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I poked around. Nothing was said. I got a distinct feeling of OCD from that site....

Or as James Franco has re-named it -- CDO. So it is alphabetical.

I don't understand why any of the ratings agencies have the slightest credibility. They were -all- assuring everyone that the sub-prime CDOs were triple-A quality.

Now that they're throwing their former compatriots under the bus...why the hell should we believe them this time?

@kevingrr

I think there is a lot of reason to be angry, and increasingly a sense that the traditional tools of policy and working within the system have failed us. Jamie Dimon is no hero. He's one of the key people that fought tooth and nail to keep effective regulations from being drafted. They talk big about the natural consequences of the market, and then they go and benefit more than almost any other industry from the government tit. It's disgusting hypocrisy.

I'm also surprised that you would talk about being from the real estate sector, and not be familiar with at least the putative benefits of the securitization of debt (the reason the needed to repeal glass steagall). If you are waiting for a return to the ease of real estate finance you may have experienced in the past decade or two of frothy CDOs you're kidding yourself. The party is over. There needs to be a return to actual underwriting standards, and an enforcement of those standards. That means paperwork. Sorry.

>> ^rougy:

@bcglorf,
There were a lot of "house flippers" as I've heard them called, but I doubt it was a majority of the "bad loans" that Wall Street was packaging in their CDO's. I'm guessing 20% of those loans would be a high guess, most likely in the 10% range.
I'm convinced that the Adjustable Rate Mortgages (ARMs) were a major culprit that caused a lot of people to lose their homes. Back around 2004, there was a big advertising blitz here in the states about how people could refinance their homes using an ARM and make themselves some easy money.
What actually happened was that those loans were sold---which I don't think was always allowed---and the fine print said that each time the loan was sold, there was an adjustment to the mortgage.
My parents bought a little house for a rental. Their first month's mortgage payment was about $180. Not six months later, they were paying almost $500, and they couldn't get out of it. They were lucky. It wasn't their primary residence and they were able to sell the place suffering a relatively minor loss.
Anyway...I still haven't found anything new about Greece's problems, but as of today it still seems to be a powder keg situation.
Cheers.
EDIT:
Look at this graph from Wikipedia.
http://upload.wikimedia.org/wikipedia/commons/7/78/Sovere
ign_credit_default_swaps.png
One look at that tells me that Greece's problem probably doesn't have much to do with its social spending.


The 'making easy money' off of ARM's is a big part of what I was talking about. Regular people were encouraged to make 'easy money' upgrading their primary residence. There's of course big fault on the banks for encouraging and profiting off that, but there's also fault on the regular folks making the easy money too.

I didn't just mean professional house flippers, even a regular Joe that noticed his house had gone up by $40k since buying it a year ago deciding he'd sell, use $20k of the profits as down payment on a bigger home, and the other $20k to furnish the new home with nice toys. More than just a few of those guys did it a second or third time too, an why not? The problem ones were the ones that extended themselves to the max where they couldn't make their mortgage payments unless their planned sale at a profit panned out. The banks were stupid to lend to those kind of people, and that's been well established. It's been less popular though to point out that the borrowers were stupid to take the deal too. It's been even less popular to point out that the borrowers often made a lot of money along the way too. My beef is that the banks stupidity got cushioned by tax payers. The right approach was taken by letting the borrowers live with their decision, the banks should've been treated the same.

@bcglorf,

There were a lot of "house flippers" as I've heard them called, but I doubt it was a majority of the "bad loans" that Wall Street was packaging in their CDO's. I'm guessing 20% of those loans would be a high guess, most likely in the 10% range.

I'm convinced that the Adjustable Rate Mortgages (ARMs) were a major culprit that caused a lot of people to lose their homes. Back around 2004, there was a big advertising blitz here in the states about how people could refinance their homes using an ARM and make themselves some easy money.

What actually happened was that those loans were sold---which I don't think was always allowed---and the fine print said that each time the loan was sold, there was an adjustment to the mortgage.

My parents bought a little house for a rental. Their first month's mortgage payment was about $180. Not six months later, they were paying almost $500, and they couldn't get out of it. They were lucky. It wasn't their primary residence and they were able to sell the place suffering a relatively minor loss.

Anyway...I still haven't found anything new about Greece's problems, but as of today it still seems to be a powder keg situation.

Cheers.

