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Jandre002 on 29 September 2008
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HappySqurriel said:
Jandre002 said:

IT WAS! And we saw lots of profit from that. Our country prospered for years, but that isn't the issue. The issue is not regulating mortgage-backed assets AT ALL. These companies make their own terms, apply their own value, then disperse these assets as if mortgage was reliable. Giving more money to more people isn't the issue. Mortgage backed assets are the issue.

Sure without mortgage backed assets there would never have been nearly as many loans, but the rating, distribution, and percentage of assets distributed with subprime ratings was what caused the crash. Percentages of CDO's issued with subprime ratings went from 6% in 1994 to nearly 70% in 2006. No one can know that except the companies investing in them, yet as the rules stand the SEC can intervene on a "voluntary basis only". Giving crooks the option of whether the police can stop by or not is stupid, isn't it?

 

 

Personally, I think the one sentence explaination for why we have gotten into the position we're in is "... because there was way too much credit!"

Regardless of whether you blame the changes in regulation under Bill Clinton, the greedy wallstreet bankers, or the federal reserves inflationary monetary policy the fact is that too many people were able to get loans they couldn't afford with almost no money down.

Like all times when credit is too easy to access, there was massive ammounts of fake equity produced which made people believe they were living in a time of great prosperity. The unfortunate consequence is that this period of great prosperity is typically matched by a period of great pain.

Yeah that sums it up. Too much, too fast. Credit is an obligation but has no physical representation of definite value. I always wondered how the hell are market could be going up so fast while the rest of the world was crawling along for the most part and I guess this answers that question.

Scary times indeed. I always thought America would fall from grace, but I never thought it would be before 2010. We have really f*cked ourselves this time.