Oh you have almost lured me in with that classy gangsta mouth of yours
You're as bad as those Ozombies Originally Posted by WTF
- Austin Ellen
- 01-31-2020, 05:58 PM
C'mon bitch,bet.
- WTF
- 01-31-2020, 06:39 PM
You starting to sound like the Wicked Witch...I'm about to throw a bucket of water on your hysteric ass!
- The_Waco_Kid
- 01-31-2020, 06:40 PM
- oeb11
- 01-31-2020, 06:41 PM
ftw is just Fascist DPST desperate for a recession to bring his Marxist hero Bernie as POTUS - and tank the US economy - perhaps for good.
Got short bets on the economic indicators , ftw????
Got short bets on the economic indicators , ftw????
- WTF
- 01-31-2020, 06:45 PM
Awww you mask your stupidity with that vapid wit
- oeb11
- 01-31-2020, 06:48 PM
Ah, the usual ftw, YR, and hh - name-calling and scatology as substitute for debate and ideas, concepts, communication.
How sad for the Fascist DPST's to be so limited in their own minds.
Special Education failed them - tut, tut!
How sad for the Fascist DPST's to be so limited in their own minds.
Special Education failed them - tut, tut!
- The_Waco_Kid
- 01-31-2020, 06:48 PM
- WTF
- 01-31-2020, 07:11 PM
Please oeb spellbound us with your reason for these GDP numbers that both lusty and bambino said were a thing of the past after Trump's election...
- WTF
- 01-31-2020, 07:13 PM
- oeb11
- 01-31-2020, 07:14 PM
Why debate with one who has already made up hi/her "mind" according to fascist DPST principles.
Poor ftw is just desperate for a recession - in order to have any hope of his/her hero Bernie taking office in 2021.
You are welcome to your Marxist fascist ideology, ftw.
Poor ftw is just desperate for a recession - in order to have any hope of his/her hero Bernie taking office in 2021.
You are welcome to your Marxist fascist ideology, ftw.
- WTF
- 01-31-2020, 07:21 PM
Exactly wtf I thought...nothing from you.
You bitch about debating and given the opportunity, you crash and burn.
You bitch about debating and given the opportunity, you crash and burn.
- The_Waco_Kid
- 01-31-2020, 07:50 PM
- WTF
- 01-31-2020, 11:08 PM
still waiting for yous to prove why the housing market crash was the fault of the GOV/FED .. Originally Posted by The_Waco_Kidhttps://www.interest.co.nz/banking/9...eseeable-while
If you have any trouble understanding this please feel free to ask questions.
- The_Waco_Kid
- 01-31-2020, 11:37 PM
https://www.interest.co.nz/banking/9...eseeable-whileno thanks. here's your culprit
If you have any trouble understanding this please feel free to ask questions.
here's his accomplice
https://www.thebalance.com/what-caus...crisis-3306176
i'll make it really simple .. pictures! you can understand that yeah?
/what-caused-2008-global-financial-crisis-3306176_FINAL-5c61ad8ac9e77c000159c893.png)
Kimberly Amadeo Updated December 14, 2019
The financial crisis was primarily caused by deregulation in the financial industry. That permitted banks to engage in hedge fund trading with derivatives. Banks then demanded more mortgages to support the profitable sale of these derivatives. They created interest-only loans that became affordable to subprime borrowers.
In 2004, the Federal Reserve raised the fed funds rate just as the interest rates on these new mortgages reset. Housing prices started falling as supply outpaced demand. That trapped homeowners who couldn't afford the payments, but couldn't sell their house. When the values of the derivatives crumbled, banks stopped lending to each other. That created the financial crisis that led to the Great Recession.
Deregulation
In 1999, the Gramm-Leach-Bliley Act, also known as the Financial Services Modernization Act, repealed the Glass-Steagall Act of 1933. The repeal allowed banks to use deposits to invest in derivatives. Bank lobbyists said they needed this change to compete with foreign firms. They promised to only invest in low-risk securities to protect their customers.
The following year, the Commodity Futures Modernization Act exempted credit default swaps and other derivatives from regulations.1 This federal legislation overruled the state laws that had formerly prohibited this from gambling. It specifically exempted trading in energy derivatives.
Who wrote and advocated for passage of both bills? Texas Senator Phil Gramm, Chairman of the Senate Committee on Banking, Housing, and Urban Affairs. He listened to lobbyists from the energy company, Enron. His wife, who had formerly held the post of Chairwoman of the Commodities Future Trading Commission, was an Enron board member. Enron was a major contributor to Senator Gramm’s campaigns. Federal Reserve Chairman Alan Greenspan and former Treasury Secretary Larry Summers also lobbied for the bill’s passage.
