Taxpayers pay for the sins of the bankers
From Winter 2006, just so you know what you're paying for.
Securitized Mortgage Fraud - The Ponzi Unwinds
Even in good times the Ponzi business model employed by most of the mortgage banking industry required ever increasing loan volumes to keep default rates down. New loans typically don’t go bad as fast as bad loans, so the rapid growth rate of the sector helped hide the truth about the quality of their holdings. Now that the sector is having trouble growing, reported default rates are on the rise and profits are evaporating.The market for mortgage backed securities grew far too rapidly, and the supply of easy credit had to end.
Ponzi’ finance units must increase outstanding debt in order to meet its financial obligations.” - Hyman Minsky
Credit Suisse on a monthly basis puts out one of the most data filled reports in the biz on mortgage and consumer finance. A careful reading of the latest issue, enables one to piece together the nature of the American asset Bubble consumer financing Ponzi scheme.
The macro question is, how can this benign “risk free” environment continue if Ponzi equity extraction from declining housing values abates at all? And even worse, what happens if large layoffs spread into the real estate and construction areas of the economy?
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Like a Ponzi scheme, it is good until it isn’t. Think of it as musical chairs. When chairs are plenty, everyone is having fun. Yet as the music winds down, we know that eventually only one person will be able to sit.
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Noticed all those "ReFi" commercials have pretty much disappeared. Guess the House of Cards has collapsed. All that's left is the unwinding and the pain.(a clear understatement on my part)
Yep, this is the big one. They've squeezed the world dry and the Fat Lady is singing the final number. Let me coin the phrase now. "The Greater Depression."
That's right, let's just heap more debt on the American people to save these worthless criminals, after all, they're worth more than the future of America, right? If you really wanted to help the borrowers, why not force the lenders to convert those fraudulent ARMs to low interest fixed rate loans? Why? Because it doesn't bail-out the sub-prime lenders. What is with this collusion to fleece every last penny out of the American working class? Does the United States even have the ability to issue enough debt to cover these loans? Last I saw, the rest of the world had enough of it(in more ways than one), and weren't showing up at the auctions. Aren't we in enough of a debt crisis already? I guess the working class in America takes it in the angus again so the thieving rich can skate away scott free. Where is Robin Hood when you need him?
'Debt' is the 'Chains that bind us'
The grasp and grab for resources, including and most obviously oil and gas, has been going on since the end of World War II in its current state. It was spoken about openly when the media was more constrained and less widely available. Churchill spoke eloquently about how debt was a far better weapon against rowdy natives than the Gestapo or the state-capitalists in the Soviet Union’s KGB.
Debt would allow “great men” to reach their destiny without insufferable wretches, the public, getting in their way. Institutionalize debt internationally and it would also allow great nations to rule quietly and with Adam Smith’s “silent hand.” “Or else we should be forever trapped within our mansions.” said Churchill.
Adam Smith however would today be classed as a left wing economist, the Joseph Stiglitz of his age. He wrote, also eloquently, about how markets needed justice in order to function, otherwise the merchant class would spew despair and misery around the world.
He was correct.
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December 2006, the SEC removed the 'uptick rule' that prevented people from unrestrained shorting of the market as it goes down.(Unrestrained shorting acts like putting the accelerator to the floor while going downhill.) The only reason for doing this is to allow profiting on a crash. The rule was put it place in 1934 to prevent a 1929 type crash from happening again.
Chairman Christopher Cox
U.S. Securities and Exchange Commission
Washington, D.C.
December 4, 2006
The final item on our agenda today is elimination of the short sale price test - colloquially known as the "tick test."
Historically, the Commission and self-regulatory organizations have sought to balance the competing views of short selling -- whether it is primarily good or bad -- by permitting short sales in advancing markets, and preventing short sales at successively lower prices.
The Commission first imposed restrictions on the execution prices of short sales almost seventy years ago, when we adopted the "tick test" of Rule 10a-1 in 1938. The tick test permits short sales only at a price above the last sale price, or alternatively, at the last sale price -- if that is higher than the previous price.
The core provisions of Rule 10a-1 have remained virtually unchanged since the 1930s. But a great deal else has changed in the marketplace over that very long time. Over the years, decimalization and changes in trading strategies have undermined the effectiveness of the price test. And at the same time, increased transparency and better means of surveillance appear to have lessened the need for the price test.
We will today consider proposals to remove the tick test of Rule 10a-1, and to prohibit the SROs from maintaining their existing price tests or adopting any new ones. Along with the proposed repeal of the tick test, we will also consider a proposal to make conforming changes to the order-marking requirements of Regulation SHO.
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even though sometimes we are like 
