1%! 1%!" instead.

[Anonymous]

There's plenty of blame to go around, but let's not go completely absolving mortgage holders. If you take the money, you have to pay it back. If you know you can't, I you certainly get part of the blame. It's not like applicants didn't know their own income.

Yes "A fool and his money are soon parted." unless you are a bank, with the smartest, well connected employees you can buy, then it is the fault of the person YOU GAVE THE MONEY TO. Let see, structure the the loan so the payments are low for the first 5 years, tell the person the payments will not go up, hide your incredibly high fees in the loan document, bundle these loans together(collect more fees), pay the rating agencies to rate your bundle junk AAA (what the USA should have done!), sell the bundle loans to someone else(collect more money), repeat. Where id the risk?
I bet you could not tell me how much you paid for your mortgage. The real rate is different when you add in all the fee. An average home sale generates $60K fees, who paid for that? Yes lets blame the bad and evil consumers. They made so much money from this!

Did you miss the first line: "There's plenty of blame to go around . . . " For what it's worth, I'm 08:34 - I think I've demonstrated that I don't believe individual homeowners are responsible for the current economic crisis. However, that doesn't mean I think they are absolved of all responsibility for their own decisions. Yes, many of them were duped - but many of them knew the risks of the mortgage they were taking out, but just really, really wanted that $500,000 McMansion in Loudoun with 5 BR, developer standard finishes and a 35 mile, 75 minute commute that costs $10 in gas alone round trip. But hey, it's OK to have an interest only loan that adjusts in 2 years - interest rates are low (and will always stay that way, right?) and my home's increase in value will automatically give me equity (even though it's gone up 150% in the last 6 years - that obviously will continue, right?). Don't pretend that every single person who took out a subprime loan was a non-english-speaking, functionally illiterate migrant worker who was fed a pack of lies by an unscrupulous mortgage broker. Many people were greedy, plain and simple. Banks caused the crisis; many mortgage holders contributed to (not caused, contributed to) their own personal financial difficulties through stupid decisions.

As an aside, if in your experience the people working in banks, and selling and analyzing mortgages are really “the smartest, well connected employees you can buy” – well, please let me know where you do your banking. ‘Cause that’s not at all what I’ve seen.

[TheManWithAUsername]

Anonymous wrote:Hello, MWAUN (ok if I abbreviate?).
Even our GNP scorecard is highly deceptive. We pay twice as much as other developed countries for healthcare, and that number goes into GNP figures, but we our outcomes aren't any better (that's assuming we have healthcare in the first place). We have bigger houses (assuming we still have a house) that cost more to maintain (that goes into GNP) but less leisure time (that doesn't). We pay astronomical amounts for education (that goes into GNP) but the outcomes aren't much better (and sometimes worse).
The financial sector amounts to something like 30% of the economy, but who benefits from it? The top 1%, for the most part. Maybe we should chant "1%! 1%!" instead.

Oh, yeah. I think the whole we measure "output" is highly suspect. It's not like we make stuff anymore.* You work at Wal-Mart and spend your pay at McDonald's, where I take your order.

We could chant, "We're number 1!" but we're not quite there in wealth inequality yet. We're about the same as an average African kleptocracy. Give us a few years, I guess.


*That said, someone who I think would know told me that if you take out oil, we're a net exporter. Something to think about.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:capitalism in it's pure form is very self-regulating. of course, then irresponsible people can't get loans. the govt steps in and takes away the risk of lending to morons while threatening responsible lenders for not lending to enough morons. when the banks find out they can make money lending to morons while the govt absorbs the risk, they love it. govt pretends that regulation can monitor millions of decisions based on faulty and illusionary risk assessments. if they just let people operate on the fear of losing money, the whole thing wouldn't have happened. govt involvement just becomes so conviluted and inefficient. the genious of the country is little government. the smaller the governmenr, the more we will kick ass economically. socialist/centralized countries really fear unbridled capitalist countries...they get trounced, economically.

You don't understand the mortgage market. The proof is all of the loans not backed by Freddie and Fannie. Wall Street created private competition to Freddie and Fannie. Private. Competition. And they created the riskiest classes of loans, funded without Freddie and Fannie. If the market was self-regulating, this would have never occurred.

right, and the crisis didn't become a crisis until Fannie and Freddie started becoming huge players in those markets.

Yeah well if Freddie and Fannie caused the problem, then the assets that were privately financed would not have been a spectacular flameout. Those debt holders should be sitting on great investments. But oh wait, that didn't happen.

And if you read the papers, you would know exactly how Fannie and Freddie got mixed up in this stuff. Countrywide told Fannie and Freddie that they had to either take the subprime loans or he would take his business elsewhere. Which means two things: (1) the private sector pushed this, and (2) there was a private alternative to the crap Freddie and Fannie got involved in.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It felt very propaganda-ish to me and I'm a dyed in the wool democrat. It just really felt over the top. I hate non-journalistic, fictionalized pablum of any kind.

