2Pack
January 18, 2010, 10:40pm
#1
The fact that Time magazine has entertained this drivel probably shows the depths to which republican tendency America is grasping at straws. Over to FT Alpha who summarised today. The crisis was caused by Wall Street and by the US ratings agencies that would have explained in the most rigouros mathematical terms how to assign a Triple A rating to the contents of my sewage tank and whose Wall St friends would have sold the package on …smell and all…with the utmost aplomb.
ftalphaville.ft.com/blog/2010/01 … al-crisis/
**Did foreigners cause the financial crisis?
Here’s the basic premise, as synopsised by Time:
Much of the fault of the financial crisis has been heaped on Wall Streeters, unscrupulous mortgage lenders and weak regulators. But in a new research paper, economist Ricardo Caballero says there is another major group of contributors to America’s monetary mess who are not getting the blame they deserve: foreigners.
“There is no doubt that the pressure on the U.S. financial system [that led to the financial crisis] came from abroad,” says Caballero, who is the head of MIT’s economics department. “Foreign investors created a demand for assets that was difficult for the U.S. financial sector to produce. All they wanted were safe assets, and [their ensuing purchases] made the U.S. unsafe.”
The idea is that the world had an insatiable demand for safe debt instruments, a demand that the US felt compelled to provide with lots of nice triple-A-rated securitised things. When the real estate bubble popped, mass panic ensued, and the US was left holding the bag for much of the risk.
And it was your ratings agencies that fraudulently represented toxic sludge as safe assets to get the business Mr Caballero. You will be describing Al Capone as a small time publican next .
Here’s a bit more from the paper’s abstract:
The crisis itself was the result of the negative feedback loop between the initial tremors in the financial industry created to bridge the safe‐assets gap and the panic associated with the chaotic unraveling of this complex industry. Essentially, the financial sector was able to create “safe” assets from the securitization of lower quality ones, but at the cost of exposing the economy to a systemic panic. This structural problem can be alleviated if governments around the world explicitly absorb a larger share of the systemic risk. The options for doing this range from surplus countries rebalancing their portfolios toward riskier assets, to private‐public solutions where asset‐producer countries preserve the good parts of the securitization industry while removing the systemic risk from the banks’ balance sheets. Such public‐private solutions could be designed with fee structures that could incorporate all kind of too‐big‐ or too‐interconnected‐to‐fail considerations.
The solution in Caballeros addled mind is to let the rest of the world hire the poxy ratings agencies to create a similar toxic sludge.
What a moron here
Jabus, he could work for FF!
2Pack
January 18, 2010, 10:51pm
#3
The greaseball must be lobbying Cowen for the chairmanship of the Banking Enquiry
jabaar
January 18, 2010, 11:06pm
#4
And from Denninger todaymarket-ticker.denninger.net/arch … China.html
That which our government will not do we must on our own initiative.
This means no more Chinese access to our networks.
It means no more purchases of Chinese goods.
It means no more Chinese anything.
And it means **DEMANDING that the United States Treasury VOID all Chinese-held Treasury Debt **as liquidated damages for the theft of our military secrets and civilian intellectual property.
From this American to China: SCREW YOU.
Words fail me
jabaar:
And from Denninger todaymarket-ticker.denninger.net/arch … China.html
That which our government will not do we must on our own initiative.
This means no more Chinese access to our networks.
It means no more purchases of Chinese goods.
It means no more Chinese anything.
And it means **DEMANDING that the United States Treasury VOID all Chinese-held Treasury Debt **
as liquidated damages for the theft of our military secrets and civilian intellectual property.
From this American to China: SCREW YOU.
Words fail me
hard to grapple with the depraved mindset and sher any excuse will do to avoid paying your debts.
cant be long now before the race card is played and all those chinese spies deported or put in camps, those pakis and yemenis put in Guantanamo, , where does it end? Fox news will go into overdrive with this shit
WAR WAR WAR defend the american way all the way
grumpy
January 19, 2010, 9:37am
#6
I prefer this telling of events (from July 2007)
I recently spent some time with a senior executive in the structured product marketing group (Collateralized Debt Obligations, Collateralized Loan Obligations, Etc.) of one of the largest brokerage firms in the world. I was in Roses, Spain attending a wedding for a good friend of mine who thought it would be an appropriate time to put the two of us together (given our shared interests in the structured credit markets). This individual proceeded to tell me how and why the Subprime Mezzanine CDO business existed. Subprime Mezzanine CDOs are 10-20X levered vehicles that contain only the BBB and BBB- tranches of Subprime debt. He told me that the “real money” (US insurance companies, pension funds, etc) accounts had stopped purchasing mezzanine tranches of US Subprime debt in late 2003 and that they needed a mechanism that could enable them to “mark up” these loans, package them opaquely, and EXPORT THE NEWLY PACKAGED RISK TO UNWITTING BUYERS IN ASIA AND CENTRAL EUROPE!!! He told me with a straight face that these CDOs were the only way to get rid of the riskiest tranches of Subprime debt. Interestingly enough, these buyers (mainland Chinese Banks, the Chinese Government, Taiwanese banks, Korean banks, German banks, French banks, UK banks) possess the “excess” pools of liquidity around the globe. These pools are basically derived from two sources: 1) massive trade surpluses with the US in USD, 2) petrodollar recyclers. These two pools of excess capital are US dollar denominated and have had a virtually insatiable demand for US dollar denominated debt…until now. They have had orders on the various desks of Wall St. to buy any US debt rated “AAA” by the rating agencies in the US. How do BBB and BBB-tranches become AAA? Through the alchemy of Mezzanine-CDOs. With the help of the ratings agencies the Mezzanine CDO managers collect a series of BBB and BBB- tranches and repackage them with a cascading cash waterfall so that the top tiers are paid out first on all the tranches – thus allowing them to be rated AAA. Well, when you lever ONLY mezzanine tranches of Subprime RMBS 10-20X, POOF…you magically have 80% of the structure rated “AAA” by the ratings agencies, despite the underlying collateral being a collection of BBB and BBB- rated assets… This will go down as one of the biggest financial illusions the world has EVER seen.
ftalphaville.ft.com/blog/2007/08 … kyle-bass/
Yeah, it was the chap wot invented the Gaussian Copula function’s fault!
And David Bowie.
In the US, you get ahead in your career by providing useful narratives for your pay-(slave-) masters.
His full paper ishere