• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

Unprinting money

austrianecon said:
You do realize AIG paid no taxes so it could pay it back. ;)
Click to expand...

I do realize you will squirm your way out of atoning for your misinformed comments.

The first comment:
austrianecon said:
Actually the Fed bought some really toxic stuff early in the "crisis" to save banks. Fed ended up buying billions in crap* from Lehman, Bear Sterns and AIG. Fed specifically created Maiden Lane I, II and III LLC to run assets it bought. Over $100b in those three alone.

* crap being CDOs, Residential whole loans, a variety of CDS, the bulk is CMBX, AMBAC, MBIA, PMI, CDS (Commercial Real Estate), CDS on Munis, CDS on non-agency RMBS, CDS on Non-residential ABS, some treasuries, and just under $3 billion in Interest Rate Swaps (that's just for Maiden I). Maiden II and III are even worse. (ask if you want to know).
Click to expand...

Was shown to be inaccurate.

Followed by:

austrianecon said:
It's old news (2010).... Fed wasn't happy when it was forced to report it. Maiden Lane I, II, and III have cease to exist and Fed didn't "take" loss.

We won't know the full MBS break down for a few years (or when the Fed starts to unwind).
Click to expand...

Which is inaccurate.

Followed by:

austrianecon said:
They are.. Fed actually spent $112 billion bailout for AIG. Treasury another $70b.

No, Kush. The purchase price for AIG assets was $112b. Not a $20b senior loan to BlackRock to run Maiden Lane II or the $25b for Maiden Lane III. AIG was fed $60b in one week (the same week the Maiden Lane products were bought). The Fed doesn't count the money it give in emergency lending hence why it had a "profit" on the senior loans.
Click to expand...

Which again is inaccurate.

Then you try to shift the goalpost... again... with the tax response.

Same as the deflator post and the bank reserve post. When called out, you either ignore it or squirm. This expert act of yours is getting old.
 
Kushinator said:
I do realize you will squirm your way out of atoning for your misinformed comments.

The first comment:

Was shown to be inaccurate. [quote/]

You have shown no evidence what was in the Maiden Lane LLC (I,II,III) to refute my claim. They were crap, they were CDO and what I listed above. This has never been in dispute by the Fed, Treasury or Blackrock (who ran them). Maiden Lane LLC III contained Davis Square III.

Davis Square III had ratings depending on class (1-A) was rated A2, 1-B was given a Baa (Non-investment grade), 1-C was rated Caa1, 1-D Caa2 as well. Caa1 and 2 are junk bond status. Those were the ratings at the time they were bought by the Fed. ALL under review to get downgraded even further by December 2008.

Kushinator said:
Followed by:



Which is inaccurate.

Followed by:



Which again is inaccurate.

Then you try to shift the goalpost... again... with the tax response.

Same as the deflator post and the bank reserve post. When called out, you either ignore it or squirm. This expert act of yours is getting old.
Click to expand...

I have differing opinion on those issue then you. Doesn't mean I am wrong or right.. We disagree. I find deflator to be manipulation as a way to hide inflation and bank reserves is again.. how you view your assets. Capital is part of Reserve requirement, you need X amount of cash on hand.

None of what I said is inaccurate. There was hearings in Congress over what the Fed did. Those hearings exposed that the Fed did two things.. 1) Maiden Lane LLCs were illegal (not in Fed's authority) and 2) Fed pushed the Maiden Lane losses onto the balance sheets of AIG and others to hide losses from the Maiden Lane holdings.

The Fed did account trickery and one of those was allowing (despite being illegal) AIG to claim tax relief due to losses in future years. Treasury Department Inspector General Neil Barofsky (TARP guy) reported these issues to Congress in Nov 2009. He accounted for $62b paid to counter-parties to AIG assets bought by the Fed (Maiden Lane II and III).

The Fed also encouraged AIG to lie to SEC over it.

So you wanna stick with Fed and Treasury was made whole?
Click to expand...
 
austrianecon said:
Kushinator said:
I do realize you will squirm your way out of atoning for your misinformed comments.

The first comment:

Was shown to be inaccurate. [quote/]

You have shown no evidence what was in the Maiden Lane LLC (I,II,III) to refute my claim. They were crap, they were CDO and what I listed above. This has never been in dispute by the Fed, Treasury or Blackrock (who ran them). Maiden Lane LLC III contained Davis Square III.

