Very interesting article on the problem / disaster of trying to rescue the national banks. The large, national banks need to be broken into pieces.
http://www.dismountingourtiger.com/economics/bank-bailout-yields-collateral-damage-double-standards-poor-solutions/comment-page-1#comment-91
How can we as consumers help?
http://my.barackobama.com/page/group/AmericansforSmartBanking
Received this from the consultants@bankerscompliance.com which is a Banker's Compliance Consulting Blog. Read below how these consultants tell the banks how to make it difficult for the consumers to get the Home Mortgage Disclosure Act (HMDA) information regarding discriminatory lending practices.
It is apparent from this article many financial institutions are discriminating illegally.
Put a message on this blog for them to stop this practice and report them to the Federal Reserve and FDIC as a consumer complalint. Ask them to send a letter to this blog to stop sending messages encouraging illegal practices.
________________________
My message to this blog and to Federal Reserve / FDIC
As banking consultants, your encouraging the banks to make it difficult for the consumers to get the Home Mortgage Disclosure Act (HMDA) information regarding discriminatory lending practices, is encouraging banks to hide those activities and make them inaccessible. Stop encouraging illegal practices.RETRACT THESE STATEMENTS IMMEDIATELY! It is apparent from this article many financial institutions are discriminating illegally.Your activities are being reported to the Federal Reserve and FDIC.
HMDA Data Requests Posted: 22 Apr 2009 10:00 PM PDT We are hearing that many banks have recently had requests for their HMDA Data. While you are required to make this information available, you are not required to provide it for free or provide the data electronically.
We have a saying that I am sure most of you know that starts out, “if you believe that, I have a bridge to sell you.” It is a cliché used to point out the most preposterous assumptions by the most naïve people. It usually gets rolled out when only the slightest amount of thought renders an ideal illogical.
So when the pimply faced ex-pizza delivery guy (because I am sure you checked out the credentials of this perfect stranger that all of the sudden had your best interest in his heart.) who turned into a loan agent told you this did you have him explain how? Did he explain that over the next 30 years, at your 7% rate, on a $100,000 loan you would pay $250,000 plus property tax, insurance, and maintenance costs? This was supposed to be an “investment”? How many times your net (bring home) yearly salary is that? When you finally paid it off, it might be worth $200,000, although historically it would be more like $150,000 and that wouldn’t even take into the rise in cost of living over the past 30 years. So how was this a “responsible decision”? Boy, wait till you get a grasp of how a credit card works.
An investment people should A) never cost more then the purchase price you paid for it. B) Should never be worth less then the price you paid for it. C) Should have the ability to cash out (with maybe some minor penalties) and get your “initial investment” back plus whatever you have earned off of it. And D) If you loose your job, it should be a source of last resort to provide food shelter or clothing for you and your family. You should not be in jeopardy of loosing it because you lost your income. The only thing way a house might be considered an “investment” is if you are planning on leaving the paid off asset to one or all of your kids.
I suppose that you believed him when he said, “borrow to the max now, everybody’s income eventually grows” as well? So you bought shares of a bridge, and now I have to pay for it. Exactly how is the free, fair and just? The biggest problem facing this country is not its economic woes. It is that a large enough portion of our community are not able to make rational responsible decision and are not able to accept blame. I hate GWB and believe he may have doomed this country to a bitter end. But I could never bring myself to believe he was responsible for a hurricane. Now, Cheney? He may have had that kind of influence, being the Anti-Christ and all.
The title refers to the stimulus package recently passed by Congress. Sung to the music of “Celebration”, by Kool and the Gang. Watch it here.
This is the title of a video I have posted on You Tube.
The title refers to the stimulus package now before Congress. To be sung to the music of “Celebration”, by Kool and the Gang. Karaoke style.
Well I have to say a few words on the fiasco we call our economy. Sorry Mr. President, I don't fully agree with the assessment that poor lending is what put us into the current predicament. I think it was a final straw, but it was a thin straw at best.
So, what did get us where we are now? Out of control, unregulated oil prices. That is what the majority of the heap is upon this pile. As gas prices escalated at an astonishing rate, and oil companies reaped record profits, the economy began a spiral that has left the entire country reeling. With the higher prices came higher expenses in the transportation of goods. This leads to higher costs, and in effect higher prices. The higher costs a business has to incur, the more they need to charge for their product or service to stay in the black. If goods are higher and one needs to cut back, where do these cut backs come from? Jobs, either the hours, or the position.