Truth is often stranger than fiction. You obviously don't understand anything about the financial markets.
Some of us remember Glass-Steagall being repealed and thinking..."why the hell?..." We remember the dire warnings in the press about the subprime mortgages resetting--the only thing that wasn't readily apparent was that these crap mortgages were being stuffed in such massive quantities in MBS securities rated AAA that the lower tranches' exposures would devastate the supposedly higher tranches' as well. It wasn't readily apparent to most outsiders that banks were buying and selling CDSs (multiple insurance policies) on the same MBS in what amounts to a massive Ponzi scheme, because none of the OTC contracts were regulated or had to provide any sort of disclosure (thanks to Summers and friends, and Greenspan, that unquestioning disciple of Ayn Rand who still believes that the market can regulate itself--really?).

I suppose all those people slowly dying in the Superdome during Katrina were also a piece of Hollywood propaganda? They put the poor blacks there to make a point?
And, oh yes, there definitely are weapons of mass destruction in Iraq. And the earthquake in Japan--that's a rehearsal for Superman 4.

This is the OP. No need to get saucy, pp. My reaction was similar to the other poster's. It seemed unreal. Too bad to possibly be true. And, no, I don't know a lot about the financial markets. Still learning. But I've seen enough Michael Moore to be suspicious of that kind of film as a general rule.

From what you're telling us though, this was the real deal. Since the people on this post who are saying it was real are using evidence and the people who aren't are simply name calling (wtf does "too much government" mean? that's right-wing propaganda), I'm inclined to believe you. Utterly stunning. I've always known that the people who control the capital control the country, but I've never been afraid of people making money - even serious money - if they come by it honestly. How is it that none of these people went to jail? And why are we not turning massively inward and asking what about our culture would both create and tolerate this?

Sorry for getting saucy, OP, but when people seem to think this kind of thing could not happen because we live in a democracy blah blah blah it simply drives me up the wall at this point. I have no problem with people making money--I know a lot of people who made plenty by the sweat of their brow providing useful goods and services to society, and they deserve every penny. These I-bankers do not.
We got a taste of this with Enron, when their traders took advantage of a highly deregulated CA energy market to create artificial shortages that caused CA utilities to go bankrupt, devastated small businesses, and cost the state tens of bilions of dollars in damage. They watched with glee as forest fires that were going to disrupt electricity distribution raged, making comments to the effect that they were "f--ing CA" and "Burn, baby, burn!".
We got a taste of it with the Internet bubble, when start-ups were issuing pro-forma (idealized) financial statements in lieu or real ones and Wall Street analysts were publicly recommending companies that they were privately assessing to be trash, or issuing recommendations on companies in return for favors (like the guy who did it for I forget which company--Citigroup, maybe-- so the CEO would get his kids into the 92nd st. Y preschool). One of the poster children for this kind of "analysis" now does financial commentary on Yahoo. Why isn't he in jail?
When this scandal erupted I remember reading about a family (mom was a cleaning lady, dad worked in construction, and they had one child) leaving in a self-storage unit because they had lost their jobs and the roof over their head. They were living STEALTHILY IN A SELF-STORAGE UNIT for fear of being discovered and "EVICTED." Shortly afterwards, the NYTimes published an article about the head of derivatives trading at AIG and the death threats his family had received, and quoted him as tearfully saying that "there are children involved in this, you know", meaning, "my poor children don't deserve to be put through this."
But I guess it's ok for other people's kids to become homeless because of him, as long as his kids' sensibilities aren't offended. All people are created equal, but some are more equal.

[Anonymous]

Anonymous wrote:You know the vast majority of people who applied and got loans did not lie on these m. apps. They told the truth and were approved for loans they could not paid. So, if I give you money and I know you can not pay me back, what should happen? Who should take the blame?

When we were refinancing our mortgage the mortgage broker practically begged us to take out an interest only loan. I approached her to convert a 5 year arm to a 30 year fixed. Her response to me was a high pressure pitch to take out an interest only loan. I politely told her that I wanted less risk and uncertainty in my life, not more. She actually told me that it wouldn't be a problem because my DH and I were so responsible that we would never get in over our heads. I was super offended at her pressure and we moved on to someone else. So, yes, the mortgage consumer was very vulnerable back then. We were lucky that we were informed enough to just say no. Not everyone was.

[Anonymous]

When this scandal erupted I remember reading about a family (mom was a cleaning lady, dad worked in construction, and they had one child) leaving in a self-storage unit because they had lost their jobs and the roof over their head. They were living STEALTHILY IN A SELF-STORAGE UNIT for fear of being discovered and "EVICTED." Shortly afterwards, the NYTimes published an article about the head of derivatives trading at AIG and the death threats his family had received, and quoted him as tearfully saying that "there are children involved in this, you know", meaning, "my poor children don't deserve to be put through this."
But I guess it's ok for other people's kids to become homeless because of him, as long as his kids' sensibilities aren't offended. All people are created equal, but some are more equal.

I understand your larger point, but this comment makes no sense. They lost their house because they lost their jobs. That's terrible, but likely would have happened no matter what kind of mortgage they had. Not sure how it's the mortgage company's fault.

And here's a good rule of thumb - any time you find yourself minimizing death threats (to kids, no less) as "offending sensibilities," take a step back and reasses. You've lost perspective.