Treasury sells $4.5 billion in AIG stock

myp · Aug 30, 2012

mogur said:
But when hedging slides into burying toxic loans, thereby encouraging a free-for-all pursuit of maximum investment, regardless of risk, then there is no longer any buffer against recklessness, but rather an encouragement of it.

Hedging is not the issue here. The problems you describe (toxic assets [which we, including Wall St., knew AFTER the fact by the way, not before- the subprime loans is another issue], overly high risk-taking, etc.) were the result of a underestimation of risk. Very few people, Wall St. or not, saw the bubble coming because everyone for the most part underestimated the systemic risk.

mogur said:
And if you think that Freddie and Fannie led the parade, you have it backwards. To now say that Freddie and Fannie over-investment was government leading the charge over the cliff is silly. They were incompentantly led for awhile, but they were following the crowd. Should they have acted more prudently? Of course, but to keep up with the money grabbers, they cannot now be blamed for leading the charge. That was the big bank, big investment houses.

It is not silly because they were a huge part of it. At the end of the day, this crisis was not solely the fault of Wall St., government, the Fed, or the home buyers- it was the fault of ALL of them.

And Fannie/Freddie played a large role in that. They became a market maker for a lot of the CDOs and MBSs, spending billions driven by a political goal dating back decades.

mogur said:
Bush made it his goal to encourage home investment at any risk. He thought that home ownership would lift the impoverished out of their hardship and stimulate the economy. If safeguards hadn't been removed by Clinton, the Republicans, and greed, he probably would have succeeded. Btw, Barney Frank wanted more rent assistance than home purchase assistance. The almost total collapse of our economy, and thereby most of the rest of the world, happened under emasculated government oversight, not because of 'government investment houses'.

This was not all Bush. Fannie and Freddie's growth and funding was largely the result of Democrat policies over the last few decades. Both parties were involved and both at fault. Part of this also goes beyond the political institutions and into the Fed, where Greenspan pushed a easy money policy.

In conclusion really it was a perfect storm. Everyone from the couple that wanted a house so bad they tried to pay for it on equity to the house flipper to the subprime lenders to Wall St. to the companies and governments who bought Wall St.'s products (Fannie/Freddie included) to the Fed that allowed leverage to the Federal government which incentivized risky behavior due to political dreams to regulatory bodies such as the SEC which didn't do their jobs are at fault. Without any one of those and a general understatement of risk that mostly everyone believed, it would not have been as bad as it was.

Nemo · Aug 30, 2012

AIG operated as a so-called "shadow bank" which contributed to the collapse of the financial markets and current economic recession. See article at:
http://www.propertycasualty360.com/2012/04/13/bernanke-blames-shadow-banking-system-for-financia

myp · Aug 30, 2012

Nemo said:
AIG operated as a so-called "shadow bank" which contributed to the collapse of the financial markets and current economic recession. See article at:
http://www.propertycasualty360.com/2012/04/13/bernanke-blames-shadow-banking-system-for-financia

Shadow banking is huge right now still (possibly even moreso than it was before), but it kind of shows why the whole Glass Steagal thing is overrated in this discussion too since it was basically a way around that for certain funds. Shadow banking has been around since the 70s.

The trigger for the crisis was still the housing mess and liquidity issues faced by companies like Lehman (including how it might have impacted their shadow banking activities). It is arguable that the Fed took a few missteps and made it worse than it should have been (this camp usually says Lehman too should have been bailed out instead of allowed to fail).

At the end of the day, the system had changed due to innovation, but policy had not. Combine that with the right mix of political enthusiasm and everyone wanting more and it becomes dangerous.

