New book on the financial collapse may be an interesting read...

C

ColonelHaiku

True Classic
I read Rolling Stone reporter Matt Taibi's excellent book Griftopia and now this one looks to be of interest, as well...

There's a political WMD stockpile and it is currently stored in book form: [ame="http://www.amazon.com/Reckless-Endangerment-Outsized-Corruption-Armageddon/dp/0805091203/ref=sr_1_1?s=books&ie=UTF8&qid=1307451201&sr=1-1"]Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon[/ame]. By Gretchen Morgenson, one of America’s best business journalists who is currently at The New York Times, and noted financial analyst Joshua Rosner, Reckless Endangerment gives the best available account of how the growing chaos in the mortgage and personal finance markets and the rampant bundling of dubious loans into exotically toxic securities plunged the world, and millions of American families, into the gravest financial crisis since World War Two. It is gripping reading as well, and its explanations are clear enough that readers without any background in finance will have no trouble following the plot. The villains? An unholy alliance between Wall Street, the Democratic establishment, community organizing groups like ACORN and La Raza, and politicians like Barney Frank, Nancy Pelosi and Henry Cisneros. (Frank got a cushy job for a lover, Pelosi got a job and layoff protection for a son, Cisneros apparently got a license to mint money bilking Mexican-Americans of their life savings in cheesy housing developments.)

If Morgenstern and Rosner are to be believed, the American dream didn’t die of old age; it was murdered and most of the fingerprints on the corpse come from Democratic insiders. Democratic power brokers stoked the housing bubble and turned a blind eye to the increasingly rampant corruption and incompetence at Fannie Mae and the associated predatory lenders who sheltered under its umbrella; core Democratic ideas may well be at fault...


If Morgenson and Rosner are right, there is someone the American people can blame for our current economic woes and it is exactly the cast of characters that a lot of Americans love to hate. Big government, affirmative action and influence peddling among Democratic insiders came within inches of smashing the US economy."

http://blogs.the-american-interest.com/wrm/2011/06/07/fanniegate-gamechanger-for-the-gop/
 
Yeah, IF they are right...

I suppose it's pretty hard to market a book that claims that there is plenty of blame to go around so nobody has to feel left out. There are equivalent books out there claiming it is all the fault of the Republicans. It's awfully easy to believe things that align with your prejudices and easy to find allies in that too.

That being said, it is interesting that Sheila Bair's rather modest proposal that a minimum of 5% of originated loans for FDIC banks be held back from securitization has met with heavy seas from the banks. Given the central role mortgage backed securities and the poor performance of the rating agencies one could be forgiven for thinking that the main culprit is still at large and will remain so. But back in 2005 there was scarcely a bad word to be found about those securities-Countrywide couldn't "...write loans fast enough to satisfy Wall Street..." according to Mozillo himself.
 
Did some research on

the authors (Morgenson & Rosner)... the former is a Pulitzer Prize winner and the other is considered to be one of America's top financial analysts.
 
There's no question that the Democrats were leading the charge to force banks to make questionable loans. The Democratic party seemed to think that the banks were there to force some sort of social justice in the housing market. The Democratic party is rotten to the core and has been for a while. Most of what was decent that was left in the party has fled to the GOP or third parties in the last 20 years. However, to lay the blame for our economic problems all on the Democrats is absurd. The GOP congress during the Bush admin. spent huge amounts of money, cut taxes without spending cuts to offset them. The Bush administration went to war without asking for any sacrifices, reappointed Greenspan to the Fed after it had become clear that he had abandon his free market sound currency beliefs and encouraged everyone to borrow and spend recklessly. While I do believe the Democrats have spent the last forty years building an entire class dependent on the government that makes fiscal sanity politically impossible they are not the only ones that caused this situation.
 
Some truth in that

incompetence and arrogance can be found in both political parties... but, I would suggest you do some research on James Johnson, the circa-1999 turbocharging that Bill Clinton performed on the programs that contributed to the meltdown and follow the money (tens of millions of dollars) that was made by party-players who were appointed to Fannie/Freddie and the near-inconceivable policy and corruption that resulted.

and the GWB administration didn't do much to change this, except for sounding an alarm far too late.