Enron wanted to engage in derivatives trading using its online futures exchanges.2 Enron argued that foreign derivatives exchanges were giving overseas firms an unfair competitive advantage.
Big banks had the resources to become sophisticated at the use of these complicated derivatives. The banks with the most complicated financial products made the most money. That enabled them to buy out smaller, safer banks. By 2008, many of these major banks became too big to fail.
Securitization
How did securitization work? First, hedge funds and others sold mortgage-backed securities, collateralized debt obligations, and other derivatives. A mortgage-backed security is a financial product whose price is based on the value of the mortgages that are used for collateral. Once you get a mortgage from a bank, it sells it to a hedge fund on the secondary market.
The hedge fund then bundles your mortgage with a lot of other similar mortgages. They used computer models to figure out what the bundle is worth based on several factors. These included the monthly payments, the total amount owed, the likelihood you will repay, and future home prices. The hedge fund then sells the mortgage-backed security to investors.
Since the bank sold your mortgage, it can make new loans with the money it received. It may still collect your payments, but it sends them along to the hedge fund, who sends it to their investors. Of course, everyone takes a cut along the way, which is one reason they were so popular. It was basically risk-free for the bank and the hedge fund.
The investors took all the risk of default, but they didn't worry about the risk because they had insurance, called credit default swaps. These were sold by solid insurance companies like the American International Group. Thanks to this insurance, investors snapped up the derivatives. In time, everyone owned them, including pension funds, large banks, hedge funds, and even individual investors. Some of the biggest owners were Bear Stearns, Citibank, and Lehman Brothers.
A derivative backed by the combination of both real estate and insurance was very profitable. As the demand for these derivatives grew, so did the banks' demand for more and more mortgages to back the securities. To meet this demand, banks and mortgage brokers offered home loans to just about anyone.
Banks offered subprime mortgages because they made so much money from the derivatives, rather than the loans themselves.
The Growth of Subprime Mortgages
In 1989, the Financial Institutions Reform, Recovery, and Enforcement Act increased enforcement of the Community Reinvestment Act. This Act sought to eliminate bank “redlining” of poor neighborhoods. That practice had contributed to the growth of ghettos in the 1970s. Regulators now publicly ranked banks as to how well they “greenlined” neighborhoods. Fannie Mae and Freddie Mac reassured banks that they would securitize these subprime loans. That was the “pull” factor complementing the “push” factor of the CRA.
The Fed Raised Rates on Subprime Borrowers
Banks hit hard by the 2001 recession welcomed the new derivative products. In December 2001, Federal Reserve Chairman Alan Greenspan lowered the fed funds rate to 1.75%. The Fed lowered it again in November 2002 to 1.24%.
That also lowered interest rates on adjustable-rate mortgages. The payments were cheaper because their interest rates were based on short-term Treasury bill yields, which are based on the fed funds rate. But, that lowered banks' incomes, which are based on loan interest rates.
Many homeowners who couldn't afford conventional mortgages were delighted to be approved for these interest-only loans. As a result, the percentage of subprime mortgages doubled, from 10% to 20%, of all mortgages between 2001 and 2006.3 By 2007, it had grown into a $1.3 trillion industry. The creation of mortgage-backed securities and the secondary market ended the 2001 recession.
It also created an asset bubble in real estate in 2005. The demand for mortgages drove up demand for housing, which homebuilders tried to meet. With such cheap loans, many people bought homes as investments to sell as prices kept rising.
Many of those with adjustable-rate loans didn't realize the rates would reset in three to five years. In 2004, the Fed started raising rates. By the end of the year, the fed funds rate was 2.25%. By the end of 2005, it was 4.25%. By June 2006, the rate was 5.25%. Homeowners were hit with payments they couldn't afford. These rates rose much faster than past fed funds rates.
Housing prices started falling after they reached a peak in October 2005. By July 2007, they were down 4%. That was enough to prevent mortgage-holders from selling homes they could no longer make payments on. The Fed's rate increase couldn't have come at a worse time for these new homeowners. The housing market bubble turned to a bust. That created the banking crisis in 2007, which spread to Wall Street in 2008.
The Bottom Line
Deregulation in the financial industry was the primary cause of the 2008 financial crash. It allowed speculation on derivatives backed by cheap, wantonly-issued mortgages, available to even those with questionable creditworthiness.
