Re: Non-Existent Loans: "“I cannot fucking believe this is allowed"

[leftchick]

I am a person who has been baffled by how these non-existent loans came to be. This article posted the other day has been more than an education. It makes me sick to my core.It is a long read and gets more disturbing as you dig into it. These rat bastards are fucking criminals and should be hauled away instead of giving them BILLIONS as a reward for their corruption. Why has no one in congress inquired about this, the ultimate Ponzi Scheme? I mean wtf are they there for??

:mad: :grr: :argh:

The End
by Michael Lewis Nov 11 2008
The era that defined Wall Street is finally, officially over. Michael Lewis, who chronicled its excess in Liar’s Poker, returns to his old haunt to figure out what went wrong.


http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom?print=true#

<snip>


Eisman’s willingness to be abrasive in order to get to the heart of the matter was obvious to all; what was harder to see was his credulity: He actually wanted to believe in the system. As quick as he was to cry bullshit when he saw it, he was still shocked by bad behavior. That night in Vegas, he was seated at dinner beside a really nice guy who invested in mortgage C.D.O.’s—collateralized debt obligations. By then, Eisman thought he knew what he needed to know about C.D.O.’s. He didn’t, it turned out.

Later, when I sit down with Eisman, the very first thing he wants to explain is the importance of the mezzanine C.D.O. What you notice first about Eisman is his lips. He holds them pursed, waiting to speak. The second thing you notice is his short, light hair, cropped in a manner that suggests he cut it himself while thinking about something else. “You have to understand this,” he says. “This was the engine of doom.” Then he draws a picture of several towers of debt. The first tower is made of the original subprime loans that had been piled together. At the top of this tower is the AAA tranche, just below it the AA tranche, and so on down to the riskiest, the BBB tranche—the bonds Eisman had shorted. But Wall Street had used these BBB tranches—the worst of the worst—to build yet another tower of bonds: a “particularly egregious” C.D.O. The reason they did this was that the rating agencies, presented with the pile of bonds backed by dubious loans, would pronounce most of them AAA. These bonds could then be sold to investors—pension funds, insurance companies—who were allowed to invest only in highly rated securities. “I cannot fucking believe this is allowed—I must have said that a thousand times in the past two years,” Eisman says.

His dinner companion in Las Vegas ran a fund of about $15 billion and managed C.D.O.’s backed by the BBB tranche of a mortgage bond, or as Eisman puts it, “the equivalent of three levels of dog shit lower than the original bonds.”

FrontPoint had spent a lot of time digging around in the dog shit and knew that the default rates were already sufficient to wipe out this guy’s entire portfolio. “God, you must be having a hard time,” Eisman told his dinner companion.

“No,” the guy said, “I’ve sold everything out.”

After taking a fee, he passed them on to other investors. His job was to be the C.D.O. “expert,” but he actually didn’t spend any time at all thinking about what was in the C.D.O.’s. “He managed the C.D.O.’s,” says Eisman, “but managed what? I was just appalled. People would pay up to have someone manage their C.D.O.’s—as if this moron was helping you. I thought, You prick, you don’t give a fuck about the investors in this thing.”

[Kokonoe]

1. I will reply without reading the post

I surmise there is an alternate economic system. :puke: :puke: :puke:

[Greyhound]

2. Look into the origins of the fractional reserve central banking system.

It's what these bankster parasites do, steal and call it legal.

[gratuitous]

3. "You don't give a fuck about the investors"

Pardon my French, but no shit, Sherlock. As long as flim-flammery was rewarded and rewarded well, nobody had any reason to worry about the investors or the market or anything else. If I can package a several million dollar wad of investments and realize a fat fee for selling a ball of shit to someone else, why wouldn't I do it? I don't have any ownership in the investments, the ball of shit, or the buyer; I'm just looking to collect my fee, which is based on a spurious estimate of what the ball of shit is worth.

And thanks to Phil Gramm and his Randian acolytes like Alan Greenspan, no regulation or oversight was necessary because of their bedrock belief in the magick of the free market, and that the actions of a group of greedheads pursuing their own self-interest will somehow manage to benefit all of society. Or at least, that's the way their particular ball of shit was sold to the public.