The Monster That Ate Wall Street

*** It was also the liberalization of the regulations in 2006 or so within Freddie Mac and Mae. Notely a democratic congress...***

The Republicans controlled congress in 2006, retard.

See also the crucial role of the Commodities Futures "Modernization" Act (2000) snuck through Congress by Senator Phil Gramm and sponsored by Enron. The derivatives market, freed from any oversight whatsoever by this bill, mushroomed into the Frankenstein Buffett warned about. This nmess could not have happend without this.

Oh, no...Let's not forget those jerks on all the finance committees in Congress! Where was Nancy Pelosi, Barney Frank, Chris Dodd, the Democrat heavy weights, during the last eight years, pray tell? Just sitting on their fat butts, not manning the wheel, not performing due diligence of the pending financial crisis that is on THEIR watch. Where was the SEC? I demand an investigation, especially into Barney Franks, the octopus with all 8 tentacles in lobbyists pockets and lunch pails!!!!!

It just wasnt credit swaps.
It was also the liberalization of the regulations in 2006 or so within Freddie Mac and Mae. Notely a democratic congress...liberalized the regulations so others who could not really afford a house could get one.

TBH

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mjkoch is right. I am just as angry with bailing out the unethical Wall St. theives as I am about bailing out the "I gotta have it because I want it" (even though I can't afford to pay for it) Main St. crowd. Owning a house (and second vacation home, and time share) and SUV are NOT a right. They are purchases that should be made by carefully thinking through what you can afford after you do your homework. I did without because put the money aside for a "rainy day" and didn't buy on impulse. Its the same as those who declare bankrupcy not because they lost their income, but because they didn't do the math.

Pouring $700 billion into what? Has everyone forgot the problem with: 1. 'ACTUAL TRADE DEFICT' 2. The 'AMERICAN INABILITY TO EXERCISE DISCIPLINED CONSUMER SPENDING'. 3. The MULTIPLE LEVELS OF GREED that need to be prosecuted; not just the COE's. $700 billion could easily be extracted by freezing the bank accounts of the 1000's of executives that created this mess and using that money instead of the tax payers dollars. Start there first, then determine how much more capital needs to be generated. Before you ask the innocent to help start with the ones directly linked to the problem.

Dear Holly Garfield
You are wrong, our Gov.. will not make money on the bailout. 1) Gov has to borrow the $700 billion and pay interest on this for 10 or 20 years. 2) Our Gov. will have to pay expenses on all the foreclosured homes it take ownership of: the property taxes, repairs on homes like broken windows and leaky roofs, cutting the lawn, etc. In Florida who will prepare for a hurricane an empty foreclosed government owned home?

Alan Fishman was CEO of Wa-Mu for less than three weeks. He is eligible for a severance package of $19 million dollars.

"How we got here" is this: Robber Barons and no oversight.

http://www.youtube.com/watch?v=H5tZc8oH--o

Root Cause

After the feds realized what they had done it was too late. Then they started lowering rates. A classic federal government move....react after it is too late.

TARP BAILOUT THRILLER NIGHT (Final version)
(Michael Jackson's Thriller)
WilliamBanzai7

It's Midnight this late September night and the street is full of Politicians, Lurking in the Dark.
Under The Moonlight, You See A Sight That Almost Stops Your Heart.
You Try To Scream, But Terror Takes The Sound Before You Make It.
Debt Markets Start To Freeze, As Horror Looks You Right Between The Eyes,
Your Paralyzed

You Hear The Door Slam, And Realize There's Nowhere Left To Run.
You Feel The Cold Take Hold, And Wonder If You'll See the Mother of All Bear Runs
You Close Your Eyes, And Hope That This Is Just Imagination,
But All The While, You Hear The GOP Pachydermata Creepin' Up Behind
You're Out Of Time

They're Out to Get You, There's Demons Closing In On Every Side.
They Will Possess You, Unless You Change The Number On Your Skype.
Now Is the Time for You and Your Trading Quants to huddle Close Together
All Thru The Night, It'll Save You From The Terror On The Reuter Screen,
It'll Make You See:

(narrated by Vincent Price)
Darkness Falls Across The Land, The Asian Trading Day Is Close At Hand.
Bottom Feeders Crawl In Search Of Blood To Foreclose on Your Neighborhood
And Whosoever Shall Be Found Without The Soul For Economic Bust
Must Stand And Face The Hounds Of Subprime Hell, And Rot Inside WaMu's Bankrupt Shell.

The Foulest Stench Is In The Air The Funk Of 700 Billion Bailout Bucks
And Shortselling Ghouls From Every Trading Room Are Closing In To Seal Your Doom
And Though You Fight To Stay Alive Your Net Worth Starts To Shiver
For No Investing Mortal Can Resist The Evil Of The TARP Bailout Thriller

'Cause this Is Thriller, TARP Bailout make or break Night
and No-ones Gonna Save You from the Beast about to Strike.
You Know its Thriller, TARP Bailout Thriller Night
You're fighting for Your Monetary Life inside a Killer, Thriller.

Thriller, TARP Bailout Thriller Night
'Cause I can thrill you More Than Any Market Ghoul Could ever try. (Thriller, Bailout Night)
So Let Me Hold You Tight And Share A Killer, Chiller, Fiscal Massacre
Thriller Here Tonight.

'Cause this Is Thriller ,TARP Bailout Thriller night
It Will Thrill You More Than Any Ghoul Could ever dare try
Any Ghoul could ever Dare Try

(Daddy, can I be TARP for Halloween? No deary...its too scary! Be something funny
like the McCain campaign )

http://williambanzai7.blogspot.com/

So the financial 'geniuses' hired a bunch of inexperienced people with no financial background to come up with the CDS scheme. This sounds like the US Apollo moon program in the 1960s. A bunch of highly talented but inexperienced engineers and scientists worked on Project Apollo. At least project Apollo had a reason for no experience, since no one at all had experience. On the first moon landing the lunar lander touched down with 15 seconds of fuel left. The lander computer overloaded because the astronauts forgot to turn off a second radar. Neil Armstrong landed manually. When Buzz Armstrong put on his space suit he broke the handle on the circuit breaker that would turn on the rocket motor to return the lander to orbit. He didn't know that until they returned to the lander. The lander got off the moon only after Buzz pushed a ball point pen into the hole where the handle broke. And this was only one lunar landing. We did lose 3 astronauts in a ground test fire and almost lost Apollo 13. There were numerous other close calls. This is the lesson of using people with no experience, no matter how smart they are.

These high priced 20 somethings didn't have the financial experience to think about why there are reserve requirements in the first place and the life experience to know that you should have insurance, but you should never rely on insurance. They didn't have the economic background to work through a downturn with CDSs in large volumes. They probably didn't work through the failure of insurance providers. They didn't have the financial savvy to work through what engineers call failure modes. What can go wrong, how do you indentify the problem and how do you fix it. Only expeirenced business people have the knowledge to see where the CDS could go in the hands of experienced business people.

There is a saying in aviation that applies here: 'there are old pilots, there are bold pilots, but there are no old, bold pilots.' Here we have a bold idea that would never become an old idea.

Occasionally a true genius idea does come through and change the world for the better forever. Mostly, though, the 'genius idea' turns out to be a catastrophe. That's kind of like evolution. Most mutations are either harmless or total catastrophes. Only a few are actually for the better. This time the genius idea was a catastrophe and there was no testing before it was implemented on a massive scale.

If AIG went under, Goldman Sachs would have gone under. That is why Paulson used crony capitalism to rescue AIG at taxpayer expense.