Nemo · Aug 31, 2012

No, there was a significant change in policy. It was a two-step process: first, there was the repeal of the provisions of Glass-Steagall that barred banking entities from trading in mortgage-backed securities and other derivative contracts; and second, the exemption from bankruptcy. This set the stage for the subprime mortgage debacle. See article at:
10 Years Later, Looking at Repeal of Glass-Steagall - NYTimes.com

Nemo · Aug 31, 2012

http://www.reuters.com/article/2012/08/29/us-bankofamerica-aig-lawsuit-idUSBRE87S11920120829

myp · Aug 31, 2012

Nemo said:
No, there was a significant change in policy. It was a two-step process: first, there was the repeal of the provisions of Glass-Steagall that barred banking entities from trading in mortgage-backed securities and other derivative contracts; and second, the exemption from bankruptcy. This set the stage for the subprime mortgage debacle. See article at:
10 Years Later, Looking at Repeal of Glass-Steagall - NYTimes.com

As I said in my response, shadow banking started before Glass-Steagall was repealed. Graham Leach Bililey [GLB] (the bill that undid parts of Glass Steagall) played a role, but it was far from the only major cause. What I meant by no significant change in policy was in the context of shadow banking (that was the "innovation" I referred to)- it began in the 70s and evolved in various forms since, but policy pretty much was stagnant towards it even before GLB.

Nemo · Aug 31, 2012

Deleted: Posted in wrong thread.

mogur · Sep 1, 2012

myp said:
...

Fannie and Freddie's growth and funding was largely the result of Democrat policies over the last few decades. Both parties were involved and both at fault. Part of this also goes beyond the political institutions and into the Fed, where Greenspan pushed a easy money policy.

In conclusion really it was a perfect storm. Everyone from the couple that wanted a house so bad they tried to pay for it on equity to the house flipper to the subprime lenders to Wall St. to the companies and governments who bought Wall St.'s products (Fannie/Freddie included) to the Fed that allowed leverage to the Federal government which incentivized risky behavior due to political dreams to regulatory bodies such as the SEC which didn't do their jobs are at fault. Without any one of those and a general understatement of risk that mostly everyone believed, it would not have been as bad as it was.

You have to be kidding. Fannie and Freddie were against the ropes of over-indulgence by private investment firms that all of a sudden (since repeal of Glass-Stegal in 1997) were also banking firms that buried their toxic, crap ass loans (who, btw, encouraged the no job, no income, no prospect people that Bush wanted to endow) to invest what little they had to make the investment houses even more greedy money. Those hidden toxic derivatives that first tanked the housing market, and then the financial market were a direct result of greed by big banks. Separate banks from investment again, and maybe we will have a level playing field again.

Come on, Myp, you really think that the poor are part of this problem? It's their greed that tanked us?

myp · Sep 1, 2012

mogur said:
You have to be kidding. Fannie and Freddie were against the ropes of over-indulgence by private investment firms that all of a sudden (since repeal of Glass-Stegal in 1997) were also banking firms that buried their toxic, crap ass loans (who, btw, encouraged the no job, no income, no prospect people that Bush wanted to endow) to invest what little they had to make the investment houses even more greedy money. Those hidden toxic derivatives that first tanked the housing market, and then the financial market were a direct result of greed by big banks.

You realize that the toxic assets became toxic after the fact right? You act as if they were toxic all along.

That aside, Fannie and Freddie had a huge amount of money at their hands and they invested in MBSs in a very large scale. They were a sizable part of the market and helped blow up the bubble. A quick wikipedia search shows that at their peak they purchased over $100 billion in mortgage backed securities per year. You can't just ignore it. source: http://en.wikipedia.org/wiki/Subprime_mortgage_crisis

mogur said:
Separate banks from investment again, and maybe we will have a level playing field again.

It is hard to do it after the fact. But even then, things won't go back to the way they were considering shadow banking, etc. (which existed prior to the repeal of Glass Steagall so made the housing bubble still possible albeit probably smaller).

mogur said:
Come on, Myp, you really think that the poor are part of this problem? It's their greed that tanked us?

