NYT biz journo: How Fannie Mae, Dems, WS and ACORN caused the 2008 crash

[oxcoug]

Most people who aren't trying to protect an ideology already know that this is the defining thread in the tangle of yarn that is the 2008 collapse, but all of the clamor about "lack of regulation" on Wall Street being the culprit has obscured it. This truly remarkable book (that I've now read more than half of) lays out the devastating case, and if Americans finally get the picture it will be a very bad thing for the Democratic Party [ame="http://www.amazon.com/Reckless-Endangerment-Outsized-Corruption-Armageddon/dp/0805091203"]Amazon.com: Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon (9780805091205): Gretchen Morgenson, Joshua Rosner: Books@@AMEPARAM@@http://ecx.images-amazon.com/images/I/51%2BIZXIfvfL.@@AMEPARAM@@51%2BIZXIfvfL[/ame]

The true story of the crash of 2008 begins with seemingly laudable goal of making housing affordable to all Americans, a weird obsession of multiple presidents both Repubs and Dems. From there:

1. Policies designed to loosen up the lending industry compel financial institutions to make no money down loans to tons unqualified borrowers (to spell this out for Finderson: Govt intervention in the logic of the housing markets forced them to depart from established lending practices in order to achieve a bit of social engineering)
2. The resulting demand distortions in the housing market flood the economy with easy money, both up to governments which overspend and down to consumers who overspend and overdose
3. Wall Street never misses easy money and starts securitizing the shit out of all kinds of bad debt..........(lots of other stuff that Morgenson will tell you about)
4. Things fall apart, the center cannot hold and mere anarchy is unleashed upon the world

This book shld be required reading for Americans - especially the ones who don't understand that the roots of this crisis are in the government activism, not in lack of government regulation (though that later played a role).

This review from Walter Russell Mead (of the Council on Foreign Relations, his last book was listed by the Economist, the FT and the WashPo as one of the best books of the year, just in case anyone else was hoping to dismiss him as a rightie crank) dives deeper http://blogs.the-american-interest.c...r-for-the-gop/

[pellegrino]

I'm not sure that the information in and of itself causes the democratic party to falter. It's possible, but it depends on how the information is presented and who presents it. If someone like Glen Beck takes this and runs with it then I think it goes nowhere. If, instead someone like Cooper Anderson were to tell this story consistently over a period of time, then we'd see a lot more movements. I don't see any current republican politician telling this story and having it appear s anything more than partisan politics.

I think for many people identifying with a party is like identifying with a religion. When confronted with the facts, some will leave, some will hang on trying to believe, and others will soldier on because that's how they identify themselves and that's never going to change. This story is nothing to those hardcore, water off a duck's back and they'll never accept it as a valid historical narrative. Those who are in the middle will accept it and might even embrace it, depending on who tells the story, how they tell it, and how often they tell it.

[byu71]

I'm not sure that the information in and of itself causes the democratic party to falter. It's possible, but it depends on how the information is presented and who presents it. If someone like Glen Beck takes this and runs with it then I think it goes nowhere. If, instead someone like Cooper Anderson were to tell this story consistently over a period of time, then we'd see a lot more movements. I don't see any current republican politician telling this story and having it appear s anything more than partisan politics.

I think for many people identifying with a party is like identifying with a religion. When confronted with the facts, some will leave, some will hang on trying to believe, and others will soldier on because that's how they identify themselves and that's never going to change. This story is nothing to those hardcore, water off a duck's back and they'll never accept it as a valid historical narrative. Those who are in the middle will accept it and might even embrace it, depending on who tells the story, how they tell it, and how often they tell it.

I think you are right. Even though a small percentage of the public watches the nightly news or Sunday talk shows, if they did a real story on it or better yet sixty minutes did, it could get traction. They won't though.

Reminds me of when I was in the business early in the 80's. Sixty minutes did a story on PaineWebber in a Calif. branch, I was in SLC at the time. A broker had an old lady client who traded the crap out of stocks and options. She took $100,000 and ran it up to the mid to upper $100's. All the while the branch manager kept sending letters that she had to sign and return saying she knew what she was doing. Of course the broker was making good commissions too. Well, eventually she basically lost it all.

Sixty minutes of course was talking about the brokerage industry in general and noted that eventually her lawyer in court got the $100k back.

What they failed to say was early on, PW saw they had a loser, especially PR wise. They told her they would give her money back. After consulting an attorney, she was convinced she could get mental stress damages or whatever they call it.

In the end she just ended up with her $100,000 that PW offered to settle for. Well kinda, the lawyer got part of it.

The main street media has a way of telling the story the way they want. The '08 story is not one they want to tell as Democrat greed. Wall St and banker greed is the story they want to tell. They do call out Goldman, but fail to mention that firm is as much or more democrats than repubs.

[Color Me Badd Fan]

Most people who aren't trying to protect an ideology already know that this is the defining thread in the tangle of yarn that is the 2008 collapse, but all of the clamor about "lack of regulation" on Wall Street being the culprit has obscured it. This truly remarkable book (that I've now read more than half of) lays out the devastating case, and if Americans finally get the picture it will be a very bad thing for the Democratic Party Amazon.com: Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon (9780805091205): Gretchen Morgenson, Joshua Rosner: Books

The true story of the crash of 2008 begins with seemingly laudable goal of making housing affordable to all Americans, a weird obsession of multiple presidents both Repubs and Dems. From there:

1. Policies designed to loosen up the lending industry compel financial institutions to make no money down loans to tons unqualified borrowers (to spell this out for Finderson: Govt intervention in the logic of the housing markets forced them to depart from established lending practices in order to achieve a bit of social engineering)
2. The resulting demand distortions in the housing market flood the economy with easy money, both up to governments which overspend and down to consumers who overspend and overdose
3. Wall Street never misses easy money and starts securitizing the shit out of all kinds of bad debt..........(lots of other stuff that Morgenson will tell you about)
4. Things fall apart, the center cannot hold and mere anarchy is unleashed upon the world

This book shld be required reading for Americans - especially the ones who don't understand that the roots of this crisis are in the government activism, not in lack of government regulation (though that later played a role).

This review from Walter Russell Mead (of the Council on Foreign Relations, his last book was listed by the Economist, the FT and the WashPo as one of the best books of the year, just in case anyone else was hoping to dismiss him as a rightie crank) dives deeper http://blogs.the-american-interest.c...r-for-the-gop/

Michael Lewis's book basically tells the story of the few guys who saw the runup of subprime for what it was, bet against it, and made billions in the process.

From my viewpoint, the relationship between government and the crisis was as follows -- regulations were eased not because they wanted to streamline the way money flows from banks to the end borrowers; rather, they were eased so they could get all the idiots into homes that really shouldn't be buying homes in the first place. In the process, Wall Street learned it could make an assload of money by securitizing not only the good loans, but the shitty loans also. When prices started accelerating, all the Starbucks Baristas/house flippers got into the game and they obliged the bankers by creating the volume needed for more MBSs which created more fees for Wall Street.

The myopic intentions opened the door for the situation that occurred. If the regulations that were eased never existed in the first place, the same thing may have happened anyway.

I've heard some discussion that the new asset class these guys are glomming onto are student loans. Obama is apparently all for it. Look for more people getting suckered into spending $80k for a University of Phoenix Masters in Retail Management or some other kind of nonsense.

http://collegesavings.about.com/b/20...-lets-hope.htm