wrote in message
...
On Thu, 18 Mar 2021 14:28:27 -0700 (PDT), trader_4
wrote:

On Thursday, March 18, 2021 at 3:56:08 PM UTC-4, wrote:
On Fri, 19 Mar 2021 04:57:59 +1100, "Rod Speed"
wrote:



wrote in message
...
On Thu, 18 Mar 2021 07:25:44 -0700 (PDT), trader_4
wrote:

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.

There were derivative securities based on MBSs that transferred risk,
but
blaming
them for the disaster is silly. 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. Or blaming futures on soybeans for putting them in the
toilet, when
prices dropped because of Trump's tariffs.

AIG never wrote a single mortgage and they got the most money from
TARP. Look up CDO and Credit Default Swap then get back to me.

The CDO values in 2008-9 far exceeded the value of the underlying MBS
they "protected:.


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. Maybe you
could post
proof here to back up your claims.

The basic facts about the derivatives were absolutely true.

But that isnt what produced 2008.

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.

The question wasn't whether they paid the money back, we were talking
about the leveraging effects of CDOs and CDS's on the initial MBS.

That's not what produced the meltdown of the financial system.

Maybe read this

https://en.wikipedia.org/wiki/Financ...7%E2%80%932008

Which doesn't say anything like your stupid claim that it was banks
gambling
with
depositors money using derivatives that imploded the financial system
so
spectacularly.
You didn't read it did you?

"Increased debt burden or overleveraging
Leverage ratios of investment banks increased significantly between
2003 and 2007.




Prior to the crisis, financial institutions became highly leveraged,
increasing their appetite for risky investments and reducing their
resilience in case of losses. Much of this leverage was achieved using
complex financial instruments such as off-balance sheet securitization
and derivatives, which made it difficult for creditors and regulators
to monitor and try to reduce financial institution risk levels. "

That's the leverage ratio of the bank, not specific to MBSs or anything
else.
It just means that the investment bank was less prepared to weather any
unforeseen calamity. The US is more leveraged right now that any time
since
WWII. If a war erupts and we are less able to fund it, does that mean
that
the increased leveraging caused the war? And note that it doesn't say
what
you claimed, which was that derivatives somehow leveraged pooled mortgages
many times over.


The selling and speculation on the credit default swaps is where the
leveraging came in and banks were buying into that market with
borrowed money.

Still nothing like your stupid claim that the implosion of
much of the world financial system was cause by banks
gambling with depositors money using derivatives because
Summers got Clinton to change what banks were allowed to do.