Cool lucrum, I'm drinking a Coors light now, the beer of construction workers everywhere. Off subject but are you trading again ?
Newcastle Brown Ale here. (I drank practically nothing but Coors Light for many years) A little FX here and there, if I still traded equity index futures I'd never get anything done for being glued to the screen all day.
I used to drink coors light too, but i cant drink beer anymore cause i get such bad heatburn if i do. Usually now i drink a vodka with pop, and move onto scotch after i have a couple mixed drinks. If its good scoth i will drink the scotch first, but i dont feel like going after 10$ a glass shit when im relaxing on my own....
I know.... its particularly lame when I go to the lake, or a Beach, or a boat, and everyone cracks a beer, and i got to break out my damn arsenal (a cup, a bottle, mix, and ice) while they all just enjoy an ice cold beer....
Tuesday, October 19, 2010 Was Abacus the Business Model for the Entire Mortgage Industry? As I've repeatedly pointed out, the big banks intentionally signed up as many borrowers as possible, even if there was no way they could repay their loans. For example, I recently wrote: [Professor William] Black explained that fraud by a financial company usually involves the company: 1) Growing like crazy 2) Making loans to people who are uncreditworthy, because theyâll agree to pay you more, and thatâs how you grow rapidly. You can grow really fast if you loan to people who canât you pay you back and 3) Using extreme leverage. This combination guarantees stratospheric initial profits during the expansion phase of the bubble. But it guarantees a catastrophic subsequent failure when the bubble loses steam. And collectively - if a lot of companies are playing this game - it produces extraordinary losses (more than all other forms of property crime combined), and a crash. In other words, the companies intentionally make loans to people who will not be able to repay them, because - during an expanding bubble phase - they'll make huge sums of money. The top executives of these companies will make massive salaries and bonuses during the bubble (enough to live like kings even even if the companies go belly up after the bubble phase). [Simon] Johnson confirmed that a high housing default rate was part of the banks' models. The financial giants knew they would make huge sums during the boom, and then transfer their losses to the American people during the bust. But there might have been another reason that loaning to borrower who couldn't repay was the prevalent business model. As foreclosure expert Neil Garfield notes, mortgages are worth a lot more if they default than if they perform. Specifically, a mortgage worth $300,000 if the homeowner repays in full might be worth $9 million to the various owners of synthetic cdos and credit default swaps if the owner defaults. We know - as alleged by the SEC: Paulson & Co. effectively shorted the RMBS portfolio it helped select by entering into credit default swaps (CDS) with Goldman Sachs to buy protection on specific layers of the ABACUS capital structure. Paulson also advised Los Angeles apartment mogul Jeff Greene to do something similar. Greene was heavily involved in the subprime market, and he bought the worst of the mortgage backed securities, and then bet against the bonds using CDS. But Garfield says that it is broader than just a couple of investors like Paulson and Greene. He believes that was basically the business model for the entire mortgage industry. He said that the big banks that packaged mortgage backed securities had an incentive to suck in really bad mortgages. If a certain percentage of the mortgages default, the cdo and cds side bets pay many times more than the actual mortgage could possibly pay http://www.washingtonsblog.com/2010/10/did-giant-banks-intentionally-loan-to.html
Nonsense. The "banksters" have been demonized far more than the other bad actors because they're the easy political target. In comparison everyone else has been given a pass. Such as the countless greedy, irresponsible sheeple who bought more house than they could afford and who took $2.3 trillion in equity from their homes from 2003 to 2007 and are now squatters but also "victims" and "heroes." Pandering politicians who are trying to keep them there without paying are "compassionate." Where's all the outrage over that or those responsible for Gramm-Leach-Bliley or relaxing the net capital rule or the other boneheaded government moves? Of course TBTF is even more of an issue now that it was. But hardly anyone has been held responsible when IMO EVERYONE who contributed should be, and pretty much only the "banksters" have been demonized.
Its as if they've shot themselves in the foot. So they can't walk anymore. Then they think "well maybe if I shoot my other foot I'll walk again!"