"trader_4" wrote in message
...
On Thursday, March 18, 2021 at 9:35:25 AM UTC-4, wrote:
On Thu, 18 Mar 2021 04:30:54 -0700 (PDT), trader_4
wrote:
On Wednesday, March 17, 2021 at 10:04:25 AM UTC-4,
wrote:
Clueless again.
The housing failure alone would have simply meant a lot of people got
evicted. The thing that made it a global crisis was that the banks and
mortgage companies leveraged these mortgages with derivatives that
were worth many times more than the underlying mortgages.
That's wrong too. AFAIK, there was no leveraging that caused the
problems.
The "derivatives" were simply pooling mortgages together into securities
and
selling shares in them to investors. It was fundamentally sound, not
leveraged
and it increased funding for mortgages. The only problem was in the
lending
practices where banks and institutions made progressively riskier loans
to
people with marginal ability to be able to keep up with the payments on
real
estate that had already appreciated sharply and was over valued. And
then
when the problems started, it was further complicated by the fact that
investors
only knew they had an investment in mortgages, without any way of
knowing
how many of those mortgages were in trouble, what the properties were
really
worth at the moment, etc.
And absent the MBSs, it most certainly would not have simply meant a lot
of
people got evicted. There were huge losses there, because the values of
the
properties declined, the real estate market turned poor, millions of
properties
were under water, not worth the mortgage value. THAT is what lead to the
huge
losses, those were real and would have been widespread whether the
mortgages
were part of MBSs, held by Fannie or Freddie (which went bankrupt), held
by banks,
or held by the seller.
You really need to read more about what derivatives are. One mortgage
ended up being many times as much in "bets" for and against that
mortgage.
I know exactly what derivatives are. You show us proof for your claim
that MBSs
resulted in one mortgage being turned into may times as much in "bets".
It
was not a leverage problem with MBSs, it was a leverage problem with the
mortgages themselves. It was not the MBSs that created the problem.
The problem was lenders making increasingly risky loans to people with
marginal
ability to pay. ARM loans with low introductory rates, 5% down
mortgages,
mortgages where with two incomes they could barely afford it. Appraisers
over valuing properties. Those mortgages were then pooled together into
MBS
and sold to investors.
And anyone was free to gamble in the housing market with
no downside at all, when the bubble burst, as it always does,
they were free to hand the keys back and suffer no penalty
at all if they had borrowed more than the property was
worth. They didnt even lose the early mortgage payments,
the lender had lent them that money too.
There were derivative securities based on MBSs that
transferred risk, but blaming them for the disaster is silly.
Yep, he watched that stupid movie and didnt even notice it is fiction.
It would be like blaming options on GM stock for
being responsible for GM going bankrupt, instead
of their low sales, high expenses and losses.
And their stupid pension scheme.
Or blaming futures on soybeans for putting them in the
toilet, when prices dropped because of Trump's tariffs.
Maybe you could just watch the "Big Short"
movie if you don't like to read.
I see part of your problem. You think movies are factual.
Yep, he actually is that stupid.
Maybe you could post proof here to back up your claims.
Best not hold your breath about that.
Commercial banks like BoA were heavily
invested in them with depositor money.
That's wrong too. AFAIK, BOA and similar didn't invest in MBS. They
originated
the mortgage loans, packaged them into MBS and sold them to investors.
And banks have always had exposure to mortgage loan risk, that's their
business.
Prior to MBSs banks passed mortgages on to Fannie and Freddie, this was
similar.
They were exposed because of vehicles like AIG that sold insurance on
the mortgage or insurance on the insurance on the mortgage. .
Waiting for proof.....
Much of that bail out money also went to bail out foreign investors.
That is why it was claimed to be a global crisis.
Show us your proof for that claim, because I suspect it's also BS. I
never
heard of *any* of the 2009 bail out money going to foreign investors. It
was
a worldwide crisis, because when the core of the US financial system is
in crisis, it
will always be a worldwide crisis. I can't help again notice that you're
just like
Trump, just make it up on the fly.
Again look at who was invested just in AIG. (there were other similar
operations, just not as big).
If the test is that if the govt bails out any company and foreigners own
some of
the stock, then just about every bailout is going to be bailing out
foreigners.
Bringing up AIG as an example was a bad idea. Apparently you're unaware
that they
repaid all the bailout money, with interest. So did all the banks. Ive
told you that
many times here over the years. Yet folks like you keep ignoring it,
pretending it
was a taxpayer give away. And now the new claim is that much of it went
to foreigners.