Rising property values and easy mortgages attracted a lot of people to avail of home loans. This created the housing market bubble. When the Fed raised interest rates in 2004, the consequential increased mortgage payments squeezed home borrowers’ abilities to pay. This burst the bubble in 2007.
Since home loans were intimately tied to hedge funds, derivatives, and credit default swaps, the resounding crash in the housing industry drove the U.S. financial industry to its knees as well. With its global reach, the U.S. banking industry almost pushed most of the world’s financial systems to near collapse as well. To prevent this, the U.S. government was forced to implement enormous bail-out programs for financial institutions previously billed as “too big to fail.”
The 2008 financial crisis has similarities to the 1929 stock market crash.4 Both involved reckless speculation, loose credit, and too much debt in asset markets, namely, the housing market in 2008 and the stock market in 1929.
i've told yous before .. Billy and Sandy lit the fuse by REPEALING Glass–Steagall
the very protection put in place after 1929. Fed forecasts didn't mean shit, after the fact that Billy and Sandy lit the fuse.
anything else you'd like to know, grasshopper?
- The_Waco_Kid
- 02-01-2020, 12:44 AM
no thanks. here's your culprit
here's his accomplice
https://www.thebalance.com/what-caus...crisis-3306176
i'll make it really simple .. pictures! you can understand that yeah?
Kimberly Amadeo Updated December 14, 2019
The financial crisis was primarily caused by deregulation in the financial industry. That permitted banks to engage in hedge fund trading with derivatives. Banks then demanded more mortgages to support the profitable sale of these derivatives. They created interest-only loans that became affordable to subprime borrowers.
In 2004, the Federal Reserve raised the fed funds rate just as the interest rates on these new mortgages reset. Housing prices started falling as supply outpaced demand. That trapped homeowners who couldn't afford the payments, but couldn't sell their house. When the values of the derivatives crumbled, banks stopped lending to each other. That created the financial crisis that led to the Great Recession.
Deregulation
In 1999, the Gramm-Leach-Bliley Act, also known as the Financial Services Modernization Act, repealed the Glass-Steagall Act of 1933. The repeal allowed banks to use deposits to invest in derivatives. Bank lobbyists said they needed this change to compete with foreign firms. They promised to only invest in low-risk securities to protect their customers.
The following year, the Commodity Futures Modernization Act exempted credit default swaps and other derivatives from regulations.1 This federal legislation overruled the state laws that had formerly prohibited this from gambling. It specifically exempted trading in energy derivatives.
Who wrote and advocated for passage of both bills? Texas Senator Phil Gramm, Chairman of the Senate Committee on Banking, Housing, and Urban Affairs. He listened to lobbyists from the energy company, Enron. His wife, who had formerly held the post of Chairwoman of the Commodities Future Trading Commission, was an Enron board member. Enron was a major contributor to Senator Gramm’s campaigns. Federal Reserve Chairman Alan Greenspan and former Treasury Secretary Larry Summers also lobbied for the bill’s passage.
Enron wanted to engage in derivatives trading using its online futures exchanges.2 Enron argued that foreign derivatives exchanges were giving overseas firms an unfair competitive advantage.
Big banks had the resources to become sophisticated at the use of these complicated derivatives. The banks with the most complicated financial products made the most money. That enabled them to buy out smaller, safer banks. By 2008, many of these major banks became too big to fail.
Securitization
How did securitization work? First, hedge funds and others sold mortgage-backed securities, collateralized debt obligations, and other derivatives. A mortgage-backed security is a financial product whose price is based on the value of the mortgages that are used for collateral. Once you get a mortgage from a bank, it sells it to a hedge fund on the secondary market.
The hedge fund then bundles your mortgage with a lot of other similar mortgages. They used computer models to figure out what the bundle is worth based on several factors. These included the monthly payments, the total amount owed, the likelihood you will repay, and future home prices. The hedge fund then sells the mortgage-backed security to investors.
Since the bank sold your mortgage, it can make new loans with the money it received. It may still collect your payments, but it sends them along to the hedge fund, who sends it to their investors. Of course, everyone takes a cut along the way, which is one reason they were so popular. It was basically risk-free for the bank and the hedge fund.
The investors took all the risk of default, but they didn't worry about the risk because they had insurance, called credit default swaps. These were sold by solid insurance companies like the American International Group. Thanks to this insurance, investors snapped up the derivatives. In time, everyone owned them, including pension funds, large banks, hedge funds, and even individual investors. Some of the biggest owners were Bear Stearns, Citibank, and Lehman Brothers.
