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+--- Thread: The Great Unraveling - 'Legal' Pyramid Scheme? (/showthread.php?tid=68469)
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The Great Unraveling - 'Legal' Pyramid Scheme? - Panopticon - 12-17-2008
http://www.nytimes.com/2008/12/17/opinion/17friedman.html?ref=opinion
[quote THOMAS L. FRIEDMAN, ] NYT
...I have no sympathy for Madoff. But the fact is, his alleged Ponzi scheme was only slightly more outrageous than the “legal” scheme that Wall Street was running, fueled by cheap credit, low standards and high greed. What do you call giving a worker who makes only $14,000 a year a nothing-down and nothing-to-pay-for-two-years mortgage to buy a $750,000 home, and then bundling that mortgage with 100 others into bonds — which Moody’s or Standard & Poors rate AAA — and then selling them to banks and pension funds the world over? That is what our financial industry was doing.
If that isn’t a pyramid scheme, what is?...
Re: The Great Unraveling - 'Legal' Pyramid Scheme? - Acer - 12-17-2008
What do you call giving a worker who makes only $14,000 a year a nothing-down and nothing-to-pay-for-two-years mortgage to buy a $750,000 home,
Um, did this happen? I'm getting tired of all the hyperbole without seeing some real data on this subject.
Re: The Great Unraveling - 'Legal' Pyramid Scheme? - mattkime - 12-17-2008
>>Um, did this happen? I'm getting tired of all the hyperbole without seeing some real data on this subject.
Essentially, yes. the companies creating the loans simply resold them so it didn't matter if the customer could pay or not.
there is some hyperbole with the numbers but mortgage brokers regularly encouraged people to get as much as they could afford paying interest only.
Re: The Great Unraveling - 'Legal' Pyramid Scheme? - swampy - 12-17-2008
Just google NINJA loans. (No Income, No Job, No Assets). A total failure of social engineering through Congressional legislation. Thank you Jimmy Carter.
Here's a pretty good site about the CRA loans.
http://www.ffiec.gov/cra/
Re: The Great Unraveling - 'Legal' Pyramid Scheme? - mattkime - 12-17-2008
>>A total failure of social engineering through Congressional legislation. Thank you Jimmy Carter.
thats pure bull$hit.
Re: The Great Unraveling - 'Legal' Pyramid Scheme? - swampy - 12-17-2008
Shows what you know, Matt.
Re: The Great Unraveling - 'Legal' Pyramid Scheme? - mattkime - 12-17-2008
>>Shows what you know, Matt.
I know _exactly_ what you're talking about and have been following the problems in the economy very closely. I don't take sides where issues are open to a wide variety of interpretations but i do speak up when people are flat wrong.
your insistence on politicizing bipartisan mistakes is essentially lying at this point. its obvious that having your side win is more important than the truth.
in short, this is exactly what is wrong with politics and society in general - we'd prefer to fight between each other rather than work toward truth.
Re: The Great Unraveling - 'Legal' Pyramid Scheme? - mikeylikesit - 12-17-2008
Acer wrote:
What do you call giving a worker who makes only $14,000 a year a nothing-down and nothing-to-pay-for-two-years mortgage to buy a $750,000 home,
Um, did this happen? I'm getting tired of all the hyperbole without seeing some real data on this subject.
It didn't happen that way. The $14K worker was told to claim a higher income and so they lied aided and abetted by the RE broker, the mortgage broker and the lending institution. Everyone lied.
Re: The Great Unraveling - 'Legal' Pyramid Scheme? - Seacrest - 12-17-2008
This is, I believe, the source of that particular story:
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2007/04/13/carollloyd.DTL
It's convoluted for sure, but similar tales can be told all across the bubble, all throughout the socio-economic spectrum as well.
The big misconception is that this is just a "subprime" problem and a real estate or housing problem, but it's not. It's a fundamental issue with having an economy too heavily reliant on credit (which is really another name for debt, but 'debt' is a four-letter word) and the expectation that rising asset prices can continually outpace income growth and real productivity.
Re: The Great Unraveling - 'Legal' Pyramid Scheme? - Filliam H. Muffman - 12-17-2008
Yes, it was all an evil plan hatched by Jimmy Carter that went unnoticed for 25 years. Based on what he is doing now, I can only assume it was a plan to put home builders out of business and ensure world domination by Habitat for Humanity.
8-) 8-) 8-) 8-) 8-) 8-) 8-) 8-) 8-) 8-) 8-) 8-) 8-) 8-) 8-) 8-) 8-) 8-) 8-) 8-)