Skip to comments.What Cooked the World's Economy? It wasn't your overdue mortgage.
Posted on 02/02/2009 12:41:18 AM PST by Tempest
The basic story line so far is that we are all to blame, including homeowners who bit off more than they could chew, lenders who wrote absurd adjustable-rate mortgages, and greedy investment bankers.
Credit derivatives also figure heavily in the plot. Apologists say that these became so complicated that even Wall Street couldn't understand them and that they created "an unacceptable level of risk." Then these blowhards tell us that the bailout will pump hundreds of billions of dollars into the credit arteries and save the patient, which is the world's financial system. It will take timemaybe a year or sobut if everyone hangs in there, we'll be all right. No structural damage has been done, and all's well that ends well.
Sorry, but that's drivel. In fact, what we are living through is the worst financial scandal in history. It dwarfs 1929, Ponzi's scheme, Teapot Dome, the South Sea Bubble, tulip bulbs, you name it. Bernie Madoff? He's peanuts.
(Excerpt) Read more at villagevoice.com ...
It's also a kick in the pants to those in denial thinking that the government had to force banks into rescue and that banks were doing just dandy. It also emphasizes how large the issue is and how free market deregulation opened up a can of worms.
The bad loans are about 1.2 trillion dollars of the problem. The CDO's is the 599 trillion dollars of the rest of the problem...
Intersting article you might want to look at.
The recession is NOT the problem. It is the solution.
We need to stop spending, start saving, pay off our debts, and become far, far more productive. As individuals, as well as a nation.
I’ll have to print this out for later study. It’s very complex, and I’ve had trouble getting a bead on how we got here. That’s important for all of us to do, so we vote accordingly to make sure it doesn’t happen again.
I just don’t think the Obama plan is going to help.
Neither the reccesion nor Obama is the messiah.
We do need to be better off as a society and holding those accountable for this disaster is what will make us better.
At least we have a bright new president. He’ll give you a job painting a bridge.
I hope that was an attempt at sarcasm.
Well I hope you find it informative. I think the Obama stimulus was flawed to begin with but it’s a total Frankenstein now. And any more bank bailouts would just be like rewarding the criminals. I say screw the CDO’s, let the corrupt banks fail and default on the derivatives.
yes that was sarcasm. geesh.
Sorry I thought the village voice was some ultra-left, liberal BS, maybe I’m mistaken.
I’ve come to expect anything from the nuts who believe in the GWB Hurricane machine.
They have a lot of writers. Bill Kristol used to write for the NYT. The author places most of the political blame on Clinton.
the GWB Hurricane machine.
LOL! That never gets old!
While I agree with approaching the Voice commies with caution, I’m trying to absorb as much of this stuff as a non-economist can, from all points of view. So I’m glad this was posted. I just don’t think we’re getting the whole story from Rush Limbaugh, who I enjoy and trust, but who seems to defend anything any banker does, ever.
The worst part is we haven’t repealed any of the legislation/regulation that got us into this mess.
“Its very complex, and Ive had trouble getting a bead on how we got here.”
Yes it is, but it is not just in the USA.
The entire world is in the same boat.
One has to believe in the idea that if the USA sneezes, the world catches a cold.
Personally I don’t have a clue but to see this as a cyclical
The 1.2 trillion is real. The rest is primarily an uninformed generic rant against derivatives in general and thus constitutes a red herring in this case. Notice that the author hasn't even differentiated between the types of derivatives such as futures contracts, forward contracts, options and credit default swaps which shows that the article has been very poorly researched. I'm not saying that a lot of derivatives are necessarily good, but they're not what blew up in the world's face. The subprime mortgages did.
If only it were 1.2 trillion dollars we would be out of this mess already and it wouldn’t be a global crisis.
Red herring? are you smoking crack? did a red herring bankrupt Iceland? Does a red herrig threaten to do the same to England?!
1.2 trillion doesn’t cause this level of problems in a global economy!!! Wake up! *sigh*
30 trillion is the first installment. the rest is coming soon.
The "Commodity Futures Modernization Act of 2000" (H.R. 5660) was introduced in the House on December 14, 2000 by Rep. Thomas W. Ewing (R-IL) and cosponsored by Rep. Thomas J. Bliley, Jr. (R-VA) Rep. Larry Combest (R-TX) Rep. John J. LaFalce (D-NY) Rep. Jim Leach (R-IA) and never debated in the House.
The companion bill (S.3283) was introduced in the Senate on December 15, 2000 (The last day before Christmas holiday) by Sen. Richard Lugar (R-IN) and cosponsored by Sen. Peter Fitzgerald (R-IL) Sen. Phil Gramm (R-TX) Sen. Chuck Hagel (R-NE) Sen. Thomas Harkin (D-IA) Sen. Tim Johnson (D-SD) and never debated in the Senate.
The Republican leadership of the House incorporated "The Commodity Futures Modernization Act of 2000(H.R. 5660)" by reference, as Section 1(a)(7), in a long and complex conference report to the 11,000 page long "2000 omnibus budget bill" formally known as "The Consolidated Appropriations Act for FY2001(Labor, Health and Human Services, and Education Appropriations Bill) (H.R. 4577)." 157 Democrats and 133 Republicans voted for the appropriations bill. 51 Republicans and 9 Democrats opposed the appropriations bill vote results in the house. The Senate version passed by "Unanimous Consent." President Clinton signed it into Public Law (106-554) on December 21, 2000.
#&*$%& idiots and greedy b*st*rds. All of them, both parties.
You do understand that the sub-prime mortgae default rate is less than 20% don’t you???
While doing some searching for something else this weekend I came across all sorts of material about the world economic situation that supports your point. Indeed this is a global situation, and since economies don’t end at the border, it may be one of those situations so complicated that economists will be debating just what the heck happened forever.
Thanks for posting! ;)
Isn’t this the Gramm-Leach-Bliley act (CFMA)? I could be wrong.
If this is that act the only reason the Democrats voted for it was because they made sure banks were subject to CRA inspection.
I’m about ready to go Libertarian anyway.