A derivative backed by the combination of both real estate and insurance was very profitable. As the demand for these derivatives grew, so did the banks' demand for more and more mortgages to back the securities. To meet this demand, banks and mortgage brokers offered home loans to just about anyone.
Banks offered subprime mortgages because they made so much money from the derivatives, rather than the loans themselves.
The Growth of Subprime Mortgages
In 1989, the Financial Institutions Reform, Recovery, and Enforcement Act increased enforcement of the Community Reinvestment Act. This Act sought to eliminate bank “redlining” of poor neighborhoods. That practice had contributed to the growth of ghettos in the 1970s. Regulators now publicly ranked banks as to how well they “greenlined” neighborhoods. Fannie Mae and Freddie Mac reassured banks that they would securitize these subprime loans. That was the “pull” factor complementing the “push” factor of the CRA.
The Fed Raised Rates on Subprime Borrowers
Banks hit hard by the 2001 recession welcomed the new derivative products. In December 2001, Federal Reserve Chairman Alan Greenspan lowered the fed funds rate to 1.75%. The Fed lowered it again in November 2002 to 1.24%.
That also lowered interest rates on adjustable-rate mortgages. The payments were cheaper because their interest rates were based on short-term Treasury bill yields, which are based on the fed funds rate. But, that lowered banks' incomes, which are based on loan interest rates.
Many homeowners who couldn't afford conventional mortgages were delighted to be approved for these interest-only loans. As a result, the percentage of subprime mortgages doubled, from 10% to 20%, of all mortgages between 2001 and 2006.3 By 2007, it had grown into a $1.3 trillion industry. The creation of mortgage-backed securities and the secondary market ended the 2001 recession.
It also created an asset bubble in real estate in 2005. The demand for mortgages drove up demand for housing, which homebuilders tried to meet. With such cheap loans, many people bought homes as investments to sell as prices kept rising.
Many of those with adjustable-rate loans didn't realize the rates would reset in three to five years. In 2004, the Fed started raising rates. By the end of the year, the fed funds rate was 2.25%. By the end of 2005, it was 4.25%. By June 2006, the rate was 5.25%. Homeowners were hit with payments they couldn't afford. These rates rose much faster than past fed funds rates.
Housing prices started falling after they reached a peak in October 2005. By July 2007, they were down 4%. That was enough to prevent mortgage-holders from selling homes they could no longer make payments on. The Fed's rate increase couldn't have come at a worse time for these new homeowners. The housing market bubble turned to a bust. That created the banking crisis in 2007, which spread to Wall Street in 2008.
The Bottom Line
Deregulation in the financial industry was the primary cause of the 2008 financial crash. It allowed speculation on derivatives backed by cheap, wantonly-issued mortgages, available to even those with questionable creditworthiness.
Rising property values and easy mortgages attracted a lot of people to avail of home loans. This created the housing market bubble. When the Fed raised interest rates in 2004, the consequential increased mortgage payments squeezed home borrowers’ abilities to pay. This burst the bubble in 2007.
Since home loans were intimately tied to hedge funds, derivatives, and credit default swaps, the resounding crash in the housing industry drove the U.S. financial industry to its knees as well. With its global reach, the U.S. banking industry almost pushed most of the world’s financial systems to near collapse as well. To prevent this, the U.S. government was forced to implement enormous bail-out programs for financial institutions previously billed as “too big to fail.”
The 2008 financial crisis has similarities to the 1929 stock market crash.4 Both involved reckless speculation, loose credit, and too much debt in asset markets, namely, the housing market in 2008 and the stock market in 1929.
i've told yous before .. Billy and Sandy lit the fuse by REPEALING Glass–Steagall
the very protection put in place after 1929. Fed forecasts didn't mean shit, after the fact that Billy and Sandy lit the fuse.
anything else you'd like to know, grasshopper? Originally Posted by The_Waco_Kid
https://www.interest.co.nz/banking/9...eseeable-while
If you have any trouble understanding this please feel free to ask questions.
what's the matter sparky? it took you a week to dig up your out of date and over simplified article .. it took me less than 30 minutes to show you the truth.
still scrambling to reply? remember .. i see you online .. butt u can't see me! i am a ninja poster! a ghost! and your point is TOAST!!
and for the record i never predicted nor bet yous about GDP growth.
and i'm still waiting for yous to explain what part of the national debt is the bad part .. and what is actually good.
clock's ticking!
tick tock .. tick tock ..
BAHHAHAAAA