Obama's Anti-Business Policies Are Our Economic Katrina

[spursncowboys]

...And considering you're usually wrong, that's a good thing!

Wrong? Such as?

[DarrinS]

I'll answer this DarrinS style.

How toxic could CDS's have been viewed if people in the finance industry were trading for them?

Congratulations. Your hindsight vision is 20/20.

[LnGrrrR]

Congratulations. Your hindsight vision is 20/20.

You were the one who was arguing that the problem was all those banks being forced to loan to people with bad credit. And yet, banks were seemingly excited about it, to the point where they traded for these commodities using legalized gambling, ie CDS's.

Tell me Darrin, if there weren't any CDSs, would we have this issue of overrated credit scores? How about massive debt on the part of banks, would we have that? I ask because you're obviously the financial guru, able to distill entire financial crises into a few sentences. Please, enlighten us, oh matahari.

[LnGrrrR]

I guess I should just "go to google" to see how CDS's work. I wonder, has DarrinS followed his own advice yet?

[Winehole23]

I guess I should just "go to google" to see how CDS's work. I wonder, has DarrinS followed his own advice yet?

He's not a real big reader, in case you haven't caught on. I tend to doubt he'd follow his own advice. I don't.

[Winehole23]

Dude can barely remember what he says from post to post.

[spursncowboys]

You were the one who was arguing that the problem was all those banks being forced to loan to people with bad credit. And yet, banks were seemingly excited about it, to the point where they traded for these commodities using legalized gambling, ie CDS's.

Tell me Darrin, if there weren't any CDSs, would we have this issue of overrated credit scores? How about massive debt on the part of banks, would we have that? I ask because you're obviously the financial guru, able to distill entire financial crises into a few sentences. Please, enlighten us, oh matahari.

I didn't see DarrinS post that. Are you saying that there were no side effects towards telling banks to loan to bad credit ppl and not cover their backsides with GOE's like Freddy and Fanny?

[LnGrrrR]

I didn't see DarrinS post that. Are you saying that there were no side effects towards telling banks to loan to bad credit ppl and not cover their backsides with GOE's like Freddy and Fanny?

SnC, I'll ask you what I ask him. If there were such real backsides, how come all these financial types were actively trading FOR these CDS's? If they were viewed as such a negative, why would they do that?

Or perhaps, some dumbass thought he could manage away risk by putting a BUNCH of high-risk accounts into one pool, and just assume some of them would pay every month, making it "low-risk". And then, a few banks started using this method to give loans, so other dumbass banks thought they had to do so to compete?

And then, those banks realized they were making a mint, since the rates on these high-risk accounts were higher than the low-risk ones, and started trading them to other banks who needed money?

Let's face it, if they were "covering their backsides", they would have just made a small bet to recoup some of the money. That didn't happen. Banks put TONS of bets down, to the point where there were more bets than loans. On top of that, they sliced and diced all these loans into so many packages that it became nearly impossible to a) separate them and b) determine the ACTUAL VALUE of them. All due to the idea that risk could be magically reduced.

Now I laid it out in laymen's terms above, but that is essentially what happened. Blaming it on the high-risk people who took out the loans is like blaming the coin for landing tails when you bid a million that it would come up heads.

[spursncowboys]

SnC, I'll ask you what I ask him. If there were such real backsides, how come all these financial types were actively trading FOR these CDS's? If they were viewed as such a negative, why would they do that?

Or perhaps, some dumbass thought he could manage away risk by putting a BUNCH of high-risk accounts into one pool, and just assume some of them would pay every month, making it "low-risk". And then, a few banks started using this method to give loans, so other dumbass banks thought they had to do so to compete?

And then, those banks realized they were making a mint, since the rates on these high-risk accounts were higher than the low-risk ones, and started trading them to other banks who needed money?

Let's face it, if they were "covering their backsides", they would have just made a small bet to recoup some of the money. That didn't happen. Banks put TONS of bets down, to the point where there were more bets than loans. On top of that, they sliced and diced all these loans into so many packages that it became nearly impossible to a) separate them and b) determine the ACTUAL VALUE of them. All due to the idea that risk could be magically reduced.

Now I laid it out in laymen's terms above, but that is essentially what happened. Blaming it on the high-risk people who took out the loans is like blaming the coin for landing tails when you bid a million that it would come up heads.

It could be all the banks knew they would be backed up for their high risks by the govt. Either that or they never expected the economy would go as far as it did. There were alot of people who thought the 90's , tech driven, markets would never go down again. Kramer said the economy would never stop growing. I saw the quote in Intelligent Investor, revision 7, and can't remember the true quote but that sounds good enough. Then after 01 crash, there was a popular thought that the market was under-priced. That it was already rock bottom.
I don't think you laid it out easily. If you have a specific example, it would really help.

[LnGrrrR]

It could be all the banks knew they would be backed up for their high risks by the govt. Either that or they never expected the economy would go as far as it did. There were alot of people who thought the 90's , tech driven, markets would never go down again. Kramer said the economy would never stop growing. I saw the quote in Intelligent Investor, revision 7, and can't remember the true quote but that sounds good enough. Then after 01 crash, there was a popular thought that the market was under-priced. That it was already rock bottom.
I don't think you laid it out easily. If you have a specific example, it would really help.

Like I said, alot of financial people are obviously idiots. Except for the ones who figured that the gov't would bail them out; the'yre geniuses who deserve to be placed in front of a firing squad.

I'll try to look for a specific example. In the meantime, here's some info.

http://spaniardintheworks.blogspot.c...cial-mess.html

The link is admittedly biased, but it will get you started. I'd find a better one but I've got homework to do

[Yonivore]

nevermind...pointless