The second layer of this is the drop in spendable income when fuel costs more than triple. The less spendable income a family has plays a direct role in the amount of sales a small business makes. Less sales, equals less profits, equals layoffs. With the family's budget stretched by exorbitant fuel costs it may lead to the inability to make mortgage payments, especially when the mortgage payments increase in time because of the assumption of higher income is expected. THIS is where the lending practices start to contribute to the fiscal downfall.
I am not an economist, nor a banker, but I am a big picture kind of person and can see all these pieces falling into their prospective slots. Anyway, adjusted mortgages are not a product of the past 8 years. They started in the 1980's (note, this also was when many regulations dissolved either by law, or by inaction) For many, this banking practice allowed them to afford a home they may not have otherwise afforded, but with this also came extreme home ownership inflation.
The home I grew up in cost my family 35K in 1966. In 1989 it sold for 316K. And after doing a websearch I find a house across the street that is currently listed for 777K. WOW. Now that is some serious inflation. Is this the banker's fault? I don't think so. They merely facilitated the transaction. However, where the banking industry is culpable, in my opinion, is that as home sales began to struggle (became quite noticeable to this layperson several years ago), they did not modify their practices, and with the increase in fuel costs being a major red flag they needed to make immediate modifications, and they didn't. Now they want to be bailed out.
I have a few ideas how bail outs could happen. Reinstate or create regulations that ensure ethical business conduct. For the more urgent bailing out of banks and homeowners I had this idea. Both parties need to be accountable for their personal roles in the current state of things. What can the government do to assist? I would offer this solution, that would be completely voluntary from the banks and/or homeowners. The federal government would put the funding in HUD. HUD would offer to buy the paper on homes that have occupants that are in the foreclosure process (homes valued at 700K or lower). The purchase amount would be 80% of the current market value of that home. The homeowner, would then have 2 choices. They could either repay the loan (recalculated for the amount the government paid with a 4-5% interest rate) or, they could become rent to own tenants if they can't afford the mortgage payment recreated by the new loan. The rent to own tenancy would be rent in the amount of 35% of their income with 25% of the amount they actually pay, going towards the loan amount should they decide to repurchase their home at a later date. This will assist banks from having to sell properties that they most likely won't recoup their losses on anyway. They should accept the profit losses as a price for making bad business decisions.
This kind of bailout will not burden the economy in the long run, because the money will either be paid back as the loan is paid (with interest), or there would be rental income until the house could be sold in the future and the loan would be repaid at that time.
I haven't yet figured out a means that would make the profiteers of the oil industry accountable, just yet, but I'm working on it...my little brain is a ticking. Tic Toc.
I started this blog because I bought a home a few years ago in Las Vegas, when the market was hot and now I've lost so much money on my home I can't even sell it if I want to. If I did I'd probably end up with a net loss of over $100,000. It was my first home. I put nothing down, with a 5 year arm. I have good credit, and so far have not missed any payments. However because the economy in Vegas is getting worse, I'm not sure how much longer I can afford to stay in this home. And since it's not appreciating and doesn't look like the value will be coming back anytime soon, it's looking more and more like a lost cause. I know there are many others in Las Vegas that are in the same situation that I am in, so this blog will be a good place to express your anger toward the banking system and government. I believe they both share in the majority of the blame for the foreclosures. I hear talk that the Govt. is working on it and Obama is planning on doing something, but not much action or specifics as of yet. I'm not sure the government really does have a plan. At least doesn't seem like they have any real good ideas yet. So I started this blog so Americans can post their thoughts themselves and discuss some possible solutions. The foreclosure crisis is the root of all our economic problems and what triggered the recession, so we will not only be solving the foreclosure crisis, but also saving the entire country from meltdown.
Ben Stein's suggestion on Larry King Live last night was the most sensible, simple and sure-fire way to recoup taxpayer money on the bailout I've heard yet: put a tax on the un-regulated insurance contracts called Credit Default Swaps (CDS) which are at the heart of the sub-prime mortgage taxpayer rip-off.
For those who are unfamiliar, a Credit Default Swap is essentially an insurance contract between two parties, where the first party (presumably the one who holds one or more sub-prime mortgages), pays the second party a premium in return for insurance that, in the event the borrower defaults, the second party pays off the face value of the mortgage.
Mr. Stein's proposal is simply to levy a tax on these transactions. The idea is not really all that radical. I happen to live in one of two states which does not have a state sales tax. In every other state, it is routine to tax commerce. What's wrong with enacting federal legislation taxing this particular form of commerce?