I don't like the word greed because it is often overused and misused, but if we must use it, I'll say the greed of EVERYONE was the problem. It is hard to say the poor who got trapped in this are at fault because of the emotional stories often attached with it, but ignorance is not an excuse unfortunately. I don't think they knew as much as Wall St. did about what they were doing, but they were at fault too. Thinking the housing market would improve forever so that they could buy a house on equity is just ridiculous.

I find it kind of ironic that a lot of people put pretty much all the blame on Wall St. for the housing crisis, yet when it comes to the Euro crisis, the blame is on Greece, Italy, Spain, etc. for spending too much. Those countries essentially are the poor people in the [admittedly imperfect, but in my opinion still good enough] analogy and Germany and banking corporations are Wall St.

Nemo · Sep 2, 2012

The cause for the market crash of 2008 was a failure of the government to exercise proper regulatory control over mortgage banking and securities. Between 2004 and 2006, banks and mortgage lenders made millions of high-risk, subprime loans (i.e., 100% "piggyback" loans with adjustable interest rates "ARMs", etc.) to borrowers that were unqualified for conventional financing and without due-diligence requirements for collateralization on the assumption that the real estate market could only go up and no one could lose. These loans were then packaged and sold as debt securities on the financial markets worldwide.

Then, predictably, things took a downturn. The interest rates for ARM's went up, and borrowers started defaulting on their loans, precipitating a flood of foreclosures across the country. By August 2007, Countrywide Home Loans (the largest mortgage lender on the planet) was on the verge of bankruptcy; but was bought out by Bank of America in an effort to prevent its own equity position in the company from being extinguished. (Not a good move as it turned out, for in taking over Countrywide, it had to assume a large portfolio of very bad loans.) The disintegration, however, continued with millions of defaults followed by foreclosures as real estate values plummeted. This in turn precipitated bank failures, including Indymac Bank (the largest since the crash of 1929), which was followed by the collapse of some of the biggest investment firms like Bear Sterns, Morgan Stanley, and Lehman Brothers (the biggest bankruptcy in history), the federal "conservatorship" of Fannie Mae and Freddie Mac, and finally the outright takeover of AIG. It had a cascading effect necessitating a government bailout with taxpayer funds just to stabilize the financial markets and prevent widespread, systemic economic chaos.

It was the fault of deregulation. The FDIC, FSLIC, HUD and FTC failed in regulating the banks and mortgage lenders, and the SEC failed to exercise proper oversight of the sale of mortgage-backed securities. (Even Alan Greenspan was forced to admit that he was wrong in thinking that the market could be left to its own devices.) And, it will happen again because the Congress lacks the political will to establish regulatory control over financial markets. Dodd-Frank - which the banking lobby is working night and day to have Congress repeal - is not the answer. Regulation must be measured, but effective; and not so heavy-handed as to stifle economic growth. To work, there must at least be a level playing field, which requires more transparency that will promote value over speculation. Also, there needs to be accountability: if there are no penalties for failure - if executives are rewarded for running their companies aground - there is no incentive to exercise restraint over irresponsible action.

mogur · Sep 2, 2012

myp said:
You realize that the toxic assets became toxic after the fact right? You act as if they were toxic all along.

100% disagreement, myp. Predatory lending on anyone that had skin was the origin of 'toxic mortgages'. From making it incumbent on bankers to qualify loans, to the free-wheeling, 'I will crush you by loaning more than you can, by qualifying anyone' is what tanked the housing market. You think that everything was above board until the crash, and then those mortgages BECAME toxic? That is lucridous.

No, predatory lending victimized not only those that were baited (meaning lying ass bullshit) to take loans that they couldn't afford, but the investors that were sold those toxic mortgages, as well as the taxpayers who were on the hook to salvage the 'too big to fail' carnage. The low income victims only lost a few house payments, and back to their poverty. The perpetrators moved up in the investing world, and the real victims were hard-working wage earners that saw their real estate investment go underwater.

