Quote:
Originally Posted by rhetorical
Fuck all the excuses about sub prime crap. If these "capitalists" had rang alarm bells months ago, this could have been avoided. But they were scumbags in guccis and it all came down in one week. What happened to "one if by land, two if by sea".
{snip}
Sad state of affairs.
|
I agree it is a sad state of affairs, but the "sub-prime crap," as you so eloquently word it, was actually the warning bell for the US economic melt-down and emblematic of the greater concern: wild speculation and hedging against commodities and real property. It's not much different, really, than the wild margining against (uh, oh - here's the part where it gets ugly) web properties in the late 90s - only this time, it was actual goods instead of cyberspace that people gambled with, so the meltdown has a much more immediate fallout against the general populace and not just Silicon Valley.
The current situation stems almost directly from mortgages that were based on non-existent down payments and structuring loans in ways that had nothing other than over-priced property to back them - and the assumption (endemic in boom economies) that the property values underlying those papers would continue to rise. As the market contracted - which was fairly apparent would happen after the meteoric rise in property values stateside - those values dropped - which also should've been readily apparent to those whose job it is to make markets in such things - leaving the securities backed with nothing more than a hope and a dream.
Because those mortgages had been repackaged and sold as a "can't lose" proposition by those who should've known better, and bought up by others that should've been able to look at the underlying math - well, hello, stupidity and greedy investors.
