Barry Ritholtz Eviscerates the Big Lie
by Mike Kimel
Barry Ritholtz looks at the Big Lie.
The big lie of the financial crisis, of course, is that troubling technique used to try to change the narrative history and shift blame from the bad ideas and terrible policies that created it.
In particular, Barry is interested in this:
Take for example New York Mayor Michael Bloomberg’s statement that it was Congress that forced banks to make ill-advised loans to people who could not afford them and defaulted in large numbers. He and others claim that caused the crisis. Others have suggested these were to blame: the home mortgage interest deduction, the Community Reinvestment Act of 1977, the 1994 Housing and Urban Development memo, Fannie Mae and Freddie Mac, Rep. Barney Frank (D-Mass.) and homeownership targets set by both the Clinton and Bush administrations.
He then goes on to a very exhaustive look at the evidence. Read the whole thing at Barry’s place.
It would be all the more informative if Ritholtz, or someone so inclined, would do a similar analysis of the role played by the securitization of the mortgages that were originated by those private lenders with no depistors. I’m of the opinion that as musch as the housing bubble may have contributed to the ignition of the crisis, it was the heavy distribution of “junk” CDOs and the CDS that were used to in some manner hedge any potential losses from the CDOs. And worst of all were the so called naked CDS which helped to inflate the potential losses on all the securitized debt. Just the opposite effect of what was the basis for their market to begin with. In effect, a false product leading to false profits being earned by false prophets. All members of the financial industry and not a single banker amongst them.
They say the banksters make jobs!!
Jeff Madrick in a recent book goes through this.
They demanded more mortgages to “create” tranches in the MBS, and the 20% that were BB- were supposed to be hedged against the 20% that were supposedly AA+.
Turned out the AA+ was not better than the BB-.
And all those hedges were covered at $.03 on the dollar. If they unwound a few pennies they went bust.
So, treasury has about $600B of these still and the fed has a lot on their balance sheet as well.
Building houses for MBS tranches is not job creation.
The banksters ran out of big companies to plunder (M&A’s scams) and China was slowing down.
Who was watching the farm be sold out?
אופציות Thanks for the great article. it really inspired me and motivated me. I run a small business from a long time and as usual their were ups and downs which made me feel low
Great article, awesome wright up. I like your writing skill you are very good at your work as well as even wright good wright.. i must say us are all rounder форекс
Awesome post.. Did you followed any formator you wrioght your own fx 比較
台灣ORM服務 Great wright up Dan Crawford, really interesting
To our readers…AB has not outsourced readers’ comments (in case you followed a few of the readers’ links). 🙂
Kim, Sarah, Keely and Priscilla!! Dan, have you hired a small cadre of cheer leaders to boost your profile as econoblog stud? Strange that they should have picked this particular post to focus their attentions on as it is mostly the words of Ritholtz. Maybe the four ladies are actually automatons that can’t recognize attributions. Have any of them sent you unsolicited personal photos? Take care. Don’t forget what happened to Anthony Weiner.