That aside, Fannie and Freddie had a huge amount of money at their hands and they invested in MBSs in a very large scale. They were a sizable part of the market and helped blow up the bubble. A quick wikipedia search shows that at their peak they purchased over $100 billion in mortgage backed securities per year. You can't just ignore it. source: http://en.wikipedia.org/wiki/Subprime_mortgage_crisis

Got that one right. They were lead by several greedy people, also. And they did contribute to the fiasco. But I believe that they didn't forge the lead to the charge. http://useconomy.about.com/od/criticalssues/a/Fannie_Cause.htm

It is hard to do it after the fact. But even then, things won't go back to the way they were considering shadow banking, etc. (which existed prior to the repeal of Glass Steagall so made the housing bubble still possible albeit probably smaller).

I don't like the word greed because it is often overused and misused, but if we must use it, I'll say the greed of EVERYONE was the problem. It is hard to say the poor who got trapped in this are at fault because of the emotional stories often attached with it, but ignorance is not an excuse unfortunately. I don't think they knew as much as Wall St. did about what they were doing, but they were at fault too. Thinking the housing market would improve forever so that they could buy a house on equity is just ridiculous.

Words to live by, I agree 100%.

I find it kind of ironic that a lot of people put pretty much all the blame on Wall St. for the housing crisis, yet when it comes to the Euro crisis, the blame is on Greece, Italy, Spain, etc. for spending too much. Those countries essentially are the poor people in the [admittedly imperfect, but in my opinion still good enough] analogy and Germany and banking corporations are Wall St.

Greece, Pizza, and Spain are failing because they don't tax the rich, and have too many on the government payroll. Corruption is not exclusive to American politics. The only ones paying taxes are the ones being paid by taxes, and that is not a formula for success. You have to tax the actual money gainers, not just those that the government provides a job. Pare back the government jobs, while taxing swimming pools. Of course, it is more complicated than that, but for our purposes, it will suffice. Greece also has a problem with joining the Euro standard, but we will not go into that either, without a real discussion.

Nemo, that is a post that deserves accolades. Thank you. I can't answer to you because you nailed it. Please post more.

Nemo · Sep 3, 2012

The subprime mortgage debacle (and the housing bubble it spawned) was due to a number of things that went unregulated, some punishable for criminal fraud on all levels from the borrowers at the bottom to the top levels of the corporate boardroom. Here is a summary of one of many such cases that I investigated:

Over an 18-month period between 2005-2006, a man who works as a janitor for the school district, and never earned more than $35,000.00 per year in his life, managed to buy four homes in California by borrowing more than $2,000,000.00 in subprime loans. On his loan applications (prepared by his loan broker) he stated under penalty of perjury that he owned a janitorial service business and earned over $300,000.00 a year. The homes were purchased as "owner occupied" with 100% financing on adjustable rate notes secured by the property valued at inflated appraisals made by the partner of the loan broker. The mortgages were assigned and sold by the banks as debt securities on the financial markets through the Mortgage Electronic Registration System ("MERS").

Then, in 2008, the bubble burst. The interest rate on the adjustable mortgages went up and the property values took a nosedive; and the hapless janitor was facing payments nearly double the amount he earned each month and collected from renters of the properties. One after another, the note obligations secured by the mortgages went into default and foreclosure proceedings, some by the lending banks that were obligated to buy back the paper pursuant to repurchase agreements, and others by assignees of the securities. The "millionaire" janitor, who has filed bankruptcy, is an uneducated immigrant from Mexico and claims that he did not understand the loan documents prepared for his purchase of the four properties; the loan broker claims that he prepared the applications based on what the borrower told him; and the banks now admit that there was no "due diligence" inquiry as to either the value of the collateral or the borrower’s financial ability to make the payments. One bank officer I deposed stated: "He looked pretty good on paper."