EDIT:

Look at this graph from Wikipedia.

http://upload.wikimedia.org/wikipedia/commons/7/78/Sovereign_credit_default_swaps.png

One look at that tells me that Greece's problem probably doesn't have much to do with its social spending.

>> ^rougy:

@bcglorf,
You're right that it has to be looked at more closely. If you find anything concrete, please feel free to share the link with me if you feel like it.
Regarding the "social spending" angle, I'm curious to know how much of that had to do with investing in some of the more trashy gizmos that Goldman et al had to offer.
We know that here in the states, a number of pension funds took a major hit when Wall Street tanked. They had invested heavily in the CDO scam (AAA rated). Wall Street was bailed out, they weren't.
I'm curious to know how much of Greece's damage was caused by similar investments.
I'm betting it was substantial.

P.S. - G.S. has been behind a lot of really dirty financial shit and they always seem to get away with it. A number of municipalities in the USA have suffered gravely thanks to G.S. They were basically looted. Matt Taibi wrote a great article about it in Rolling Stone, but I can't find the link just now. Worth a read if you feel like Googling for it.
This is worth a read, but I don't think it's the same article I was thinking of.


No love of GS here .

I find the worst part of it though is the bailing out of massive corps like them, while their CEO's and top dogs pocket billions in profits while the companies were taking the massive risks that led to the companies collapse. In my opinion it's criminal to not demand that the ridiculous profits made taking the risks aren't the funds being used to payoff the debts from those very same risks turning out poorly later on.

For the record, in America a very big part of the wealth that was lost wasn't just pocketed by the ultra-wealthy. There were also all the middle class chaps refinancing homes they couldn't afford every two years and pocketing $30k-$60k a year for doing nothing but holding onto a home for two years. Some of those folks put that money away and came out fine. Most however bought RV's, electronics, multiple vehicles to fill their three car garages, and any other toys they wanted. After all, they were earning $30k a year for doing virtually nothing and had the money to burn. Of course after they had burnt that money, their backs were up against the wall when they bought that last fateful home before the market dropped out and found themselves with a $750k mortgage for home now worth $200k and payments they could only make in a world were they sold their home next year for $900k. Again, not everyone was doing this, but the numbers were very high. Over the 15 or so years this madness was going on, the guys really milking it had burnt through almost a half million dollars each buying stuff they really didn't need and with a method that had left them indebted for that same half mill with no way to pay it off. With 10s of thousands of people all having run after this, the value of the bad decisions of even the middle class was utterly massive. It wasn't only Goldman Sachs laughing all the way to the bank with free money, they were just doing it at a bigger scale, taking their 10% cut off the excess of thousands of similarly greedy middle class folk.

@bcglorf,

You're right that it has to be looked at more closely. If you find anything concrete, please feel free to share the link with me if you feel like it.

Regarding the "social spending" angle, I'm curious to know how much of that had to do with investing in some of the more trashy gizmos that Goldman et al had to offer.

We know that here in the states, a number of pension funds took a major hit when Wall Street tanked. They had invested heavily in the CDO scam (AAA rated). Wall Street was bailed out, they weren't.

I'm curious to know how much of Greece's damage was caused by similar investments.

I'm betting it was substantial.



P.S. - G.S. has been behind a lot of really dirty financial shit and they always seem to get away with it. A number of municipalities in the USA have suffered gravely thanks to G.S. They were basically looted. Matt Taibi wrote a great article about it in Rolling Stone, but I can't find the link just now. Worth a read if you feel like Googling for it.

This is worth a read, but I don't think it's the same article I was thinking of.

>> ^rougy:

>> ^bcglorf:
Can someone explain the Greek riots to me? I've only followed far enough to have picked up that they are in opposition to the austerity measures being enacted by government? What I've heard sounds like the government spent so much on social services that it went bankrupt, and the protesters are angry that the government is now attempting to cut back it's social services.
I'm not of strong opinion on this like I am in many other situations, but the balance of what I've heard sounds like the anti-austerity protests are so much whining that everyone wants their free money and maybe if we shoot the messenger the economy will recover.

The brunt of it is that Greece is in trouble, and the majority of people who will have to pay for it, or endure "austerity" as the fatcats like to say, had nothing, zero, to do with the trouble.
I've been trying to find out what went wrong there, but I see a lot of smoke and few specifics.
Naturally, any time the blame can be laid on social programs, then that narrative will be most promoted among America's mainstream media.
Frankly I think it was a combination of things, and some of it may have been related to the same CDO swindle that bankrupted Iceland.
But I'm sure you'll agree that if Greece went nuclear, all of their problems would be solved...just like Japan's....

