Occupy Wall Street

[BrentMusburger]

The banks should have known exactly how risky these loans were. They should have or did know that if the housing market stopped growing, it would be catastrophic. Most obviously, they should have known that the price of housing would eventually plateau or cycle down. The fact that they ignored those risks and then get bailed out is shitty... not because the individuals didn't get bailed out, but because the people behind the banks that participated in these risky investments with their customer's money should not be working in the industry ever again.

I guess I am of the opinion that the banks have a greater responsibility to do the right thing than individual consumers, because the banks are playing with other people's money while the individual consumers are playing with their livelihoods.

Some of these banks were beyond criminal. The most egregious of all was Goldman Sachs making large profits on risky loans, packaging them up and selling them as AAA morgage backed securities to get them off their hands when they milked them for what they were worth, and then having the balls to short the loans and make profits on their (assured)decline. So, I'll agree some of the people at these institutions have a special place reserved in hell.

However, the system failed on many levels, as Alan Greenspan outlined in his testimoney. I blame him more than anyone for letting the party go on and on and on. Consumers and banks alike were just riding the roaring 90's.


I will also agree that people are unaware, but once the real story of what played out is made known, it just makes you (or me at least) sick. All that expasion and growth. A bank on every corner. New subdivisions. New malls. Explosive growth in healthcare. Explosive growth in education. All of it was a lie. In community after community all the way cross the U.S.

[mg_]

The banks should have known exactly how risky these loans were. They should have or did know that if the housing market stopped growing, it would be catastrophic. Most obviously, they should have known that the price of housing would eventually plateau or cycle down. The fact that they ignored those risks and then get bailed out is shitty... not because the individuals didn't get bailed out, but because the people behind the banks that participated in these risky investments with their customer's money should not be working in the industry ever again.

I guess I am of the opinion that the banks have a greater responsibility to do the right thing than individual consumers, because the banks are playing with other people's money while the individual consumers are playing with their livelihoods.

Some of these banks were beyond criminal. The most egregious of all was Goldman Sachs making large profits on risky loans, packaging them up and selling them as AAA morgage backed securities to get them off their hands when they milked them for what they were worth, and then having the balls to short the loans and make profits on their (assured)decline. So, I'll agree some of the people at these institutions have a special place reserved in hell.

However, the system failed on many levels, as Alan Greenspan outlined in his testimoney. I blame him more than anyone for letting the party go on and on and on. Consumers and banks alike were just riding the roaring 90's.


I will also agree that people are unaware, but once the real story of what played out is made known, it just makes you (or me at least) sick. All that expasion and growth. A bank on every corner. New subdivisions. New malls. Explosive growth in healthcare. Explosive growth in education. All of it was a lie. In community after community all the way cross the U.S.

So, lemme make sure I get this straight, so I'm getting your incoherent logic about the situation.


Because large-scale investment banks and hedge funds created fictitious investments, which were AAA rated, that was supposed to be for corporations to turn to for new capital infusion to help drive the economy, the average person is to blame?

My father being upside down on his mortgage is to blame because Bear Stearns, Goldman Sachs, Moody's, etc. all rigged the system and created a $6.6 trillion illusionary market based on about $15-20 billion in residential mortgages?


No, the average American isn't to blame. The average American wasn't reckless. The average American lost his job when these investment banks got into a dangerous game of chicken and decided it wouldn't be prudent to lend anymore. The domino effect was created. When people started to smarten up to the facts these hedge funds and securities were trash, then people stopped investing in them. This caused Lehman Brothers, AIG, and Bear Stearns to get caught with a ton of junk bonds without the capital to clear them. That isn't Main Street's fault at all. Main Street has been losing, regardless. The average American has lost ground over the last 35 years, but you're still going to turn and blame them. Not these dummy markets created.

Most people were trying to do the right things. While their real wages eroded, they tried to stay afloat and invest for the long term. That's not reckless. That's prudent. What wasn't fair to them is what these pension managers and growth fund managers were putting the money into, which the "average Joe" had no control over.

[BrentMusburger]

Because large-scale investment banks and hedge funds created fictitious investments, which were AAA rated, that was supposed to be for corporations to turn to for new capital infusion to help drive the economy, the average person is to blame?

I've said multiple times that I blame both sides equally.

[scorch-]

Because large-scale investment banks and hedge funds created fictitious investments, which were AAA rated, that was supposed to be for corporations to turn to for new capital infusion to help drive the economy, the average person is to blame?

I've said multiple times that I blame both sides equally.

Look, no one's saying that the average person takes no blame here. But 99% of the population has no clue when you start talking about securities, let alone derivatives. It's too much of an investment to learn everything you need to know about markets and make informed decisions on your own. That's why financial advisers make so much money... and that's why it's so ridiculously **** that people who KNEW what they were doing created the situation. These people invested their livelihoods in a permanently long position on the housing market without knowing they were doing it. You can say that it was their fault that they didn't know, but that ignores the fact that the financial advice they were receiving from people they trusted was what led them to do it.

[BrentMusburger]

But 99% of the population has no clue when you start talking about securities, let alone derivatives.

Nor does that matter.

The bad loans had already been made. Default was coming whether the banks packaged them up or not.

These people invested their livelihoods in a permanently long position on the housing market without knowing they were doing it.

Hmmm. Do you see the problem here?

"when shoe shine boys are giving stock tips, it's time to get out."

but that ignores the fact that the financial advice they were receiving from people they trusted was what led them to do it.

There's an element of trust. As an external auditor, I believe highly in objectivity and integrity. However, there's something to be said for not asking the used car salesman if today is a good day to buy a used car. Of course financial advisors can generate fees and commissions based on how they direct clients. The clients should understand the world in which they're operating in and not be lead like sheep over the edge of a cliff. Get a second opinion. Do some independent research. Find someone you can actually trust. When I make an enormous, life changing decision, I don't accept Mr. Empty suit's word as the gospel.

