Questions for our American friends

[Roubignol]

Originally Posted by deepsepia

Unfortunately, these are only as good as the credit of the entity making the guarantee . . . and that entity was Lehman. When a bankrupt company is the one "protecting your capital" -- well, then there's no protection at all.

Is it possible to think that Lehman tried to sell these toxic products on the European markets to save the bank?

[deepsepia]

Originally Posted by xyzde69

Is it possible to think that Lehman tried to sell these toxic products on the European markets to save the bank?

Oh yeah. No surprise that they were selling debt to fund themselves - question is "why would UBS or CS recommend them to customers?"

I'd bet you that not many of the retail customers really understood what they were buying. Not only was Lehman only an average credit, there was no liqudity at all. No one other than Lehman made a market in these.

These kinds of products are still around -- not.much here or in Europe, but the Chinese sell these "wealth management" products, lots and.lots of them. They'll blow up one.day too.

They were crap, but they were very small part of the crisis, an effect not a cause.

[Arturo2nd]

Originally Posted by xyzde69

Is it possible to think that Lehman tried to sell these toxic products on the European markets to save the bank?

What killed Lehman Brothers was they kept an enormous amount of the toxic bonds in their own portfolio to take advantage of the interest rates and goose their bottom line.

The origins of the bubble and subsequent crash can be traced to a deeply flawed program approved by the U.S. Congress to increase home ownership in the United States.

Originally Posted by deepsepia

You probably didn't notice, but.one of the things the Trump Administration is doing is gutting rules which make banks more responsible for vetting stuff like this; the devil is in the details.

This is my problem with the Republican Party. Our single biggest protection against a repeat of a bubble and crash of the magnitude of 2007 is to force the break up of "too big to fail" banks. The most dangerous development of recent times has been the transfer of risk for dangerous speculation and excess leverage from the private parties taking the risks to the tax paying public. At some point, governments will be unable to finance the losses and will be forced into crisis when they default on their bonds.

Donald Trump has casually mentioned defaulting on U.S. government debt and "renegotiating" with bondholders without really appreciating the size of the disaster that would cause. Another name for "renegotiating debt" is screwing your lenders. The United States is already doing this by devaluing its currency so much.

[scoundrel]

Originally Posted by Brian249x

What killed Lehman Brothers was they kept an enormous amount of the toxic bonds in their own portfolio to take advantage of the interest rates and goose their bottom line.

The origins of the bubble and subsequent crash can be traced to a deeply flawed program approved by the U.S. Congress to increase home ownership in the United States.



This is my problem with the Republican Party. Our single biggest protection against a repeat of a bubble and crash of the magnitude of 2007 is to force the break up of "too big to fail" banks. The most dangerous development of recent times has been the transfer of risk for dangerous speculation and excess leverage from the private parties taking the risks to the tax paying public. At some point, governments will be unable to finance the losses and will be forced into crisis when they default on their bonds.

Donald Trump has casually mentioned defaulting on U.S. government debt and "renegotiating" with bondholders without really appreciating the size of the disaster that would cause. Another name for "renegotiating debt" is screwing your lenders. The United States is already doing this by devaluing its currency so much.

Donald Trump is, of course, an ignoramus. His idea of making investors in US treasury bonds take a haircut was proof of this. Were he ever to go down this road for real, the ability of the US government to raise money in future bond issues at any sane rate of interest would be pretty much nil. For a country which runs on credit, as the US presently does, the consequences of being unable to borrow would be at least as serious as they have been in Greece, and probably worse than that.

He's a man, with a plan;
Got a counterfeit dollar in each hand...
He's Mister Know It All.

Makes a deal, with a smile
Knowing all the time that his lie's a mile.
He's Mister Know-It-All.
~ Stevie Wonder.

[Arturo2nd]

Originally Posted by scoundrel

Donald Trump is, of course, an ignoramus. His idea of making investors in US treasury bonds take a haircut was proof of this. Were he ever to go down this road for real, the ability of the US government to raise money in future bond issues at any sane rate of interest would be pretty much nil. For a country which runs on credit, as the US presently does, the consequences of being unable to borrow would be at least as serious as they have been in Greece, and probably worse than that.

Not to mention the huge proportion of those bonds that are held by U.S. pension funds. A great many municipal and state pension funds are struggling to remain solvent as it is. Insolvent pension funds are forcing cities throughout the country into bankruptcy. I fear that a great many public employees will be very disappointed as their expectations are not fulfilled.

[cicciobuki]

Originally Posted by bigtrain45

The general consensus is that CNN and MSNBC lean to the left, and Fox News clearly leans way to the right. I think the 3 major, old networks, ABC, NBC, and CBS are the most neutral, but most right-wingers think they are all liberal. I'd suggest trying them all and decide for yourself who you think you can trust.