This was not an isolated case. There are a record number of defaults recorded on subprime loans secured by overvalued property that will end up being foreclosed on credit bids by the holders of these bad mortgages. The government regulatory agencies did not exercise proper oversight of mortgage lending and financial markets; and the banks were quick to take advantage of the vacuum in regulatory action. No one forced or coerced the banks to make these bad loans; they readily, willingly and eagerly made them like gangbusters. The banks lobbied Congress to lift the legal restraints on market trading, and the floodgates were opened. The rest is history.

mogur · Sep 3, 2012

Nice one, Nemo. No politics, just the truth. No one was prosecuted... amazing, whether it was dems or repubs, we all let it happen, and worse, we let it slide, afterwards. Those that were punished were the victims. The solution was to bail the asswipes, let them off the hook, and blame the janitors.

People underwater would think that it was the housing bubble that caused their misery, not predatory lending since they weren't 'victims'. Even if you researched, and made sure that your loan was not subject to the 'new economics', you lost under the housing bubble burst. Really poor people had an out... poverty returned. The middle class got creamed. They saw their life savings in equity go up in smoke. We don't need vouchers for social security, we need actual social security.

This country was the greatest on earth when the middle class reigned. It is now headed back to the 'gilded age'. Social security is no longer a debated issue, unless you want to 'ride the wild one', by making it optional.

Nemo · Sep 4, 2012

The case was referred to the authorities, but there was insufficient evidence to indict. There were some prosecutions of the low-hanging rotten fruit; but the big bananas (e.g., Angelo Mozilo of Countrywide) got off with a slap on the wrist.

I spoke with (then) CEO Ken Lewis of Bank of America about the acquisition of Countrywide Financial in 2008. At that time, BofA was heavily into fiduciary banking services that required a very high cash collateralization; and there was concern that the Countrywide deal would create an "impairment of capital" situation for the bank due to the large portfolio of "repurchase agreements" for securitized mortgages that had been traded on the financial markets. Lewis was all for the deal because of the banks investment in Countrywide; which, with the wisdom of hindsight, was a big mistake resulting in huge losses in settlements with state and the federal government agencies. As a consequence, BofA was forced to downsize, cutting thousands of jobs and eliminating many departments, including fiduciary banking services that will go into effect this October.

The situation is likely to get worse before it gets better with the banks gearing up to restart all the stalled foreclosures. There have been numerous challenges in the courts to foreclosures of securitized mortgages serviced through the Mortgage Electronic Registration System ("MERS"); but these have had mixed results. See, e.g., Gomes v. Countrywide Home Loans, Inc., 192 Cal.App.4th 1149 (2011).

There has been little in the way of effective relief. Most of the measures proposed were opposed by the powerful banking lobby; however the Congress did include the Federal Home Affordable Modification Program (HAMP) as part of the Financial Stability Act of 2009. The problem is that relatively few borrowers qualify, and the default rate on modified loans under the program is very high. President Obama has issued executive orders to government agencies to provide assistance; but these efforts have not proved to have any meaningful effect. Congress previously enacted the Mortgage Forgiveness Debt Relief Act of 2007 to ameliorate the tax consequences of foreclosures that may result in cancellation of indebtedness income (CODI) under I.R.C. § 61(a)(12); however it is very limited and does not apply to nonpurchase-money home loans. This law, which was extended once, is due to expire the end of 2012.

There has also been some action to amend the federal bankruptcy laws to allow for home loan modification; but this too is unlikely to pass, or survive constitutional challenge under the Contracts Clause. See Const., Art. I, sec. 10, cl. 1. The existing law does not provide for such relief. See Dewsnup v. Timm, 502 U.S. 410 (1992); Nobleman v. American Savings Bank, 508 U.S. 324 (1993). Notwithstanding these limitations, some bankruptcy courts have allowed "lien stripping" of second mortgages that are determined to be unsecured as to collateralization under section 506 of the Bankruptcy Code.

mogur · Sep 4, 2012

And that is the real shame. Real people, real loss, real hardship. Let's do the social security rhumba.... let people who don't have a clue, do their own investments, like under Ryan. When they are twenty, invest in Apple. When they are sixty, let them live or die by the whims of investment houses. Yea, that's the ticket, but we all know that they won't invest, they will digest. So it really doesn't matter, if social security didn't exist, then 98% of retirees would be destitute. Pay them now, or pay much more later, you conservatives should be on the social security bandwagon, to avoid your privileged money being sucked up by the lazy ones, who worked their asses off to provide you with the level playing field that you now enjoy.