Davis Square III had ratings depending on class (1-A) was rated A2, 1-B was given a Baa (Non-investment grade), 1-C was rated Caa1, 1-D Caa2 as well. Caa1 and 2 are junk bond status. Those were the ratings at the time they were bought by the Fed. ALL under review to get downgraded even further by December 2008.



I have differing opinion on those issue then you. Doesn't mean I am wrong or right.. We disagree. I find deflator to be manipulation as a way to hide inflation and bank reserves is again.. how you view your assets. Capital is part of Reserve requirement, you need X amount of cash on hand.

None of what I said is inaccurate. There was hearings in Congress over what the Fed did. Those hearings exposed that the Fed did two things.. 1) Maiden Lane LLCs were illegal (not in Fed's authority) and 2) Fed pushed the Maiden Lane losses onto the balance sheets of AIG and others to hide losses from the Maiden Lane holdings.

The Fed did account trickery and one of those was allowing (despite being illegal) AIG to claim tax relief due to losses in future years. Treasury Department Inspector General Neil Barofsky (TARP guy) reported these issues to Congress in Nov 2009. He accounted for $62b paid to counter-parties to AIG assets bought by the Fed (Maiden Lane II and III).

The Fed also encouraged AIG to lie to SEC over it.

So you wanna stick with Fed and Treasury was made whole?
Click to expand...

I don't understand why you're continuing with this.

What are you trying to prove ...?
Click to expand...
 
austrianecon said:
You have shown no evidence...
Click to expand...

What was the end result? How much did the Fed or Treasury lose?

I have differing opinion on those issue then you. Doesn't mean I am wrong or right.. We disagree. I find deflator to be manipulation as a way to hide inflation and bank reserves is again.. how you view your assets. Capital is part of Reserve requirement, you need X amount of cash on hand.
Click to expand...

:lol:

None of what I said is inaccurate. There was hearings in Congress over what the Fed did. Those hearings exposed that the Fed did two things.. 1) Maiden Lane LLCs were illegal (not in Fed's authority) and 2) Fed pushed the Maiden Lane losses onto the balance sheets of AIG and others to hide losses from the Maiden Lane holdings.

The Fed did account trickery and one of those was allowing (despite being illegal) AIG to claim tax relief due to losses in future years. Treasury Department Inspector General Neil Barofsky (TARP guy) reported these issues to Congress in Nov 2009. He accounted for $62b paid to counter-parties to AIG assets bought by the Fed (Maiden Lane II and III).
Click to expand...

See above.

So you wanna stick with Fed and Treasury was made whole?
Click to expand...

You know they were made whole. Why you continue to spread misinformation is beyond me....
 
Absentglare said:
I don't understand why you're continuing with this.

What are you trying to prove ...?
Click to expand...

He is trying to assert that the failures of Austrian Economics, with respect to our macroeconomic reality, don't exist. Hence the ideologically driven spread of misinformation.
 
JohnfrmClevelan said:
I think too much is made of what the Fed has done since 2008. It was not a straightforward addition of dollars to the economy.

First, banks needed to recapitalize when their assets went down in value. So the Fed came in and bought up a bunch of weak assets at face value, exchanging dollars for MBSs and other such assets, a fairly even exchange of value. (In the Fed's hands, because they were able to hold them, those assets have been paying off.) Banks were then able to meet their capital requirements and keep on operating. It was an even exchange of value, but now the Fed held securities and the banks held dollars. Those transactions also increased the level of total reserves in the system; any net government spending increases total reserves.

As these securities mature, dollars flow back to the Fed, which not only takes dollars out of the economy, it also lowers total reserves. So some of this is already undoing itself. When the Fed sells those securities back in exchange for dollars, the same things happen; fewer dollars, and fewer reserves. If the Fed held all of these securities to maturity, all the dollars they spent (and a few more) would come back to them, extinguishing all of those liabilities. The net effect would be zero.

The increased deficit spending did put net dollars into the economy, and of course it increased reserves, too. But, you (hopefully) get increased economic activity, which means taxes (and reserves) are going to flow back to the government.

Any flow of dollars back to the government "unprints" money. Most of this is taxation, and some of it is coming from securities held by the Fed. Nothing is permanent, but it's hard to claw back dollars once they get saved. You can't really tax China and Japan to claw back all of the dollars (bonds) they hold. On the other hand, they aren't doing any harm, sitting around unspent.

******************

We used to worry about the level of reserves in the system, drawing out the excess by exchanging reserves for interest-bearing bonds. QE showed that excess reserves weren't really a problem. They don't lead to more bank loans, so the money supply didn't "explode" like some economists worried about. MB grew a ton; M1 didn't follow. So really, not a heck of a lot happened. We bailed out the banks by moving some things around, we had some too-small stimulus spending, and that's it. Much of the "money printing" that everybody was worried about is sitting around as excess reserves, which are pretty harmless.
Click to expand...