[scorch-]

But 99% of the population has no clue when you start talking about securities, let alone derivatives.

Nor does that matter.

The bad loans had already been made. Default was coming whether the banks packaged them up or not.

These people invested their livelihoods in a permanently long position on the housing market without knowing they were doing it.

Hmmm. Do you see the problem here?

Do you think it is a problem that most of the population does not know how the bernoulli effect works and yet they fly on airplanes? People place their livelihoods in the hands of professionals everyday when they drive a car, fly on a plane, sit in an office building, etc. They don't always know who they are trusting when they do it, or even necessarily realize they are doing it. Why are you expecting them to be responsible for getting involved in complicated loan schemes on the advice of greedy, irresponsible financial advisers or loan agents?

[mg_]

[
Nor does that matter.

The bad loans had already been made. Default was coming whether the banks packaged them up or not.

Defaults on the loans didn't cause the collapse of the economy. These loans made up less than 10% of the residential housing market. Many of the people were forced into foreclosure AFTER these institutions were trying to dump their junk bonds. You keep up with this diatribe that people are equally at fault, and it's bullshit.

You can't even point to a concrete to assign blame on. You just assume because people had a mortgage that was unaffordable at a certain point that it was always that way, never mind if they were laid off during the subsequent tumultuous period.

In fact, I bet you'd be able to seriously point to any concrete data that suggests enough of these went bad. What we do have evidence of is Goldman Sachs baiting Lehman Brothers into an overleveraging of assets and then dumping into the market the shares it had to immediately devalue the Lehman Brothers and Bear Stearns interests. Ultimately, this is where we can all track it back to.

Hmmm. Do you see the problem here?

"when shoe shine boys are giving stock tips, it's time to get out."

Except that wasn't what happened?

There's an element of trust. As an external auditor, I believe highly in objectivity and integrity. However, there's something to be said for not asking the used car salesman if today is a good day to buy a used car. Of course financial advisors can generate fees and commissions based on how they direct clients. The clients should understand the world in which they're operating in and not be lead like sheep over the edge of a cliff. Get a second opinion. Do some independent research. Find someone you can actually trust. When I make an enormous, life changing decision, I don't accept Mr. Empty suit's word as the gospel.

So, what are people supposed to do? You'd be damning them for trying to invest on their own without any advice. It's shit.

No one said people were ignorant of the risks they could lose their savings. But it went far beyond this.

You keep obfuscating stupid obvious tomes with the reality which it was non-applicable. How dare someone who uses their 401k or Pension Scheme, which they really have almost no say in how it is invested, completely wiped out. Or better yet, the capital lenders to their company's business quit investing and their employer's business suddenly cannot get operating capital to keep moving.

Like, you've unfairly boiled it down. People went under on their house because their job dried up because investment banks were reckless in the markets they created.

[scorch-]

When I make an enormous, life changing decision, I don't accept Mr. Empty suit's word as the gospel.

Have you ever checked an airplane engine to make sure it was properly connected, operating at the right temperature with fuel lines at the right pressure before stepping on an airplane? Flying is a potentially life-changing decision and you're putting your life in the hands of someone you don't even know or have any idea whether they were even awake this morning while testing the vehicle you're flying in.

People have a little more power over the information they can get when it comes to mortgaging their property. But, for a lot of people, they just don't have the knowledge to assess someone's advice and so they decide to accept it at face value. After all, what sense does it make for a bank to engage in a loan contract that they anticipate will lead to a default? It's not the same as a used car salesman selling you a lemon because you don't have a reason to believe that the other party would want to invest in a loan that they predict will end in default. When I think "Buyer beware" in terms of a house purchase, I tend to think that applies to being aware of the seller's intentions, not really the person who loans you money.

[BrentMusburger]

When I make an enormous, life changing decision, I don't accept Mr. Empty suit's word as the gospel.

Have you ever checked an airplane engine to make sure it was properly connected, operating at the right temperature with fuel lines at the right pressure before stepping on an airplane? Flying is a potentially life-changing decision and you're putting your life in the hands of someone you don't even know or have any idea whether they were even awake this morning while testing the vehicle you're flying in.

People have a little more power over the information they can get when it comes to mortgaging their property. But, for a lot of people, they just don't have the knowledge to assess someone's advice and so they decide to accept it at face value. After all, what sense does it make for a bank to engage in a loan contract that they anticipate will lead to a default? It's not the same as a used car salesman selling you a lemon because you don't have a reason to believe that the other party would want to invest in a loan that they predict will end in default. When I think "Buyer beware" in terms of a house purchase, I tend to think that applies to being aware of the seller's intentions, not really the person who loans you money.

I'm just going to cave in to you and Mitch and say that perhaps my views are far too harsh. It's hard for me to step outside my own shoes and see what the normal person sees looking at these situations. I spent years in business school and practice as a professional in the feild. Please don't take this as me being arrogant. It's simply that the way I see things, the questions I would ask, the mistakes I see, may not be what someone else is even aware exists as an issue. Perhaps I significantly over estimate what the average person doesn't know---or isn't even aware that they don't know.

[kirk]

I'm just going to cave in to you and Mitch and say that perhaps my views are far too harsh. It's hard for me to step outside my own shoes and see what the normal person sees looking at these situations. I spent years in business school and practice as a professional in the feild. Please don't take this as me being arrogant. It's simply that the way I see things, the questions I would ask, the mistakes I see, may not be what someone else is even aware exists as an issue. Perhaps I significantly over estimate what the average person doesn't know---or isn't even aware that they don't know.

What a stand-up post.

Reps brah.