On Oct 19, 3:47*pm, "Robert Green" wrote:
The economy was not as much "looted" as it was artificially inflated
with easy money and subsequently that bubble popped.
The "trillions" that disappeared from the economy never really existed
in the first place. There were 20 years of bad political decisions
that led up to that. There is plenty of blame to spread around. Wall
Street was just doing what the government told them to do.

I respectfully submit that may be backwards. *I think it was the
government
that was doing what Wall St. told it to do. *The system was set up so
that
Wall St. made money even when a house was sold to someone who probably
couldn't make the payments. *They got fees, commissions and more fees.
Sadly, the states made loads of money in real estate transfer fees, real
estate taxes, etc.

They were trying to stimulate the economy and what is forgotten here
is the guy who sold the land made money, the builder made money, all
of the contractors made money, everyone in the building supply chain
made money, the real estate broker made money and the mortgage broker
made money. That is a lot of money moving around. It wasn't just Wall
Street. All Wall Street did was create the money in the first place.

Again, respectfully disagree. *They were the ones that were rolling up good
mortgages with bad ones and then selling them off to investors, collecting
fat fees and passing the seriously underrated risk onto the purchasers of
those collateralized debt obligations who couldn't even tell what they had
bought and were unable to remove the bad debts from the ones likely to be
repaid. *

Here he is again folks, the resident liberal Monday morning
quarterback.
Yeah, some of those mortgages are bad ones, years AFTER they were
issued, packaged and sold. If it's just Wall Street that's a bunch
of
crooks, what about:

The guy who sold the person the house in 2006 and pocketed $200,000?
The real estate agents who got $12,000
The appraiser who got $200
The local mortgage company
The employee of that mortgage company that helped them fill out the
form
Congress who encouraged people to buy homes through mortgage
deductibility, CRA, etc


And what about the good folks at Fannie and Freddie? If this
is strictly a Wall Street problem, why did they wind up with the
same crap mortgages? Why are they among the largest of
the institutions that needed to be bailed out? Why, unlike
almost all of Wall Street, have Fannie And Freddie not paid
ANY of that money back? Hmmm?

Or could it just be that like with most cycles of boom and bust,
no one really saw this whole problem coming?

Also, on that deal, clearly the seller got $200,000. Maybe he
bought the house for $120,000 eight years earlier. Why
aren't you ****ed at him for being a robber baron? Now
when that loan got packaged and sold, how much do
you think Wall Street got? Probably $100. Yet they
are the evil ones and the only ones responsible.
Go figure.





We've had real estate bubbles before but they never got anywhere
near as bad because in the past, there were no CDO's made up out of rolled
up mortgages in the picture. *It's about the same as getting a bag of
potatoes that you can't open before you buy that contains a lot of round,
brown potato-like rocks in it.

More ignorant nonsense. Mortgages have been packaged and
sold as securities for a very long time. In fact, CMOs were not
created for Wall Street, they were created at the request of
Fannie and Freddie decades ago. That's right, those quasi govt
companies
under the supervision of Congress. Remember Barney Frank
saying Fannie and Freddie were still OK a couple months
before they went bust?




Rating agencies gave AAA ratings to very toxic mortagages that turned sour
and brought the housing market to its knees. *The appetite for more and
bigger mortgages (and more and bigger fees) was insatiable. *Without the CDO
market driving the train, the bubble never would have grown to the titantic
proportions that it did. *Everyone wanted in on these CDO's because American
homes were considered bedrock investments.

Uh huh. So, why when it turned out that some of those homes were not
quite the bedrock they were thought to be, it's all Wall Street's
fault?
Monday morning quaterbacking again. Must be nice to smart like you
years later with 20-20 hindsight.




Wall Streeters - specifically investment banks - thought they were making
risk free money for two reasons: *First, they thought defaults could be
foreclosed and sold for even more money in an (apparently) ever-rising
market.

Yeah, they thought housing prices would just keep going up.
So did the people who bought the houses.
So did the people who bought the CMOs
So did Congress and the govt.
So apparently did the FED who kept interest rates low.
So did regulators who permitted and ENCOURAGED
mortgages to be made with little or nothing down.

So, tell us again why it is that Wall Street is the only one you
blame.


*Second, they took their cut and passed the risk on.

Of course they did. That's their business. It's like the
local hardware store owner. He buys a hammer,
sells the hammer, takes his
cut, and now the hammer is the risk of the buyer




*What they
didn't realize was that with enough foreclosures, the market for houses and
real estate (more than half the crash involved business properties) would
freeze up solid. *

Gee, you mean they aren't clairvoyant, like you?


AIG wrote "insurance" on such vehicles and when they went
sour, didn't have the proper reserves to cover the losses.

Uh huh. Which is compelling proof that they were just as in
the dark as to the risk of a debacle as the guy buying the
house, selling the house, etc, as per above. Unless you
think they deliberately committed financial suicide.

Were they stupid to not have done the proper due diligence?
Sure. Same as the others involved in that transaction,
starting with the BUYER. Does that mean that they are
corrupt and all Wall Street is evil? .


*They also were
locked into contracts that said the worse things got, the more they owed.
Those "snowball" clauses need to be closely re-examined because they didn't
really protect against risk the way they were designed to. *They just
accelerated the decline. *So we taxpayers were forced to.

Sure sounds like being incredibly stupid, not incredibly
corrupt. IF they were corrupt and smart they would not have been
holding those CMOs that went worthless and took down
their companies, would they?



The losers were the last person to own the house and the people who
held the loans when the music stopped.

I agree - the last man standing got the biggest shafting. *Tthe middle class
took it on the chin and is still taking it, hard.

I disagree. AIG didn't go to Chicago, point to a house and force
anyone to buy it.




The derivative holders were
made whole by TARP and everyone involved in the house before the crash
took their money and ran.

I can't speak to how "whole" the derivative holders were made, but I will
agree that they probably made out a lot better as a class than the poor
shmoes who bought at the height of the market.

I wouldn'd cry too much for them. Most of them put very little if
anything down. So they get to walk away. I do feel sorry for
the responsible homeowner down the street who has a
house that wasn't financed on the fringe, is making payments,
owns 30% of it, and now has a vacant, falling down foreclosure
next door. And the taxpayers who will wind up taking a big
loss with Freddie and Fannie.




*My belief that they weren't
made completely whole stems from the multi-billion dollar lawsuits still in
progress against the sellers of the CDO's.

FWIW, the homeowner across the street that rented out to crack dealers spent
his entire inheritance buying a house for $450K at the market peak that's
now worth about $300K and became so desperate for renters that he took
Section 8 clients. *They destroyed his house and it's vacant again and when
people come by and ask who lived there before they run. *It's unfortunately
not unusual for previous drug sellers and buyers to come back looking for
the previous tenants, sometimes with a grudge to settle.


And who;s fault is that? Did Wall Street force him to buy that
house? Or to put Section 8 folks in it? Geez, go figure.