Excess reserves " weren't a problem " because monetary stimulus doesn't create demand for consumer credit. There was no demand for that new liquidity so it never entered into the economy.

Sure it was sold, as a way to stimulate the economy but that was just pretense.

Call QE what it was, a Bank Bailout ( Fed buying GSE MBSs that were backed by assets in default ) and a way to make new sovereign debt cheap.
 
Fenton said:
Excess reserves " weren't a problem " because monetary stimulus doesn't create demand for consumer credit.
Click to expand...

You are clearly confused. Lower interest rates increase the demand for credit, in an economy that see's profit and employment growth.

There was no demand for that new liquidity so it never entered into the economy.
Click to expand...

Do you really understand what liquidity (and it's demand) entail?

Call QE what it was, a Bank Bailout ( Fed buying GSE MBSs that were backed by assets in default ) and a way to make new sovereign debt cheap.
Click to expand...

The Fed raised interest rates last month by 25 basis points, and yields on long duration debt have fallen by roughly the same amount.

Why?
 
Kushinator said:
You are clearly confused. Lower interest rates increase the demand for credit, in an economy that see's profit and employment growth.



Do you really understand what liquidity (and it's demand) entail?



The Fed raised interest rates last month by 25 basis points, and yields on long duration debt have fallen by roughly the same amount.

Why?
Click to expand...

http://www.cnbc.com/2015/08/18/st-louis-fed-official-no-evidence-qe-boosted-economy.html

You ever get tired of parroting unsubtsantiated talking points ?
 
Fenton said:
http://www.cnbc.com/2015/08/18/st-louis-fed-official-no-evidence-qe-boosted-economy.html

You ever get tired of parroting unsubtsantiated talking points ?
Click to expand...

Am i to debate an article?

Can't have it both ways. At the early stages of the recovery, the narrative was QE will cause debasement and inflation. Now that years have passed and credit has rebounded considerably, rhetoric changes to QE didn't do anything. All while failing to consider the data....

fredgraph.png


In case you are having difficulty: Total private credit fell by roughly a trillion dollars between 2009 and 2011, and increased by another $1.4 trillion by 2013. Private credit has increased by more than $3 trillion since 2011.
 
Ganesh said:
I am wondering what MMTers here think about this article on removing money from the economy, and what it means for our previous notions of debt, and the role of government.

Can the Fed Unprint Money? - US News
Click to expand...

The simplest answer in the present context is the obverse of what banks have done since the advent of the Great Recession.

Banks were incited to "enhance reserves" in order to perform more lending (and thus contribute to overcoming the recession by expanding consumer Demand). So, they sent most of their dysfunctional debt on their books to the Fed. This increased their capacity to borrow further from the Fed, since the dead-stuff was not officially on their books but on that of the Fed. Banks need "official reserves" as collateral for the lending they promote.

Most such lending is "securitized" and sold to debt-holders who seek real-estate debt-payments as a steady income. The realty asset sold thus comes back to them as ready money - which is how they run themselves.

Doing the opposite, the Fed requires banks to increase their reserves, thus diminishing their lending capacity.

Why should any bank be asked to do that in a recessionary environment ... ?
 
Lafayette said:
The simplest answer in the present context is the obverse of what banks have done since the advent of the Great Recession.

Banks were incited to "enhance reserves" in order to perform more lending (and thus contribute to overcoming the recession by expanding consumer Demand). So, they sent most of their dysfunctional debt on their books to the Fed. This increased their capacity to borrow further from the Fed, since the dead-stuff was not officially on their books but on that of the Fed. Banks need "official reserves" as collateral for the lending they promote.

Most such lending is "securitized" and sold to debt-holders who seek real-estate debt-payments as a steady income. The realty asset sold thus comes back to them as ready money - which is how they run themselves.

Doing the opposite, the Fed requires banks to increase their reserves, thus diminishing their lending capacity.

Why should any bank be asked to do that in a recessionary environment ... ?
Click to expand...

Banks didn't " send "their dysfunction debt over to the FED, the FED purchased Agency backed MBSs as part of their QE initaive.

It was a Bailout, and one I personally approve of.

QE as a strategy to jump start the economy was ineffective primarily because keeping interest rates bottomed out and providing the banks with excess liquidity doesn't on its own create new demand for consumer credit.