A secondary advantage of this proposal would be to force these transactions on to the record. The legislation could be written to include criminal penalties if it is determined later that any part of the original transaction involved fraud, or specific violations of federal statutes (such as the Truth in Lending Laws for example). This would give the incoming administration a tool for seeking out those responsible for the financial crisis and prosecuting them later.
I just want to make sure I have this straight: Sen. McCain proposes that the Treasury use the first $350 billion of the bailout to buy up the mortgage-backed securities (MBS) that are clogging up the credit markets. These are the slapped together, asset-backed securities that no one wants to touch because they are made up of good and bad mortgages. However, no one knows how much of each are in the securities. The lack of transparency is part of the problem, but they are clogging the secondary markets; they can't be sold and money can't be raised.
He then wants to use another $300 billion to buy at FULL VALUE the troubled mortgages that have helped to make these MBS toxic. In essence, the Treausry buys the securities at a discounted rate; the Treasury will then buy the underlying mortgages at FULL VALUE. The bank gets to clear the MBS off its books and gets cash. The bank then gets FULL VALUE for the overpriced mortgage of the security just cleared off its books.
??????
Essentially, the banks get paid in both the primary and secondary market by the same "investor."
Perhaps erratic isn't the right word.
The past few months have been really stressy for me. How about you? Yeah, I haven't talked to anyone in a good long while that's sleeping well or feeling particularly up. When you're actually in kind of a personal rut, like I am at the moment, it's really inconvenient to have the entire world tank at the same time.
First of all, there was Hurricane Ike. Remember? The one that hit the Texas coast? Nobody ever really talked about it, although I'm having a hell of a time figuring out why. Turns out, about 300 people died in the Galveston area in the storm. I honestly don't have the intestinal fortitude to rehash, again, why this is something you should care about. As I finally had to say to a particularly nasty comments troll on dailykos: if you don't know, I can't tell you. What is worth thinking about, though, is this: how is it that 300 people can die and you don't hear a peep about it on the national news channels? Give it some thought.
Next up for the apocalypse, the destruction of our national economy by approximately 100 jerks. How do I know it's probably all about 100 jerks? Because one of them used to be my jerk and I talked to him about his job a lot. What he did was credit default swap trading for Lehman Brothers, from 2001 to, oh, hey! a couple of weeks ago. Sound familiar? That's because you will find all of those same words in stories far and wide under titles such as "How Did This Happen?" and "Whose Fault Is It?" Answer: those jerks. Not the answer: people who tried to buy houses.
I swear if I hear one more politician boil it down to the responsibility of people who just should never be allowed to buy houses in the first place---Barack, McCain, whoever---I'm going to blow my top. I know Barack has to say whatever he needs to say to get to Nov. 4 now. I'm with him all the way. But it does make me ill to hear him talk about how people were irresponsible without talking about the percentage of foreclosures that were precipitated by the inability to go bankrupt because of medical bills that were impossible to pay. There is a significant portion of these people who faced that---as my family did when I was growing up. Twice. Only then there was not a draconian bankruptcy law in place. (Thank you, Joe Biden!)
Nor do these political hopefuls tend to mention the vicious and deliberately hidden terms embedded in these mortgages that made them, literally, impossible to pay back. Think about your friend that bought a house this year or last year. I'm sure you have one because everyone was buying friggin' houses in the past few years, weren't they? Now think about how smart that person is. Maybe really smart, maybe not. Either way----how much do they know about mortgage laws? How much time do they have to read the paperwork that goes along with their mortgage? Have you ever sat through a mortgage signing? It is like 10,000 pages of paperwork that you have an hour to sign. There's hardly even an expectation that you'll read it. It is completely absurd to lay the blame at the feet of average people trying to buy houses.
Anyway, back to the real culprits. Here's the long and the short of it: there were $62 trillion in credit default swaps on the market before the collapse. $62 trillion. You're going to try to tell me this is about Joe 6 pack and his mortgage? Please.
“The really interesting question that no one knows the answer to is, if you were to go into liquidation and sell off all the derivatives contracts, what is the value?” he told the newspaper. “We are just learning that no one, not even the senior people within these banks, knows how much these contracts are worth.” -- American Bar Association Journal
All right. What are credit default swaps? Well, when a trader loves his money very very much, he lays down with it side by side to give it a very special kiss...and 9 months later the economy collapses!
A lot of explantions of credit default swaps will tell you that they are a form of insurance. Okay. That's one way of thinking about it. But, they are "insurance" in the same way that the money you pay to Lefty and Rocko every other Wednesday is "protection." Let's just call this whole thing what it is: gambling.