One thing is for certain... there should have been many, many people brought to justice and serving hard time in federal prison for their misdeeds.
 
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And look at the mega money made by Hank Paulson...

....and his timely exit from Goldman Sachs to begin "public" service. He cashed out * $485 million worth of shares and paid $0 in taxes. Before you can say "Holy global financial crisis, Batman!" he is authoring legislation that begins a few trillion taxpayer dollars flooding back into his erstwhile brotherhood. Good returns for Goldman...no wonder they're so quickly posting record earnings once again. And how's that working out for you and I?

This issue is near and dear to my ever-loving/burning/bleeding heart. However, the ****ing cock up of it all cannot be laid at the feet of one political party or the other...it has come about over a long period of time, and there are a lot of people/groups/agendas that have contributed.

A documentary on vimeo "Lifting the Veil" I have not watched, but have appreciation for its stated assertion that the democratic party is long associated with the notions of "change" and civil liberty and equality, and therefore usually is thought to carry this load. But (and this is a big but) the Dems in reality are really no different than their Republican counterparts in their goals and their actions. Obvious, eh!? (I have watched the introduction and the clips of Obama and his [unkept] campaign promises really makes you choke!) Link here:
http://vimeo.com/20355767

The TeaParty too, is largely funded by the Koch brothers. Relevant article here:
http://www.newyorker.com/reporting/2010/08/30/100830fa_fact_mayer
I feel the same sense of their disgust and provocation for the current situation, but I want that to be funneled into a more germane foundation for change. Something that serves the larger good, rather than simply more corporate welfare. Dunno what that might be, admittedly.

If you got any ideas, I'm open....In the meantime, I'm certainly not holding my breath for Weiner's, Pelosis, O'Neills or Palins to put up the good fight for me. I'll keep on voting with my pocketbook, and continue to be as discriminate as I can with that.

And hey...I like those thought provoking reads of yours.
 
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Oh, and a PS in re: "rule of law"

If the whole "mortgage-gate" fiasco has not alerted you to the fact that the rule of law might be dead in the US, then perhaps you might look to this whole economic fiasco and its current effects. Matt Tabibi is keeping up with Goldman Sach's response to US governmental queries here:

http://www.rollingstone.com/politics/blogs/taibblog/the-big-short-and-goldmans-new-story-20110609

And precedent is available to us:

http://www.vanityfair.com/business/features/2010/06/pecora-201006?printable=true#ixzz1O7qfkZwg
 
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The nefarious "Koch Bros" do not

"fund" the Tea party... not true, the various TP groups receive funding from thousands of sources. That New Yorker article seems to paint a rather grim portrait of the Koch brothers without actually reporting anything objectionable (at least to me) that they might have done: "[David H.] Koch is known as part of a family that has repeatedly funded stealth attacks on the federal government, and on the Obama Administration in particular."

That's an unusual way to describe peaceful - and entirely lawful - activism.

Here's more disconcerting news...another housing drop predicted... sheesh.

http://www.cnbc.com/id/43354054

at this point, it's probably safe to say home ownership has lost most of its cachet.
 
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So what?

Obama is President of the USofA and won the Nobel-do you take what he says more seriously for that? No, of course you don't.

There is a rule taught in every Rhetoric 101 class "..never take any argument on authority..."

Meredith Whitney ".. one of America's leading financial analysts..." predicted "50-100 defaults and 100s of billions in losses in the municipal bond market this year. Well they better get going because so far defaults are half what they were last year by June and the total of losses is $28M (or something like that) in a $3T bond market.
 
Why the personal animosity

friend? Read the book... or don't. Respect the opinion of others... or don't.

I think we can all agree that we - the "collective we" - are hip deep in the proverbial sheep dip.
 
Everything the Democrats did...

in promoting home ownership was peaceful and lawful. Doesn't seem like an entirely comprehensive defence of much of anything.
 
Greed, pure and simple.