Nemo · Sep 5, 2012

Ryan's voting record does not bode well for senior citizens. I am reminded of the scene in Catch-22 when Yossarian checks his parachute and finds it replaced with a share of stock in M&M Enterprises. If Republicans like Romney and Ryan have their way, your Social Security and Medicare benefits will end up being a lottery ticket and the number for Dial-A-Prayer.

myp · Sep 7, 2012

mogur said:
100% disagreement, myp. Predatory lending on anyone that had skin was the origin of 'toxic mortgages'. From making it incumbent on bankers to qualify loans, to the free-wheeling, 'I will crush you by loaning more than you can, by qualifying anyone' is what tanked the housing market. You think that everything was above board until the crash, and then those mortgages BECAME toxic? That is lucridous.

I think you are confusing subprime and toxic... Toxic assets by definition are toxic after the fact, not before they are made...

mogur said:
No, predatory lending victimized not only those that were baited (meaning lying ass bullshit) to take loans that they couldn't afford, but the investors that were sold those toxic mortgages, as well as the taxpayers who were on the hook to salvage the 'too big to fail' carnage. The low income victims only lost a few house payments, and back to their poverty. The perpetrators moved up in the investing world, and the real victims were hard-working wage earners that saw their real estate investment go underwater.

It might have victimized those groups, but it was also their fault at the same time to a degree (no one put a gun to their heads to take those loans or make those investments). Also, Wall St. in a lot of those cases was that investor anyway, which is why they had to be bailed out. The ones who made out were the shady lenders who lent to anyone because they could then sell their mortgages to Wall St. and in turn other investors too- those shady lenders are not or were not a part of Wall St.

mogur said:
Greece, Pizza, and Spain are failing because they don't tax the rich, and have too many on the government payroll.

It is not just a problem of not taxing the rich- they simply spent too much. Yields were too good after they joined the Euro and there was too much misinvestment. But that's for another thread, I was just pointing out how Greece, etc. are often seen as at fault whereas homeowners in the housing crisis were seen as victims.

myp · Sep 7, 2012

Nemo said:
The cause for the market crash of 2008 was a failure of the government to exercise proper regulatory control over mortgage banking and securities. Between 2004 and 2006, banks and mortgage lenders made millions of high-risk, subprime loans (i.e., 100% "piggyback" loans with adjustable interest rates "ARMs", etc.) to borrowers that were unqualified for conventional financing and without due-diligence requirements for collateralization on the assumption that the real estate market could only go up and no one could lose. These loans were then packaged and sold as debt securities on the financial markets worldwide.

Then, predictably, things took a downturn. The interest rates for ARM's went up, and borrowers started defaulting on their loans, precipitating a flood of foreclosures across the country. By August 2007, Countrywide Home Loans (the largest mortgage lender on the planet) was on the verge of bankruptcy; but was bought out by Bank of America in an effort to prevent its own equity position in the company from being extinguished. (Not a good move as it turned out, for in taking over Countrywide, it had to assume a large portfolio of very bad loans.) The disintegration, however, continued with millions of defaults followed by foreclosures as real estate values plummeted. This in turn precipitated bank failures, including Indymac Bank (the largest since the crash of 1929), which was followed by the collapse of some of the biggest investment firms like Bear Sterns, Morgan Stanley, and Lehman Brothers (the biggest bankruptcy in history), the federal "conservatorship" of Fannie Mae and Freddie Mac, and finally the outright takeover of AIG. It had a cascading effect necessitating a government bailout with taxpayer funds just to stabilize the financial markets and prevent widespread, systemic economic chaos.