So we were fed pretense while the FEDs actual strategy was centered around keeping new sovereign debt cheap, and we added alot of new sovereign debt over the last 7 years, and unloading allot of toxic GSE debt off the books of private lending institutions and onto the FEDs balance sheet.

The reason why Banks aren't lending has little to do with FED policy one way or the other.

Banks will start to lend again when we have a actual economic recovery.
 
Kushinator said:
Am i to debate an article?

Can't have it both ways. At the early stages of the recovery, the narrative was QE will cause debasement and inflation. Now that years have passed and credit has rebounded considerably, rhetoric changes to QE didn't do anything. All while failing to consider the data....

fredgraph.png


In case you are having difficulty: Total private credit fell by roughly a trillion dollars between 2009 and 2011, and increased by another $1.4 trillion by 2013. Private credit has increased by more than $3 trillion since 2011.
Click to expand...

Well I never said it didn't do anything, just that it was largely ineffective at its accomplishing its stated goal

U.S. Homeownership Rate Hits 48-Year Low - Real Time Economics - WSJ
 
Fenton said:
Banks didn't " send "their dysfunction debt over to the FED, the FED purchased Agency backed MBSs as part of their QE initaive
Click to expand...

Same damn thing. They off-loaded the dud-loans (that they'd kept on their books) onto the Fed, thus expanding their lending reserve-capacity and start lending again. (And securitizing the loans, such that they could recycle yet again their money-load.)

Of course, those responsible for instigating and amassing the dud-loans in the first-place simply got a slap on the wrist.

The banksters were fined, but nobody perp-walked to jail ...

PS: Don't forget, the securitization process in the American banking industry can be done "in-house". All they need to do is shift the securitized loans (with its appropriate Triple-A rating from friends over at the rating-agencies), into another in-house finance entity that is reselling those packages to all and sundry (as mortgage investment vehicles with good returns). Where this process went wrong in the first-place was the fact that the Rating Agencies were not performing due-diligence by inspecting the fundamental nature of the mortgages that were being "securitized".
 
Last edited:
DIVINE INTERVENTION

Kushinator said:
Now that years have passed and credit has rebounded considerably, rhetoric changes to QE didn't do anything.
Click to expand...

Let's forget the rhetoric, shall we? And let's concentrate on the facts.

There is a reason the Great Recession is called thusly. Because we had never seen any economic calamity of this magnitude since the 1930s. Moreover, I post here the History of Federal Tax Rates since their inception.

In both instances (1930 and 2009), tell me why the Great Depression and the Great Recession were not triggered by massive reductions in Income Taxation rates (particularly at the upper-income levels). Both times, the years prior to the tragic economic consequences were ones of investment turmoil typified by manipulation of financial operators.

If a state had a very large and sudden increase of road-traffic deaths, don't you think its residents would be clamoring for more police on the highways?

What did we get as a result of the Great Recession? Not much, in fact. This is my history of events (wholly man-made):
*Obama is elected in a significant victory repudiating the Replicant Party for the impending recession.
*In the midst of a full-fledged recession, he (and a Dem Congress) passed two spending bills (worth close to a trillion dollars) that has the effect of stopping dead a runaway unemployment rate that reached 10%. (See History of US Unemployment Rates.)
*Was this good enough? No, the American people punished Obama for "not being able to walk on water" and reverse the Great Recession. (Not even Roosevelt could reverse the Great Recession, which came about because of WW2 spending.)
*The HofR (from which issues all spending bills) was given over to the Replicants in the 2010 midterms, which installed a No-spending Policy and reduction of governmental spending. (Except for the DoD of course.)
*Did this austerity solve anything? Not in the least, and economists continued to implore the use of governmental Stimulus Spending, that imploring evidently falling upon deaf-ears in the HofR. Why? Because they wanted Obama defeated in 2012.
*Which did not happen, but the American electorate - in its lack of collective wisdom - refused to let the Dems control the HofR once again in 2012. Which simply meant no stimulus-spending and a continued economic stagnation with a slow, slow crawl-out from the recession.
*Obama was reelected in 2014, but with still his budgetary hands tied behind his back by a Replicant control of the HofR that did not give-a-damn about high-unemployment (as long as corporate profits were swelling).
*Which, after five long, long years is just coming to an end, with the past years of employment destruction behind it.

And what do we hear from knotheads like Trump (et al on the Right)? Much the same nonsense regarding Federal budget constraint. The Replicants haven't a clue about the future of America, largely because of the patronage of a select group of American plutocrats.

