How I helped build the bomb that blew up Wall Street.

[Farin]

I´m perfectly aware that this might open a can of worms, but i think the insight this article delievers is too important.


My Manhattan Project

I think i was most shocked by the fact that the investment bankers were perfectly fine with 16% interested rates for people who clearly couldn´t afford it.
How out of touch with reality must one be not to see the consequences of offering tens of thousands of people ( and every CMO ccontans thousands of subprime mortgages ) such conditions without thinking about the consequences???

discuss

 

[freakinacage]

interesting, had a quick skip through and hope to read it properly later

 

[generulpoleaxe]

Originally posted by Farin
I´m perfectly aware that this might open a can of worms, but i think the insight this article delievers is too important.


My Manhattan Project

I think i was most shocked by the fact that the investment bankers were perfectly fine with 16% interested rates for people who clearly couldn´t afford it.
How out of touch with reality must one be not to see the consequences of offering tens of thousands of people ( and every CMO ccontans thousands of subprime mortgages ) such conditions without thinking about the consequences???

discuss

their were two main problems, first being that not only were people getting bonuses based on deals done, not profit gained from the deals. as well as people not fully checking what they were buying, when buying debt packages (as well as insuring them!)

secondly, the regulators in the UK were neutered, literaly pulled apart, restructured system put in place and then ignored the warnings.

basicly it was goverment regulators not doing their job, and the main bankers getting way too greedy and not doing their job properly/responsibly.

their is more to it in the UK than the US, the paper trale is still being unravelled.

 

[Farin]

their were two main problems, first being that not only were people getting bonuses based on deals done, not profit gained from the deals. as well as people not fully checking what they were buying, when buying debt packages (as well as insuring them!) secondly, the regulators in the UK were neutered, literaly pulled apart, restructured system put in place and then ignored the warnings. basicly it was goverment regulators not doing their job, and the main bankers getting way too greedy and not doing their job properly/responsibly. their is more to it in the UK than the US, the paper trale is still being unravelled.

sure, that i know, and i ´m really , really angry at the goverments fo being the banks whipping boys and neutering the regulators (nice choice of words by the way ) This crisis shows to me that regulation is not only for the good of the people, the clients , but also for the good of the banks themself - lehman brothers could still exist if they woudn´t have been so greedy and sticked to the more conservative investments.

But the one part i don´t get:

why ruining the people by giving them mortgages with such high interest rates when your entire profit margin relies on their abillity to pay the rates???

it´s like burning down your own house. How can intelligent , college-educated people be so shortsighted. Is the word \"Sustainability\" not part of their vocabulary ?

 

[Torn blue sky]

Originally posted by Farin

their were two main problems, first being that not only were people getting bonuses based on deals done, not profit gained from the deals. as well as people not fully checking what they were buying, when buying debt packages (as well as insuring them!) secondly, the regulators in the UK were neutered, literaly pulled apart, restructured system put in place and then ignored the warnings. basicly it was goverment regulators not doing their job, and the main bankers getting way too greedy and not doing their job properly/responsibly. their is more to it in the UK than the US, the paper trale is still being unravelled.

sure, that i know, and i ´m really , really angry at the goverments fo being the banks whipping boys and neutering the regulators (nice choice of words by the way ) This crisis shows to me that regulation is not only for the good of the people, the clients , but also for the good of the banks themself - lehman brothers could still exist if they woudn´t have been so greedy and sticked to the more conservative investments.

But the one part i don´t get:

why ruining the people by giving them mortgages with such high interest rates when your entire profit margin relies on their abillity to pay the rates???

it´s like burning down your own house. How can intelligent , college-educated people be so shortsighted. Is the word \"Sustainability\" not part of their vocabulary ?

Interesing question in the last part there. Theoretically, getting people to borrow heaps of money to reinflate the economy sounded like a really bad idea to me at the time for exactly the same reason!

Given the fact that the common joe borrowing this money is flat broke as it is, how do they expect to capitalise on this if he (or she) can\'t pay it back ???
The only thing I could think of is that WITH the \"new and improved\" economy, employers would pay higher wages to their staff in line with the cost of living in the current climate, therefore sort of recycling the money to grow the economy...

But then I laughed my ass off...No one\'s going to give you a raise, they\'ll just keep hold of the money and a lot of people will go to jail or end up homeless.

 

[Overdose]

I could go on about the wrongs of borrowing beyond your means, but that would be pointless.

Not everyone\'s a loser here, those still with cash are going to make a LOT of money in the near future.

This so called \'financial crisis\' has saved me over £300 per month, thankfully I still have a job to make the most of this.

 

[Trevor]

Is the word \"Sustainability\" not part of their vocabulary ?

Doesn\'t seem to be a part of anyones vocabulary when referring to themselves, its something for other people.