It was the fault of deregulation. The FDIC, FSLIC, HUD and FTC failed in regulating the banks and mortgage lenders, and the SEC failed to exercise proper oversight of the sale of mortgage-backed securities. (Even Alan Greenspan was forced to admit that he was wrong in thinking that the market could be left to its own devices.) And, it will happen again because the Congress lacks the political will to establish regulatory control over financial markets. Dodd-Frank - which the banking lobby is working night and day to have Congress repeal - is not the answer. Regulation must be measured, but effective; and not so heavy-handed as to stifle economic growth. To work, there must at least be a level playing field, which requires more transparency that will promote value over speculation. Also, there needs to be accountability: if there are no penalties for failure - if executives are rewarded for running their companies aground - there is no incentive to exercise restraint over irresponsible action.

It wasn't just deregulation though. You could have kept all the old regulations and still had a severe bubble. That is the point. There was innovation that changed the game, so-to-speak. You also had a loose monetary policy and greater trading volume globally.

Also, speculation at large isn't the issue here- it can be a very good thing in terms of liquidity and reducing systemic risk. You create a rift between speculation and value without realizing that speculation can be value- they are not mutually exclusive.

mogur · Sep 8, 2012

myp said:
It is not just a problem of not taxing the rich- they simply spent too much. Yields were too good after they joined the Euro and there was too much misinvestment. But that's for another thread, I was just pointing out how Greece, etc. are often seen as at fault whereas homeowners in the housing crisis were seen as victims.

You nailed it. It is all about the fact that homeowners WEREN'T responsible. Homeowners were the victims of this scheme. You don't agree? You think that those slimy homeowners were the problem? Gimme a big break, Myp. Our economy tanked on the greed of the big banks that folded toxic mortgages into big investment crap that they sold to unsuspecting investors.

Greece is tanking for many reasons. First, their buying into the Euro cost them huge money. Second, their corrupt government gave out public sector jobs like candy for votes. Third, they couldn't tax the rich, cause they owned the government. When some reasonable people said that we should fly helicopters over rich areas to evaluate 'swimming pools' for an indication of who was avoiding taxes, they simply bought camouflage netting to hide their swimming pools. No rich paying taxes, and only public sector jobs paying into the coffers is not a formula for success.

Do you really think that all that relates to our problem with austerity vs stimulus? Greece, as well as the US, needs a combination of cutting back on public service jobs as well as fairly taxing the wealthy. Stimulus does jack the debt, but cutting taxes kills jobs by killing public service jobs. We would have millions of more jobs, if the conservatives hadn't pushed for gutting public service employment. Those firefighters only need to tend to mansions, why would they bother themselves with riff-raff hovels?

myp · Sep 8, 2012

mogur said:
You nailed it. It is all about the fact that homeowners WEREN'T responsible. Homeowners were the victims of this scheme. You don't agree?

No, I don't. I think the people who bought homes they couldn't buy were responsible. I also think the subprime lenders were responsible. I also think Fannie and Freddie were responsible. I also think Wall St. was responsible. I also think investors who bought Wall St.'s products (including many governments internationally) were responsible. I also think the SEC was responsible. I also think the Fed was responsible. I also think the credit rating agencies were responsible. And I am sure I am still forgetting some others.

My point is, a lot of people did stupid things, did not think straight, etc. in this. Those who bought homes they could not afford might have gotten burned, but they played a role in that happening by not doing their homework. Casinos want you to think that if you play there you'll become rich- that doesn't mean every person who loses at a casino is a victim- part of it is their fault. The people who foolishly thought they could buy a house without a stable income or savings just didn't do their homework.

I'll skip the Greece responses since it is off-track, I'd be happy to continue the discussion in another thread if you would like to though.

Treasury sells $4.5 billion in AIG stock

Similar threads