The Genesis of the Great Recession

[Gooch]

1. Net government deficit equals private sector savings (domestic and foreign).

GDP = consumption + investment + (government spending) + (exports − imports)

Domestic -







Foreign -

Russian Default

Asian Currency Crisis

2. The Glass-Steagall Act, also known as the Banking Act of 1933 (48 Stat. 162), was passed by Congress in 1933 and prohibits commercial banks from engaging in the investment business.

1999 Gramm-Leach-Bliley Act

1999 Record High for Nasdaq

Rubin at Citigroup

Midnight in the Garden of Good and Evil

3. Fannie Mae, the nation's biggest underwriter of home mortgages,has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

[Bojack]

It seems somewhat disingenious to blame Clinton's push for subprime mortgaging on a majority of this mess because to my understanding it was largely due to ARM issues and most ARM's don't take a decade to reset to levels that cause the epidemic default rates we've seen.. Then the issues should have started arising in say 2004 or so? Subprimes certainly didn't help but I can't imagine hoards of broke ass people in elaborate loan schemes taking roughly a decade to default in mass numbers. What am I missing here?

[Razor Ramon]

[Uriel]

[Gooch]

It seems somewhat disingenious to blame Clinton's push for subprime mortgaging on a majority of this mess because to my understanding it was largely due to ARM issues and most ARM's don't take a decade to reset to levels that cause the epidemic default rates we've seen.. Then the issues should have started arising in say 2004 or so? Subprimes certainly didn't help but I can't imagine hoards of broke ass people in elaborate loan schemes taking roughly a decade to default in mass numbers. What am I missing here?

The premise of ARMs was locking into a liability that could only be afforded in a non-increasing interest rate environment and with the taken for granted ability to refinance. The premise of subprime was to sell liabilities to people who in most circumstances could not afford them. Any how were these mortgages able to be securitized, packaged, and bought/sold by banks in the first place?

And secondly, I don't know what you mean when you say that I'm blaming the "push for subprime on a majority of this mess". What did subprime have to do with #1 and #2, which would be 67% of the reasons stated, which would be the majority?

Can you stay out of this thread, bro? If you're not posting played out pics of Kanye or some jibberish about MvC 2, you really have nothing worthwhile to add and since I like you, I'd rather not have to explicitly tell you to go play somwhere else.

[Bojack]

The premise of ARMs was locking into a liability that could only be afforded in a non-increasing interest rate environment and with the taken for granted ability to refinance. The premise of subprime was to sell liabilities to people who in most circumstances could not afford them. Any how were these mortgages able to be securitized, packaged, and bought/sold by banks in the first place?

And secondly, I don't know what you mean when you say that I'm blaming the "push for subprime on a majority of this mess". What did subprime have to do with #1 and #2, which would be 67% of the reasons stated, which would be the majority?

I misspoke on the majority deal.. Anyways, I know the loans were packaged and resold (with fraudulent risk ratings applied by GMSachs IIRC to fleece investors supposedly) but my issue is an issue of timing. Unless there was a big lag between when Clinton made the push and ARMS were sold then the timing seems to be somewhat off and the recession should have started some time right after Bush 2nd election. Don't most ARMs reset after 5 years? Yearly? Because it was payment defaults on the massive amounts of ARMS that caused the asset packages to become toxic and worthless right? Or did the ARMs just have to adjust enough times and increase enough times to finally kill the ARM holder?

[dave is ok]

Banks packaged shit and sold it as gold. That's the layman's version.

[Bojack]

Banks packaged shit and sold it as gold. That's the layman's version.

I've known this for a long time. I've still never gotten an answer to my timing concern.

[dave is ok]

I've known this for a long time. I've still never gotten an answer to my timing concern.

No one will ever know when shit went bad, we only know when we it got too hard to hide. Banks have a lot of tricks up their sleeves. They can fudge quarterly reports, they can hide how bad an investment is from the investors, they can get ratings agencies to give AAA ratings to rubbish. I'm guessing shit was falling apart sometime in the mid-00's but housing prices were still going up and interest rates were low, which helped conceal it. I work in a small, three person real estate law office and throughout 2005 and 2006 we were handling at least 10 refinances a day. Shit was insane.

[Doc Holliday]

When is WikiLeaks going to answer this question for us?