"There is at least one key difference between casino gambling and CDS trading: Gambling has strict government regulation." -- Fortune
(Phew. I thought they were going to say lipstick.)
I'm just going to boil it down for you the same way My Jerk boiled it down for me about 5 years ago:
Let's say someone on your street opens up a lemonade stand. Then, his two neighbors bet one another on how much he'll make at the lemonade stand. Then, a guy down the street makes a bet on their bet, as to which of them will be right. A couple of streets over, the same thing is going on. The two third-party guys on both streets call each other up and decide to swap their bets. That is a credit default swap.
Does it sound crooked? Does it sound risky? That's because it is. Maybe, I think it's safe to say now, a little too risky.
Meanwhile, in the world of finding reasons to continue drawing breath, there is us winning everything all the time. Oh, and this rad thought:
"Palin's as off-putting and gross as a pageant contestant, but without the desire for world peace." -- Sarah Silverman
So, of course she is guilty as sin on Troopergate. Duh. The report is out today. And, of course, she issued a statement hours prior to the release of the Troopergate investigation report absolving herself of any wrongdoing. (Wait, did I miss something? Is she is a priest now? Was that part of that contract she signed in blood?)
What else has she been lying about lately? Well, you can't see Russia from her house, to start with. But, really, who can tell when she's lying and when she's not, if her sentences are so incomprehensible that they cannot be understood even by experts? Now that's what I call plausible deniability!
For those who think I'm being too hard on her, take heart. I'm sure she could give a damn what I think of her. (Oh, by the way, you too.) In fact, it turns out she's unpopular right the world round, as the Brit's say.
"What is most striking about her is that she seems perfectly untroubled by either curiosity or the usual processes of thought. When answering questions, both Obama and Joe Biden have an unfortunate tendency to think on their feet and thereby tie themselves in knots: Palin never thinks. Instead, she relies on a limited stock of facts, bright generalities and pokerwork maxims, all as familiar and well-worn as old pennies. Given any question, she reaches into her bag for the readymade sentence that sounds most nearly proximate to an answer, and, rather than speaking it, recites it, in the upsy-downsy voice of a middle-schooler pronouncing the letters of a word in a spelling bee." -- Jonathan Raban
And speaking of just talking without thinking, thereby, perhaps, emitting the shite: McCain has a tell. Which is kind of funny, actually, because there are these pols in Indiana who want to debate while strapped into polygraph machines, like that stupid television show. Still, perhaps this is what we need at this point of the apocalypse.
What's another great reason for loathing McCain this week. How about this?
Tune in for Part II of "So, You're Living During the End Times" later this afternoon........
There was an article in a week ago Sunday's Washington Post that described one house on the market after a foreclosure. The article was very instructive about what was really going on. The entire financial mess is a result of the gambling casino mentality of the derivatives market moving over into housing and mortgages. The mentality of the derivatives market was allowed to exist and continue as a result of financial market deregulation. Guess who was the big pusher of the deregulation. Why, it was Phil Gramm, who singlehandedly gave us the legislation that enabled the Enron California mess, the oil price spike, and the mortgage derivatives mess.Many financial experts, most notably Warren Buffett, the Sage of Omaha, have for years warned that there are derivatives nobody understands and that they will cause trouble. Based on the article, it is clear that we now have mortgages nobody understands and derivatives on those mortgages that nobody understands, either. Derivatives in the form of "portfolio insurance" caused the stock market crash of 1987. Since then there have been several occasions (such as Long Term Capital Management) in which derivatives threatened to collapse the world financial system. Well, they've done it again.The articlehttp://www.washingtonpost.com/wp-dyn/content/article/2008/09/27/AR2008092702587.html [washingtonpost.com]describes how the homeowner was solicited to refinance her home and took the bait. The interest rate was a teaser. Over a year into the mortgage she discovered that it was a "negative amortization loan" where the principal increases every month. The transaction probably came nowhere near compliance with Truth in Lending laws. It is shocking that such a piece of financial garbage exists. However, Wall Street wanted mortgages to feed the highly profitable derivatives market and there was a lot of pressure to produce the mortgages, no matter how.
In the hearing today on the Lehman bankruptcy, a memo was read from a Lehman VP who visited a sub-prime mortgage originator they were thinking of buying. The VP wrote that the place was a financial sweatshop and that employees were required to check their ethics at the door.
