- Jun 3, 2002
Stating that banks over-leveraged mortgage securities and compounded it by spreading the risk and then getting them insured by the likes of AIG is not opinion, it's fact. It is literally statistically impossible for homeowners to be more at fault, since the rate of foreclosures or homeowners behind on payments represents by itself a relatively minor portion of the losses Lehman, Bear, Countrywide, etc. experienced. This is fact; for e.g., homeowners not able to pay back mortgages was "only" $300B+, which in magnitude is dwarfed by the multi-trillion dollar shadow banking market collapsing plus a subsequent trillion dollar CDS/CDO implosion leaving banks with virtually no capital for operations. This has been clear for a few years; here's just one of many overviews from last summer:Originally posted by: BoberFett
It's OK Evan, I don't take your insults personally. I can see how empty your life must be, so I'll just tolerate your silly jabs and let you feel superior. When you find yourself homeless, I'll even let you stay in my guest bedroom. You know, the one that you say doesn't exist. Just call in advance.
As for debate, you let us know when you're ready. I have yet to see you debate anyone. You state your opinion, and when anybody posts anything contrary you call them layman and run away. That's not a debate, only a child holding his hands over their ears and yelling "Na na na, I can't hear you."
So while you and other layman loonies like Ron Paul continue to tout financial market deregulation/under-regulation, reality is far different, and that reality is that these shadow banks should be subject to banking regulations like any other banks. These hedge funds need to be held accountable and the SEC needs to be given the proper tools to actively oversee those funds.The scale of long-term risky and relatively illiquid assets financed by very short-term liabilities made many of the vehicles and institutions in this parallel financial system vulnerable to a classic type of run, but without the protections such as deposit insurance that the banking system has in place to reduce such risks. Once the investors in these financing arrangements?many conservatively managed money funds?withdrew or threatened to withdraw their funds from these markets, the system became vulnerable to a self-reinforcing cycle of forced liquidation of assets, which further increased volatility and lowered prices across a variety of asset classes. In response, margin requirements were increased, or financing was withdrawn altogether from some customers, forcing more de-leveraging. Capital cushions eroded as assets were sold into distressed markets. The force of this dynamic was exacerbated by the poor quality of assets?particularly mortgage-related assets?that had been spread across the system. This helps explain how a relatively small quantity of risky assets was able to undermine the confidence of investors and other market participants across a much broader range of assets and markets.
We all get that you can't debate any of this because you're not well informed about it. Just don't front like you know or give a shit about the accuracy of your utterly bunk, mostly worthless one-liner financial/economic contributions to this board.