Thanks, i'll try those 3 out!

[deepsepia]

Originally Posted by Brian249x

The origins of the bubble and subsequent crash can be traced to a deeply flawed program approved by the U.S. Congress to increase home ownership in the United States.

An interpretation popular among the Republicans, but not true.

Subprime borrowers were nowhere near as significant as prime borrowers in creating the crisis. Prime borrowers borrowed much, much more and their performance was much much worse than historicals. That's the delta that lead to the bust.

There's a noxious spin that you'll see from the cranky right, that the crisis was caused by being too generous to poor people. That baloney. It was caused by being too generous to people like Trump.

He's the one who borrowed fortunes and was treated -- for a time-- as prime, meaning that banks were more confident of repayment, so they reserved less against it. Subprime always carried hefty reserves, and so default was much less of a problem, except in the financially engineered theoretically high quality tranches of a private label MBS.

Subprime simply never was that much of the market, default rates weren't particularly bad compared to historicals-- it was the Prime segment of the market, much larger, that caused the crisis. These were loans which were supposed to be money-good, which were far greater in volume, and whose high default rate torpedo'd balance sheets.

See "Default rates on prime and subprime mortgages: differences and similarities" from the Chicago Fed for data.
https://www.chicagofed.org/~/media/p...al-web-pdf.pdf

[Decadence]

Originally Posted by bigtrain45

The general consensus is that CNN and MSNBC lean to the left, and Fox News clearly leans way to the right. I think the 3 major, old networks, ABC, NBC, and CBS are the most neutral, but most right-wingers think they are all liberal. I'd suggest trying them all and decide for yourself who you think you can trust.

Originally Posted by cicciobuki

Thanks, i'll try those 3 out!

The old networks aren't much better than cable.

For example: Today, someone who worked for CBS (Haley Geftman-Gold, vice president, and senior council) made a social media post in regard to the Las Vegas tragedy:

"I’m actually not even sympathetic bc country music fans often are Republican gun toters."



When you have that kind of partisan hatred at the top level of a network, I don't know how you can expect objectivity.

The network did fire her and the posts were removed. Anyone think she's the exception, rather than the rule? I'm speaking in terms of overall attitude.. not being foolish enough to post it.

[Arturo2nd]

Banks love rich people and real estate developers. They only tolerate us small fry as a necessary cost of doing business. They will happily charge us 20% interest on our credit cards while paying us 0.06% on our savings.

When I say flawed programs, I mean banking and mortgage programs that allowed unethical people to game the system or stupid people to make unwise financial decisions. Even now I am reading that banks have created "off balance sheet" vehicles that are loaded with derivatives resulting in the banks being far more leveraged than is revealed in their financial statements.

The public is really not aware that the attempts by the accounting profession to improve the accuracy and quality of financial statements are frequently thwarted by industry lobbyists appealing to Congress for laws that allow dubious reporting. The argument really boils down to the firms could not attract investors (bondholders and shareholders) if they were forced to provide accurate financial statements. Thus, we have situations like General Motors, which had really been insolvent for years, walking away from its pension promises to employees and leaving shareholders with nothing, when operating results were poor for a few years.

Working class people probably would not be upset if executives of companies that failed so spectacularly were forced to disgorge their wealth and executed. After all, thousands of working folks face real hardships in these cases.

[Quackerson]

Originally Posted by Decadence

The old networks aren't much better than cable.

For example: Today, someone who worked for CBS (Haley Geftman-Gold, vice president, and senior council) made a social media post in regard to the Las Vegas tragedy:

"I’m actually not even sympathetic bc country music fans often are Republican gun toters."



When you have that kind of partisan hatred at the top level of a network, I don't know how you can expect objectivity.

The network did fire her and the posts were removed. Anyone think she's the exception, rather than the rule? I'm speaking in terms of overall attitude.. not being foolish enough to post it.

American televised media news, be it old-style Big 3 network or cable, national or local...the standard has just fallen so far from anything useful. Across the board, mind you (in other words, it's not just Fox News that is at fault, here).

Too many distractions with national networks chasing shiny objects / tennis balls in the form of celebrity sex scandals, gory accidents or overhyped social issues that effect relatively few people. And the storyline of the day is parroted by every network: laziness leading to Lemmings-like behavior.

The only journalism worth a damn remains print media, specifically periodicals which come out either weekly or monthly, where the journalists writing the stories have time to research, reflect and write something worth reading.

TV journalism is just way too much of a repetitious 'stimulus:response' formula to lead to anything approaching enlightenment, and the focus generally isn't on anything of any use to me.

Sadly, print journalism is dying off. There are some good online conduits, but one needs to be selective in order to avoid clickbait tripe.