[Freedom_Is_Not_Free]

You deserve an explanation for my conclusion that you didn’t bother to read the article.

You believe investors knew subprime loans were risky. Yet when a conservative pension fund buys a AAA-rated investment vehicle, they are shunning risk. If you had read the article, you would have learned the way very conservative investors seeking safe investments ended up eating massive risk.

You would understand the completely lack of transparency in the financials and understand how this is creating a liquidity crisis.

Please go back and read the entire article. You will learn a great deal about the cause of the financial pain we are all going to share for the next couple of years. Or more.

[dennisw]

You believe investors knew subprime loans were risky. Yet when a conservative pension fund buys a AAA-rated investment vehicle, they are shunning risk. If you had read the article, you would have learned the way very conservative investors seeking safe investments ended up eating massive risk.

Plus lots of these "securitized assets" were fobbed off on Europeans. They got burned and will not be buying crappy US paper for years. Plus lots of this lousy paper got rated much too high by the bond rating companies. I'll bet there were lots of bribes and kickbacks to make this happen. Fat Swiss bank accounts

Read it all at www.jsmineset.com 

[EverOnward]

Hoping you can unravel some of my questions. I'll start with one regarding the "bundles" sold to pension plans, etc.:

I'm assuming that many of us could very well be holding some of these bundles and not be aware of it?

[FightThePower!]

I don’t know how a pension fund manager could not have known, through common sense, that these financial products were risky. These products enabled people with poor credit histories to buy houses they couldn’t afford with money they didn’t have. The only people who don’t have enough common sense to figure out that won’t work in the long run are the MBA’s that created them and bought them.

[whitedog57]

I did read the article carefully.

Yes, I understand the lack of transparency in the the financials.

Now, WHY DID INVESTORS PURCHASE SECURITIES THAT THEY KNEW WERE 1) RISKY and 2) OPAQUE?

Answer: the securities they purchased had a RISK PREMIUM. The investors KNEW this could happen.

As a Wall Street veteran of MBS/ABS, I have testified to the Fed, US Senate, House, Euro Central Bank, etc. This is not to say there wasn’t fraud by lenders/securitizers. My point was that investors knew that this (subprime ABS/CDOs) were a very risky product and ... the market turned against them. Also, many households speculated on housing prices (subprime ARMs with high LTV) and the market turned against them.

This is just my 2 cents. Rather than reveal myself to the general FREEP readership (including Democrats), suffice it to say that I have appeared in the WSJ, The Economist, Forbes, and other outlets. So, I am VERY well informed on this issue.