The article doesn't cover what happened next, but the mortgage was likely bundled into a collateralized mortgage obligation that likely had credit default swaps written on it. Here are some relevant Wikipedia links:http://en.wikipedia.org/wiki/Collateralized_mortgage_obligation [wikipedia.org]http://en.wikipedia.org/wiki/Credit_default_swap [wikipedia.org]http://en.wikipedia.org/wiki/Derivative_(finance) [wikipedia.org]http://en.wikipedia.org/wiki/Negative_amortization [wikipedia.org]It turns out that many of the derivatives are really side bets on prices of financial securities, and that the total outstanding value of the derivatives often exceeds by huge factors the total outstanding value of the securities. Furthermore, the derivatives are highly leveraged.According to a recent program on NPR's This American Life there are about 4 Trillion in bonds and about 62 Trillion in derivatives betting on whether the bonds will pay off. The derivatives on the bonds are possibly legitimate hedging. The others are essentially bets that the bond issuers will go bankrupt. That is 4 trillion of hedging and 58 trillion of bets on bankruptcy.
Ask yourself "What would Gordon Gekko do?" I think he would buy some of the bankruptcy bet derivatives and then do what he can to win the bet, i.e., to help put the bond issuer into bankruptcy.
In the absence of strict regulation, the "free market" becomes the Fraud Market. This mess can be laid squarely at the feet of financial deregulation and Fraud Market Conservatism. Adam Smith's "unseen hand" doesn't work. The financial markets are much more in keeping with Charles MacKay's book "Extraordinary Popular Delusions and the Madness of Crowds". This has been proven over and over, and is now being proven once again.One part of the eventual cleanup will need to be a shutdown of the derivatives casino. Some of these financial instruments are valuable to producers and users of real commodities, but most of them need to be eliminated. Whatever remain need to be understandable and should not be side bets.
My own idea is to prohibit derivatives that settle in cash. Require them to settle in the underlying security or commodity. That will prevent them from being side bets. Eventually, the tails will stop wagging the dogs.
What if we took our 700 billion and created a new Bank of the United states, backed by the federal government that offered a baseline of financial services at reasonable, but less than exceptional prices. It could be most cheaply based online. If the economy was good few would use it, but it would serve as a backstop in times such as those we face now. As far as the junk "assets, " this bank would be able, if the price was to its advantage, to purchase those, disassemble them and resell or restructure them with the original buyer. If financial institutions fail, the government could seize any remaining assets and deposit them in this bank. The current 700 billion dollar plan runs the grave risk of creating huge ghettos of foreclosed neighborhoods that may never be able to return to their previous vitality.
Republicans look down on the poor and middle class. They believe it is not their responsibility to help lift people up and make the country a better place for all. They think they are entitled to control the money and hand it out in a pittance to the people as they see fit. They think that distributing wealth more evenly is a communist or socialist action and will brand you as such if you suggest there should be more equality. They would rather give millions to foreign charities then to pay another couple of thousand in taxes that might help the people of this country. Not all but many.
We are losing our homes because the rich scheme ways to take money from the poor and give it to themselves. The mortgage companies encouraged their employees to scam the poor, to pray on their hopes and dreams. They don't care about education because if you keep the people uneducated they are more likely to believe your lies. They encourage you to invest in the stock market and then manipulate it until they scare you out. Then they pounce and buy in and take your money.
McCain will cut all social programs to get more money for his wars and to keep business taxes low.
Democrats have always cared for "the people" They are not perfect but they are a hell of a lot better. They want to give us health care and keep our social programs. mcCain's $5000 tax rebate for health care is laughable. As the cost of health care rises we will still be in the exact same position. Obama's people must bring this out. The people need details, not generalizations.
As a senior on a low fixed income, the thought that he is in favor of destroying social security as we know it is downright scary.
Tell everyone you know who they really are with as much detail as possible.
Another GOP point attacking the Democrats, at all levels at all times in history, is to talk about "taking on do-nothing bureaucrats" and tout their own legendary efforts to "reduce bureacracy" or "cut red tape". In fact, it is often the other way around. It is often the case that Republican approaches to "bureaucracy" tend to set up roadblocks to effective social services —reference: No Child Left Behind— designing in phoney "standards" that together with micromanagement dictates are aimed at undermining standards and cutting funding to vital programs, while bureaucracy multiplies, as do funds directed to related "consulting" projects.