What does the Left have to offer? A progressive Sanders who is saying the right things about a Social Democracy (of the kind that runs the European Union), but will likely never get elected despite the gushing of admiration by some people who recognize what (at its heart) is all wrong about America.

That is, it's Love Affair with an unbridled plutocracy that seeks to maintain its hold on the flat-tax rate that creates the riches of the top 10Percenter households in America. See here that groups Flat Tax Rate. This upper-end taxpayer never ever pays more than 30% income taxation.

Without Progressive Taxation of this group, which had reached 90% before LBJ started tinkering with it in the early 1960s, Americans are in for "more of the same" rip-off. The Far Right has successfully "strangled the beast", but it is not Their Constituency that are paying the consequences.

May heaven help America - because it certainly needs Divine Intervention to save itself ...
 
Last edited:
Kushinator said:
You are clearly confused. Lower interest rates increase the demand for credit, in an economy that see's profit and employment growth.
Click to expand...
this has nothing to do with what he was responding to.
the QE reserves that the fed did never entered the market therefore there technically wasn't an excessive reserve of US dollars.
The fed's used QE to buy bad securities from banks. it was basically a dollar for dollar swap.

Do you really understand what liquidity (and it's demand) entail?
Click to expand...
Do you understand what he is talking about is the bigger question.

The Fed raised interest rates last month by 25 basis points, and yields on long duration debt have fallen by roughly the same amount.

Why?
Click to expand...

which has nothing to do with what QE was about.
 
Lafayette said:
DIVINE INTERVENTION



Let's forget the rhetoric, shall we? And let's concentrate on the facts.
This is my history of events (wholly man-made):
Click to expand...

So lets forget the rhetoric and look at facts then you post your opinion on everything calling it a fact when it is simply your opinion.
you then spout a bunch of rhetoric around.

congrats you defeated your own argument.
 
Both the Vietnam War and the 1973-75 recession ended simultaneously in 1975 within months of one another. The War in April and the recession in March of '75.

The closeness in dates was pure happenstance ...
 
I usually underscore my opinion with factual evidence linked.

Which more than one can say about your comments ...
 
ludin said:
the QE reserves that the fed did never entered the market therefore there technically wasn't an excessive reserve of US dollars.
Click to expand...

You wear your ignorance on your sleeve. Reserves NEVER ENTER THE MARKET! THEY ARE RESERVES! The Fed controls the level of excess reserves, not banks.

The fed's used QE to buy bad securities from banks. it was basically a dollar for dollar swap.
Click to expand...

No. If they had bought bad securities from banks, they would have realized the losses that banks were dealing with at that time. On the contrary, the Fed has been profitable in their MBS portfolio.

Do you understand what he is talking about is the bigger question.
Click to expand...

:lol:

I know that Fenton doesn't understand what he is talking about, and neither do you.

which has nothing to do with what QE was about.
Click to expand...

Why did interest rates fall when the Fed raised rates?
 
Lafayette said:
Same damn thing. They off-loaded the dud-loans (that they'd kept on their books) onto the Fed, thus expanding their lending reserve-capacity and start lending again. (And securitizing the loans, such that they could recycle yet again their money-load.)

Of course, those responsible for instigating and amassing the dud-loans in the first-place simply got a slap on the wrist.

The banksters were fined, but nobody perp-walked to jail ...

PS: Don't forget, the securitization process in the American banking industry can be done "in-house". All they need to do is shift the securitized loans (with its appropriate Triple-A rating from friends over at the rating-agencies), into another in-house finance entity that is reselling those packages to all and sundry (as mortgage investment vehicles with good returns). Where this process went wrong in the first-place was the fact that the Rating Agencies were not performing due-diligence by inspecting the fundamental nature of the mortgages that were being "securitized".
Click to expand...

Nonsense,

GSE backed MBSs were given a " AAA " rating because US Treasuries had a " AAA " rating.

Since GSE debt had the implicit Govt backed guarantee that went with it their debt was treated like US Treasuries.

The only MBSs with a " AAA " rating was GSE backed.

It was not the rating agencies fault the US Govt co-opted the GSEs into purchasing a increasing amount subprime debt starting in 1995.

What " went wrong " was the Govt intervening in the private sector economy by forcing private lender's to abandon their lending standards and then giving the GSEs a quota to buy those loans at a increasing rate.

No, the Banks didnt " off-load " anything, the purchase of GSE MBSs was part of a monetary stimulus initiative that started in 2008.