EDIT:
Two words: Goldman Sachs.
Goldman was criticized for its involvement in the 2010 European sovereign debt crisis. Goldman Sachs is reported to have systematically helped the Greek government mask the true facts concerning its national debt between the years 1998 and 2009.[76] In September 2009, Goldman Sachs, among others, created a special credit default swap (CDS) index to cover of high risk of Greece's national debt.[77] The interest-rates of Greek national bonds have soared to a very high level, leading the Greek economy very close to bankruptcy in March and May 2010 and again in June 2011.
(Wikipedia)


Thanks Rougy, that's the kind of starting point I was looking for. I was hoping getting the opinions of few folks on here who'd already researched the matter was a faster place to start than wading through the sea of information out there blindly.

Still sounds as though Sachs role in this was to help the Greek government irresponsibly spend itself into oblivion. I'm still curious, and will have to dig, what that money was spent on. I know even in my country(Canada) our social services are scaled well back from Greece's, and ours are already at the breaking point of what our tax revenues can bear. Added into that is our taxes are generally higher than those in Greece and it seems that Sachs helped them postpone the inevitable, and made it worse. None the less, it also sounds like the population were the recipients or targets of the majority of the money and are now more angry at the slowing of the spending than at the debt load.

Again I'll have to look at it further. As one poster tried to call me out, I am not strongly convicted and convinced my opinion on this is correct or accurate, I have merely expressed without hedging or hiding what I hold to based on what I admit as my limited information and am asking to be proven wrong to speed my process of correcting my opinion should it be based on wrong assumptions. Rougy's pointed a big path I wasn't aware of. Anyone else have some more? Particularly around where Greece's government revenues come from and were they are spent? My perception that most of it is going right back to public services is pretty central to my opinion and I'd love to know if I'm wrong on it.

>> ^bcglorf:

Can someone explain the Greek riots to me? I've only followed far enough to have picked up that they are in opposition to the austerity measures being enacted by government? What I've heard sounds like the government spent so much on social services that it went bankrupt, and the protesters are angry that the government is now attempting to cut back it's social services.
I'm not of strong opinion on this like I am in many other situations, but the balance of what I've heard sounds like the anti-austerity protests are so much whining that everyone wants their free money and maybe if we shoot the messenger the economy will recover.


The brunt of it is that Greece is in trouble, and the majority of people who will have to pay for it, or endure "austerity" as the fatcats like to say, had nothing, zero, to do with the trouble.

I've been trying to find out what went wrong there, but I see a lot of smoke and few specifics.

Naturally, any time the blame can be laid on social programs, then that narrative will be most promoted among America's mainstream media.

Frankly I think it was a combination of things, and some of it may have been related to the same CDO swindle that bankrupted Iceland.

But I'm sure you'll agree that if Greece went nuclear, all of their problems would be solved...just like Japan's....



EDIT:

Two words: Goldman Sachs.

Goldman was criticized for its involvement in the 2010 European sovereign debt crisis. Goldman Sachs is reported to have systematically helped the Greek government mask the true facts concerning its national debt between the years 1998 and 2009.[76] In September 2009, Goldman Sachs, among others, created a special credit default swap (CDS) index to cover of high risk of Greece's national debt.[77] The interest-rates of Greek national bonds have soared to a very high level, leading the Greek economy very close to bankruptcy in March and May 2010 and again in June 2011.

(Wikipedia)

Oh, now I need to apologize. I went back and read your whole post.

Yeah. We agree. Banking regulations.

But nobody forced the banks to make bad loans. Nobody forced the banks to create huge profits. That's just silly.


>> ^bareboards2:

I read half of this and stopped. Sorry. Not really. Just being polite.
There is a great quote from a small banker in North Dakota whose bank sailed through the crisis.
He said -- banks are SUPPOSED to be conservative.
Banks are not forced to make huge profits that drive up their share price and create huge dividends for their stockholders. They CHOOSE to make huge profits that drive up their share price and create huge dividends because they CAN. They didn't used to.
Canada didn't have the same problems our country had, because they had BANKING REGULATIONS.
We have to be able to trust our banks to not collapse. Left to their own devices, they will give in to short term greed. I'm not picking on the bankers -- that is human nature. Therefore, BANKING REGULATIONS.

