"DGDevin" wrote in
:



"Tegger" wrote in message
...


US law dictated that certain investors be prohibited from determining
their own risk ratings for certain securities, but instead had to use
risk ratings from "independent" sources to determine risk-rating.
These ended up being the three licensed rating agencies.

Which, as their own internal documents and former employees have
revealed, stamped triple-A on securities that were totally obscure to
them purely because they didn't want the business to go down the
street to Moody's, or vice versa. S&P made an average of half a
million bucks each rating securities that were actually composed of
toxic waste, securities so complex they had no computer models to to
even guess what they were really worth. But they held their noses and
took the money, as most of Wall St. did, the party was never going to
end.



The ratings agencies had no choice but to give AAA ratings. To do
otherwise would be to openly defy Federal wishes anbd directives, and
risk their licenses. Whether or not business could go "down the street"
is irrelevant, since a civilized government would never have forced
those securities into being in the first place.

When Fan and Fred bought the AAA-rated mortgage securities, their own
internal memos acknowledged 1) that the securites were "opaque and
difficult to understand", and 2) that they were forced to buy them
anyway, to comply with Congressional/presidential demands.




This view that it was really all the fault of the government, and
blind self-destructive greed on the part of Wall St. had nothing to do
with it is incredible in the original meaning of the word.



If you left your front door open with a sign on the lawn saying, "Large
amounts of cash, jewelery, and valuable consumer-electronics inside.
Nobody's home; help yourself", would you be surprised when somebody
actually did walk in and help himself?

You cannot have a casino without chips. Greenspan, Bernanke, Congress
and the president all cooperated to provide truckloads of free or
nearly-free casino chips. Those chips went by another name: credit.

There's only ONE single outfit in the nation which is permitted
(ORDERED) by law to create credit from nothing. Everybody else who tries
it gets strung up a tree, like Bernie Madoff.

The other thing that aforementioned culprits did was to legislatively
force lenders to push money into the hands of those who could not pay it
back. When borrowers balked, lenders used sorts of shady tactics in an
attempt at satisfying the law.




Even Mr.
Greenspan eventually admitted that his lifelong belief in the
self-regulating, self-policing market had turned out to have some
serious flaws.



Greenspan cannot admit, to himself or to others, that he was a primary
cause of the crisis. Could /you/ live with yourself if you were forced
to admit to a mistake of such enormity?



As it happens, when you allow the financial sector to
be transformed into a casino run by lunatics, there's going to be
trouble. What a shocker.


It all starts with too much credit. It's after that when the "casino"
kicks in.

The lunatics are in Congress, the Fed, and the executive branch.


--
Tegger