And Banks didn't Securitize those mortgages, Fannie and Freddie did. The first large scale securitization of subprime debt was done by Freddie Mac in 1997 when they guaranteed over 380 million dollars worth of Subprime loans

Private issue MBSs with lower ratings didn't become available until 2002 and even then Fannie and Freddie were the primary consumers of those Securities.

As part of a larger Governent " affordable lending initaive " the GSEs bought Trillions of dollars in No-Doc, NINJA and Subprime loans, turned them into Securities and sold them off with a " AAA " rating whIle they purchased hundreds of billions of dollars worth of lower tranche private issue MBS.

In 1993, Fannie Mae CEO James Johnson committed the GSEs to 1 Trillion dollars in Subprime purchases.

In 2000, HUD Secretary Andrew Cuomo committed the GSEs to 2.4 Trillion dollars in Subprime purchases.

Clintons " Fair lending task force " forced private lenders to abandon their lending standards under threat of DOJ prosecution and make loans to borrowers who would not and could not pay those loans back.

In the late 90s Fannie and Freddie lobbied banks to sell them those loans so they could meet their Govt mandated quotas.

From 1995-2000, 42% of the loans the GSEs purchased had to be from borrowers who were low income and or had lower or no downpayment.

The GSEs were by far the 2 most influential and corrupt financial entities involved in the 2008 Financial crisis.
 
Last edited:
Kushinator said:
The goal of credit easing was to bring homeownership up to its previous high?

You are a liar.
Click to expand...

. You people get so personal Lush

Anyway where did I say that ? That QE should have driven rates back up to nearly 70% ?

A modest increase would have been nice and could have been attributed to FEDs monetary policy.
 
A BUBBLE BURSTS AND IT'S NOBODY'S FAULT?

Fenton said:
GSE backed MBSs were given a " AAA " rating because US Treasuries had a " AAA " rating.
Click to expand...

This is NOT the point of issue. You are confusing the subprime history. I am going back to the origins of the disaster foisted by the Banksters.

The securitized sub-prime packages were never ever investigated for verification of their Triple-A ratings, rubber-stamped by those agencies. Which is why, of course, they became “junk” and the properties foreclosed.

Fenton said:
It was not the rating agencies fault the US Govt co-opted the GSEs into purchasing a increasing amount subprime debt starting in 1995
Click to expand...

This sort of nonsense could only come from a bankster who participated in the fraud.

What is a rating-agency that rates debt and does not investigate its underpinnings. The debt was being contracted by private parties and with lending companies. (Typically Fannie and Freddie, who participated in the fraud (from the 1990s on), and whose managers “retired” with megabuck retirement payments.)

Nobody but nobody was investigating the fraudulent underlying debtors who were given mortgages (to flip a condo in three months), which is how the fraud was fanned and inflamed, until the fire exploded upon further financial derivative-markets, which brought the entire Financial System down in 2008/9.

From Wikipedia, here:
"Credit rating agencies (CRAs) — firms which rate debt instruments/securities according to the debtor's ability to pay lenders back — played a significant role at various stages in the American subprime mortgage crisis of 2007-2008 that led to the Great Recession of 2008-2009. The new, complex securities of "structured finance" used to finance subprime mortgages could not have been sold without ratings by the "Big Three" rating agencies — Moody's Investors Service, Standard & Poor's, and Fitch Ratings. A large section of the debt securities market — many money markets and pension funds — were restricted in their bylaws to holding only the safest securities — i.e securities the rating agencies designated "triple-A".

The pools of debt the agencies gave their highest ratings to included over three trillion dollars of loans to homebuyers with bad credit and undocumented incomes through 2007. Hundreds of billions of dollars' worth of these triple-A securities were downgraded to "junk" status by 2010, and the writedowns and losses came to over half a trillion dollars. This led "to the collapse or disappearance" in 2008-9 of three major investment banks (Bear Stearns, Lehman Brothers, and Merrill Lynch), and the federal governments buying of $700 billion of bad debt from distressed financial institutions."
Click to expand...

So, get off your high-horse of "It's not our fault!". It was "nobody's fault", but became the biggest financial disaster since the stock-market crash of 1929? And was not motivated by the same greed to "make a quick megabuck" as in 1929?

Yeah right, now pull the other leg. If you were personally involved in the faulty transactions then you are as much a bankster as the others who never ever went to jail for their crimes.

And today find themselves playing the links in Florida having ruined the lives of millions of individuals both before and after the bubble burst ...
 
Last edited:
You must log in or register to reply here.
Back
Top Bottom