When one turned on the telly and preponderance of paid tv shows is about leveraging to buy and sell properties one will never live in.

When just getting people into a loan regardless of the real value of the property or the income of the individual, failure to verify income or creditworthiness.

When banks all over the world were willing to buy blocks of poorly accounted loans with little history.

When a law is passed and capital manipulators utilize unintended loopholes or create means to trade securities which were not even possible when the law was written.

It makes you think of the last time we suffered a huge depression, people leveraged to buy over valued paper. That required a huge correction, changes in laws and so on.

A different time, a different instrument but at its base the same behavior: greed.
 
What's personal?

Nothing on my side.

I won't read the book because there is not enough hours in a day or enough days in a year to get through all of these 'written-to-an auidience-good-guys-bad-guys-oversimplified-explanations-of complex-issues-by-renowned-financial-analysts-and industry-award-winner-and-recommended-by-Glenn Beck-or-Jack Welsh-and-gosh-it-is-true-it-is-all-the-fault-of-the-(choose your favorite whipping boy).

That's not persoanal, that's a critcisism of our paper thin political culture that encourages these entirely for profit and fame publications to engage in the serious business of getting ourselves out of the sheep dip that, you, very accurately, say we are in. The minute we stop listening to the pundits and demogogues who have direct money interests in promoting these implausible Manichaen scenarios the closer we will be to demanding that our leaders do what makes sense for as many people as possible and stop preaching to all of the increasingly Balkanized choirs in the country.:):):)


By the way you never answered about "Infinite Jest" and that is personal:)
 
Agreed!!!!

:clap:

I think there is a very bad pun in there:shh:

Despite all yak to the contrary-on the issue of the housing bubble we really needn't look to the stars but to ourselves-it was a self-inflicted wound with our fetishized "home ownership at any cost" culture loading the gun for us. Once we face that unflattering fact maybe something useful can be said about the meltdown, otherwise it is just a matter of time and opportunity before it all happens again.
 
I agree with the greed thing too. And it isn't only at the top of the financial world, I see it all the way down to the employees I work with.

When I started at the RR many if not most of the old heads had some old business they'd started when they go on with the RR. Why? Because the RR had lots more employees back then and getting laid off or furloughed was common. You'd better have a laundromat somewhere, coin carwash, or a lawn sprinkler installation business to survive the lean times when the RR was slow and sent you home.

Now the RR employees I work with either try to flip houses or something like that. Faster bigger profits and potential windfalls are more important that steady income. A current fave with a few guys is going to auctions at storage garages, bidding on a garage full of junk, and then craigslisting everything asap. Of course they all dream and tell stories of guys who found something of extreme collector value and made a huge score. It's like when people in the office talk about how much powerball is up to this weekend, etc.

To me it just seems like even the common guy is focused on right now on quick profit rather than something steady. Of course the fact that RR's are leaner and layoffs and furloughs are rare(r) could have quite a bit to do with the current attitudes. To me it just feels like people are lazier, yet want more return quickly and are willing to grasp at straws.
 
Greed but not so sure about "pure and simple"

There are a lot of complex issues that allowed the greed to run rampant. Financial regulations the created all kinds of moral hazards, easy money that led people to believe debt was no big deal and FDIC insurance that insured nobody really cared what their bank was doing with their money, just to name a few. In a free market greed is tempered by fear. A long time ago the government decided that "freedom from fear" was a right and we are living with the consequences of that.
 
We are relieved of fear...

to the tune of FDIC insurance limits, but beyond that the new protection is purely the completely reasonable assumption, that Uncle Sam will prop up the banks. That's a reasonably recent wrinkle and one we, as taxpayers, ought to insist be ironed out of the system. The FDIC chief proposed a 'safe bank' scheme which would have put FDIC insured banks under strict reserve, lending standards and % of loans sold to securitizations-she got nowhere, except out of a job. In other words the banks and other regulators are saying that the industry can't be profitable in the absence of moral hazard. It is a frightening statement of where we are and how many superficially antagonistic actors are actually pushing in the same direction.

The FDIC is internally funded by the way.
 
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