Subprime Crisis Explained!

[GDSOB]

I laughed til I cried...

Sad, but true.

[Ned, NYNA11]

The CMO's are/were a lot like shares in a bag of potatoes that had been carefully filled with rotten spuds at the bottom, half rotten ones in the middle and good ones at the top. The bag was then sealed and shares of the unopened bag bag sold.

Moodys would have honestly rated the bagful as average!!!

[Porsche-O-Phile]

The most staggering thing to me about the whole situation is how completely EVERYONE bought into the delusion of endless "far-greater-than-the-rate-of-inflation" appreciation. Backed by nothing, certainly not backed by historical evidence which clearly shows housing appreciation over the last 100-or-so years tracking inflation almost exactly. Everyone from all walks of life - from the unsophisticated/uneducated to highly educated/trained finance guys bought into this delusional crapola. I knew it smelled like B.S. years ago and the whole thing has been like watching a train wreck in slow motion. And we're only at the beginning. This is just round #1. Wait until all the adjustable ARMs start hitting at the end of this year and beginning of '09. You think we're in a recession now? Just wait. And no, I'm not wishing for one - just being a realist.

That video is 100% bang-on.

[notfarnow]

There's another video I've seen where a couple of British comedians explain the subprime situation.

I haven't been able to find it, anyone know which one I mean?

[Shaun @ Tru6]

So the lipstick was bond insurance? for me the entire thing turns on that one piece of info.

this whole mess is one reason why I could never vote Republican: no accountability for Wall Street and Business as a whole.

[Buckterrier]

OMG that was great, sad but great. I'm no financial wiz by ANY stretch of the imagination but isn't this all just another Enron?

[Shaun @ Tru6]

Originally Posted by notfarnow

There's another video I've seen where a couple of British comedians explain the subprime situation.

I haven't been able to find it, anyone know which one I mean?

[Mule]

Originally Posted by Shaun 84 Targa

So the lipstick was bond insurance? for me the entire thing turns on that one piece of info.

this whole mess is one reason why I could never vote Republican: no accountability for Wall Street and Business as a whole.

Your logic is almost as sound as the cartoon figures'.

[Rick Lee]

Originally Posted by Shaun 84 Targa

this whole mess is one reason why I could never vote Republican: no accountability for Wall Street and Business as a whole.

Yup, Republicans caused the whole mess. They made people with bad credit think buying a house was a right. They made those same people sign onto loans they didn't understand and couldn't afford. And of course, Republicans specialize in conspiring to set up Wall St. investors to fail because they want to eventually bail out homeowners and crash the housing bubble. Yup, very sound logic. I think I'm voting for Hildabeast or Obama now. Thanks for setting me straight.

[Lothar]

Originally Posted by Shaun 84 Targa

So the lipstick was bond insurance? for me the entire thing turns on that one piece of info.

this whole mess is one reason why I could never vote Republican: no accountability for Wall Street and Business as a whole.

The same Robber Barons own your beloved Democrats. Those with money and power have bought and paid for politicians on both sides of the aisle. Your statement is naive in the extreme.

[Shaun @ Tru6]

Originally Posted by Rick Lee

Yup, Republicans caused the whole mess. They made people with bad credit think buying a house was a right. They made those same people sign onto loans they didn't understand and couldn't afford. And of course, Republicans specialize in conspiring to set up Wall St. investors to fail because they want to eventually bail out homeowners and crash the housing bubble. Yup, very sound logic. I think I'm voting for Hildabeast or Obama now. Thanks for setting me straight.

you're smarter than this Rick. Oversight and regulation is the issue. Without it, you have Subprime. With it, only qualified people get loans and Wall Street wouldn't be able to sell junk. It's called Accountability Rick. Something the Republican Party used to stand for.

[Shaun @ Tru6]

Originally Posted by Lothar

The same Robber Barons own your beloved Democrats. Those with money and power have bought and paid for politicians on both sides of the aisle. Your statement is naive in the extreme.

Sure, whatever you say. Republicans are all about accountability and Democrats hate regulation.

Henry Waxman says you are wrong.

[Rick Lee]

There is oversight and regulation. The subprime collapse was not caused by fraud, not in the least. Sure, let's have more federal regulations that ban lower FICO borrowers from getting a loan, or require a 10-20% down payment, or maybe tell certain types of buyers that they're not sophisticated enough for an Option ARM. Yeah, let's do that and then watch the lawsuits and political pandering fly. If nothing else, the subprime collapse reminded us that we need to start taking personal responsibility for our financial decisions.

[Shaun @ Tru6]

Slide 18 says fraud to me Rick. This thing was all about packaging.

[Rick Lee]

Slide 18 is egregiously vague and has nothing to do with lenders, but rather secondary market investors.

[t951]

I think the vid with the two brits is so on pointe.

I have actually forwarded it to my economist friends.....

[Shaun @ Tru6]

Originally Posted by Rick Lee

Slide 18 is egregiously vague and has nothing to do with lenders, but rather secondary market investors.

Rick, if it only had to to with Lenders, this would be a run-of-the-mill S&L bailout a la Neil Bush, paid for by you and me with taxes.

that's only the subplot to the story. It's the secondary market investors that ballooned it up to a worldwide crisis by fraudulently marketing these junk securities.

[Rick Lee]

Originally Posted by Shaun 84 Targa

Rick, if it only had to to with Lenders, this would be a run-of-the-mill S&L bailout a la Neil Bush, paid for by you and me with taxes.

that's only the subplot to the story. It's the secondary market investors that ballooned it up to a worldwide crisis by fraudulently marketing these junk securities.

Do you have a single post that doesn't blame a Bush for something? I think we can adapt the X Number of Degrees from Kevin Bacon game to your blaming Bush for everything in the world.

And I think the only thing fraudulent about those securities is the gov't. getting into the act and helping to freeze rates, which, if they adjusted as agreed upon and were repaid, would give those investors some return. And the S&L bailout is not at all comparable to this. If FDIC hadn't doubled from $40k to $100k in the '70's, the size of problem would have been a lot smaller. The gov't. should not be in the insurance business. But that's Bush's fault too.

[Shaun @ Tru6]

Originally Posted by Rick Lee

Do you have a single post that doesn't blame a Bush for something? I think we can adapt the X Number of Degrees from Kevin Bacon game to your blaming Bush for everything in the world.

And I think the only thing fraudulent about those securities is the gov't. getting into the act and helping to freeze rates, which, if they adjusted as agreed upon and were repaid, would give those investors some return. And the S&L bailout is not at all comparable to this. If FDIC hadn't doubled from $40k to $100k in the '70's, the size of problem would have been a lot smaller. The gov't. should not be in the insurance business. But that's Bush's fault too.

Isn't accountability great.

[berettafan]

so the brokers are car dealers and the mtg backed securities are Audi's and VW's that just came out of warranty.