John McCain seems to have difficulty separating efforts to "reduce bureaucracy" from pro-corporate efforts to strip away vital regulations that keep accounting ethics standards and fraud protections in place. The result can be seen in the banking sector, where predatory lending has cost consumers and the government hundreds of billions of dollars, due to irresponsible, unethical or unsustainable practices. Sen. Obama was working to curb predatory lending in the home-mortgage sector back in Illinois in 2001. He is tuned in to what works and to what scams can undermine the system; he fought to do the same in Washington, while senators like McCain wanted fewer "regulations".
This makes McCain not a principled "maverick", but a rogue free-marketeer, who pushes Bush-like policies that give big breaks to big banks but force the average American into smaller and smaller cages with respect to their fiscal freedom and spending ability. McCain's tax cut proposals WILL NOT FIX THIS, because they are just an extension of Bush's, which have been one of the worst contributing factors to this anti-middle-class economic dynamic we have seen emerge and lead to this financial chaos.
Obama's working-class tax credits and targeted small-business tax cuts plan will fix this; responsible regulation, coupled with higher consumer-spending capacity relative to overall economic output, will restore order to financial infrastructure and keep the big cheats honest. McCain will not.
Republican presidential candidate Sen. John McCain's national campaign general co-chair was being paid by a Swiss bank to lobby Congress about the U.S. mortgage crisis at the same time he was advising McCain about his economic policy, federal records show.
Home equity is the main wealth of average americans. Vanishing equity. lower wealth diminishes demand and employment and incomes, further spiraling down wealth, savings and quality of life. The FED lends to Banks at a discounted rate, now about 2.9%. The FHA was created in the depression to encourage home ownership. Owners of homes with upside down mortages now have incentives to foreclose, as payments fo the same house next door would be less. Housing Proposals include billions of $$ of funds for lenders or mortgage investors. Here is a simple solution: Have the FHA make loans. FHA loans and easy qualify refinance loans to 100% of current equity, at low rates, closer to the 2.9% FED rate than the current doubled relend rates, pay off old loans up to current equity, lenders would have to eat the loss on upside down loans, don't give borrowers cash out on these special refi rates, require some downpayment or sweat equity on new loans. Have little or no costs for these streamline refinances, call it the $100 loan or something, this will eliminate the issue of confusing loan costs, fees, etc. there would be none to the borrower, they would be set and fixed by FHA. This plan will immediately solve the housing crisis, foreclosures, restore confidence in the american home as the greatest safest investment on earth, create employment due to demand for housing, home improvement, etc. and serve to facilitte the public good of encouraging home ownership, it would also make housing more affordable and progessively increase incomes, as mortgages at rates half of the current rate could equate to a similar cut in housing costs, which is a greater proportion of income at lower levels.
The TV news last night had a soundbite from Hillary blasting the Bush administration for the Bear Stearns bailout while doing little for homeowners. A typical "soak it to the rich" type statement that sounds good for as long as the soundbite lasts, gives Hillary a quick emotional appeal. Gee, she's the champion for "the little guy" and Bush is up there with his buddies.
If life were only so simple. The ultimate reason the economy is in such trouble is that the bottom line, at the end of the day, it's all a confidence game. How often do we hear "backed by the full faith and credit of the government?" That's all this economy is running on, faith. And while many people hold you need a good bit of faith to make it into the more desirable environs of the afterlife, faith on this plane of existence will only carry you so far. Especially if you're perceived as a sheep in a field of hungry wolves.
The point is that all things are connected, not only here, but globally. Bear Stearns had invested in mortgages, big time, lots of them, which were made by what? The full faith that the lenders and the lendees would be able to make the terms of the mortgages. This assumption, in turn was based on the idea that home prices would keep going up forever, just as stocks in the 1990's, or tulip bulbs in the 1640's in Holland. Yes, tulip bulbs. Once the full faith and confidence in the perpetual uplift of home prices started to lose lift as it hit the cooler upper atmospheres of reality that said that these mortgages weren't based on anything close to reality, the balloon, and passengers in the gondola below had no place else to go, but down. Indeed such a chill entered the balloon that the rate of descent started to hit free-fall speed, and in so doing smashed through the layers of support, i.e., all the people who'd invested in dividend-rich mortgage aggregate holdings which had become disconnected from the original mortgages themselves by several generations!
Hillary may well be able to play to the general state of ignorance of most people as to how and why we've gotten here, and sound authoritative in so doing, but all she's giving the people is a cheap soundbite amdist confidence games. If President Obama really wants to initiate change, he'll call for at least an audit, if not abolishment of the Federal Reserve and a return to the gold standard, so the dollar is backed by something tangible, not just all the voluminious hot air so easily produced in Washington, DC. That would be change we can believe in.
