The T
George S. Patton Party
The FED's days of manipulation are over. We're broke.It cannot be sustained. Inflation is taking over...bigtime. Kudos on a good post.The Community Reinvestment Act (CRA) forced banks to loan money to those with bad credit creating toxic assets which were bundled as derivative packages and sold to other banks. You need to look farther upstream. The complaining about derivatives is just the normal BS you hear about 'speculators' during any crisis. People haven't by and large heard the word 'derivatives' much so it sounds fresh, therefore it gets more press. If they're bitching about the mortgage derivatives you simply have to remember that regulations and rules can allow and even promote the creation of bad debt, but without buyers what the hell is anyone going to do with that debt, much less derivatives/structured products based on it? The Fed provided the buyers, plain and simple. It's an odd application of Keynesianism I think in that people seem to believe "if you produce it, they will buy" which is not true. In order for people to buy bad debt they needed and got three things: easy money and credit; the lower interest rates for which also fueled a hunger for high yield, high risk debt; and explicit and implicit guarantees of bailout should the debt go tits up. Without those three things, all provided by the government and The Fed, any bad debt or derivatives that were produced would have been sold to...no one.How about the$120 TRILLION at the hands of government. YOU cannot hang this on Wall street. They aren't elected Government.
But you continue the class warfare shit Chrissy.
You can't re-write history.
The derivatives bomb brought down the financial system.
Where have you been?
Derivatives have received such a bad press that it is necessary to point out that the insurance policy on a home is a derivative. And many of the derivatives that were sold and which are now creating problems of insolvency and bankruptcy, namely, "credit default swaps (CDSs)," were insurance policies in one form or another. Their flaw was that unlike ordinary homeowners' insurance, they did not have a sufficient list of exclusions. But decades of brainwashing by the government, the media, and the educational system had convinced almost everyone that such collapse was no longer possible. The Federal Reserve would save us from any disaster. So there was no reason to create sound derivatives. And many of these same big businesses received bailouts, and were indeed "saved."