>> ^Winstonfield_Pennypacker:
The government forced them to create CDO's?

I read half of this and stopped. Sorry. Not really. Just being polite.

There is a great quote from a small banker in North Dakota whose bank sailed through the crisis.

He said -- banks are SUPPOSED to be conservative.

Banks are not forced to make huge profits that drive up their share price and create huge dividends for their stockholders. They CHOOSE to make huge profits that drive up their share price and create huge dividends because they CAN. They didn't used to.

Canada didn't have the same problems our country had, because they had BANKING REGULATIONS.

We have to be able to trust our banks to not collapse. Left to their own devices, they will give in to short term greed. I'm not picking on the bankers -- that is human nature. Therefore, BANKING REGULATIONS.


>> ^Winstonfield_Pennypacker:

The government forced them to create CDO's?

The government forced them to create CDO's? to bundle up non-AAA holdings and sell them as AAA? to extend themselves beyond their ability to cover their loses?

In a word - yes - the government forced the issue. Before the government interfered, lenders had actuarial tables and KNEW with 100% certainty who could and couldn't afford a loan the second they walked in the door. Mortgage rates were in the 8% to 10% range. Banks 'made' money on loans with the interest. People who earned less than 30K a year had a tough time getting into a house because (DUH!) they didn't really earn enough money. It was common sense. People that were POOR couldn't just go out and buy houses willy-nilly.

Then the government came along. They wanted people to get loans cheaper and more often and entirely for political reasons. But banks aren't charities and if they can't make the money on the interest (which you can't with sub-prime) then how do you make money? Hmmm... Oh yeah - let's get rid of this little thing called "Glass Steagall"! Now let's use the Fed to jack around interest rates until they are below 5%. Now you banks are commanded by government to make your profits by bundling the loans as derivatives. Now it is almost impossible to survive as a lending institution without doing what we tell you. Oh yeah, you banks? When it all blows up down the road it is YOUR fault... There you go banks!

That was government meddling with the market. They changed the rules so Barney Frank could tell voters that they had "UFFODUBBLE HOW-SING!". It was true left-wing, neolib stupidity on parade and it screwed up the entire planet. They were the ones that changed the laws. The private sector had no choice but to react to the rules that government barfed up.

The system that GOVERNMENT established turned the housing market within a very short time from a staid system of "moderate loans paid off by interest" into a crazed gold-rush of "cheap loans for everyone paid off by bundling". Banks had no choice to play that game because that was playing field that GOVERNMENT created. Any bank offering a SANE loan at an 8% interest rate and making its profits over 30 years was getting clobbered by lenders handing out loans at 2.5% ARMs that were making a bundle on the back end. Banks knew it was crazy, but those were the rules that GOVERNMENT set up and they didn't have any choice but to operate within that rubric. But government said, "Hey - if the loans blow up don't worry about it! We'll cover those bad loans with Freddie/Fannie and you won't be on the hook for it..." Government.

You see, that's what that happens when government interferes with the market and picks the winners and losers by changing rules, laws, and policy. The whole thing would have been impossible without a corrupt government starting the ball rolling for political purposes.

Everybody on the planet learned after the Great Depression that having an 'environment' where bundling and other such investments could exist was not good. That's why Glass-Stegall was created. It stopped a BAD investment practice and it worked for over 50 years without government being "involved" in a single, bloody thing. That's what !good! government does. It establishes a simple, basic set of rules and then STOPS INTERFERING. The reason for the housing failure was not because government WASN'T regulating the market. It was because the government WAS regulating the market in a terrible way.

Reinstate Glass-Steagall - a common sense law - and then ban the government from EVER interfering with the housing sector again. Things work just fine when you set up a simple, transparent system and then forbid the government from coming within a million miles of it.

Only a dogmatic right winger could say that with a straight face. And in the later sentence you proved it. You're so convinced it couldn't have been the free market, you are willing to accept any explanation for the economic collapse that pinned most of the blame on the government.

And it's categorically absurd. Yes, absolutely, the gov't played a role, but the overwhelming majority of the collapse was due to derivatives and CDOs. The only conceivable explanation for the gov't being the primary root cause is either they didn't regulate as they should have, which actually ends up being the antithesis of your argument because it advocates gov't taking a much more involved role from here on out, or it's because of initiatives by the gov't to increase homeownership by giving loans out to people who had little chance to pay it back. Of the later, the simple fact of the matter is the vast majority of the subprime loans were given out by subprime lenders, not Fannie and Freddie, before Fannie and Freddie entered into that market. Even when considering in the end all subprime loans including Fannie and Freddie, the odds of default on subprime loans were several fold higher with subprime lenders than Fannie/Freddie.

And why did CDOs containing subprime loans get pushed up into investment vehicles that could be purchased by retirement programs like 401k, etc., which fueled their growth? Fannie and Freddie backed loans and non-Fannie/Freddie backed loans were both in funds rated AAA by ratings agencies that were not regulated by the US gov't. Instead, they were paid by the investment houses that gave them the investment funds to rate in the first place. No gov't agency put a gun to their head and made them slap lipstick on those pigs.

Absolutely, Fannie and Freddie helped to legitimize subprime lending, but the simple fact of the matter is Fannie and Freddie were late to the subprime game. They even thought that they almost had to in order to, survey says, COMPETE THE MORTGAGE MARKET! Oh yes, that's right, they were compelled to enter into these dangerous loans because they were losing market share to the Countrywide's of the mortgage industry. While gov't certainly liked the idea of the result in increased home ownership rates this would cause, no gov't agency put a gun to their heads to issue subprime loans specifically. They chose to jump into those waters.

The Great Recession is in the end more about what happens when the free market, particularly the financial sector, isn't regulated effectively. I don't blame the financial industry for inventing derivatives and CDOs. Both instruments can be used to reduce risk for all parties involved, and potentially to the entire system. But they inadvertently created a system that led to its own collapse because no entity watched over the system as a whole. How could the investment banks have known they comprised entities that should any of them fail, they would cause the entire system to collapse because of the intricate web of these CDOs and derivatives? How could they possibly know AIG was overextended on derivatives? They simply aren't equipped or structured to know this. But some entity should have, and the ONLY possible answer is the gov't. I'm even sympathetic to the view the gov't as is cannot possibly do this, but that means we need to fashion a gov't that can. It's the only answer.

>> ^lantern53:

Now Wall St. may have fouled up but it was the US gov't which was holding the gun to it's head. Only a gov't could foul things up this badly.

>> ^lantern53:

O'Rourke used to be quite a hipster, the editor of the National Lampoon so many of you young people probably don't know his formerly anarchist self. He just grew up.
Grayson is certifiably insane, however.
Now Wall St. may have fouled up but it was the US gov't which was holding the gun to it's head. Only a gov't could foul things up this badly. The economy goes up and down in cycles, but when the gov't gets involved, serious interference takes place and since the gov't is so powerful (more powerful than Wall St, I guarantee you), the bankers have to do what gov't wants.
This depression is exactly what happens when a powerful gov't interferes in free markets. So if you want to Occupy anything, Occupy the Capitol building.


this is so assbackward its stunning
the government forced them to create CDO's? to bundle up non-AAA holdings and sell them as AAA? to extend themselves beyond their ability to cover their loses?

the problem was the government wasn't protecting it's citizen's interest; they removed regulation after regulation, allowed banks to get involved in too risky endeavours (seperate function of different types of banks), increased the amount of leverage allowed, etc etc

the government should have been the protection to the greed and stupidity capable in FREE MARKETS... and make no mistake, it was SOLELY GREED and STUPIDITY that led to this...

FREE MARKETS as the solution is such incredible SH_T, because all that means, is that it's unregulated... and then the whole lie of supply/demand being the saviour and great equalizer is revealed, the concept of competition comes to an end... as then the amount of money you have determines the flow of the market, have competition? buy them out... lobby to have rules and regulations put into place that prevent you from ever having competition, etc... FREE MARKETS work in the big boy's best interest, not the consumer or the little guy...

btw... because the US government is SO much in the pocket of big money interests... all this is happening (and has been) for the past 30yrs...

repeat: the 30yrs leading up to this recession, government protection/involvement in free markets has been continually lessened.... through removal of regulation meant to protect consumers/main street and through institution (thanks lobbies) of laws/regulations that allowed wall street/banks to literally destroy 20% of the wealth accumulated over the past 200yrs... only to be bailed out by the government in their pockets (and then most of these banks used the bailout money to consolidate power, buyout other banks, and grow even more TOO BIG TO FAIL)

ignorance/culpability... I'm not sure which you more reek of