Some one has to start it, Americas default.

[powerabout]

they balance the books by valuing assets they have loaned money for..thats where it gets complex
now when they loan against those over inflated values ( as they can up to the government rules) they have loaned money out greater then their asset backing which is why they need a massive injection of cash when the market revalues those assets, re mortgaging is a gamble your house is now worth more than we valued it at loan time)
If you got down to actually shipping cash between banks this would not happen but all the debt created is netted by each bank every night so although they say they might not owe each other a masive amount (netted) they will if one of the banks loan books goes wabbly so the first bank says send us the cash now as we dont trust you
( counter party credit risk) and the other bank explodes.
SO the bank have lost more money than they ever had so you could say they have created money
Valuing financial intrument is in no way an absolute game hence lots of fudge lies and years later large explosions
Out side of the US the retail banks that have got into merchant bankling ( what the f+ck does a retail banker know) have by far and away blown the most amount of cash BUT they have had the retail deposits to cover their loses in the short term as we always said in the merchant banking game the retails banks have more money to waste then we do.
(PS Long sailing day)

 

[Frosty]

Obamas quite!!! he had enough to say on the riots of Syria and Libya, nothing to say on the riots of wall street and beatings of inocent by standers,-- ie one poor guy stepped off the side walk and got the **** kicked out of him . 12 officers have not reported to work in protest of bad policing.

Gonna get out the water cannons Obama? Youve about as much chance of being elected president as I have.

Oh gone all quiet now havnt we!!

 

[Frosty]

Perhaps 'making money' needs interpretation.

I would be horrified if banks considered a mortgage as an asset. If it cant be cashed (and it cant) then it isnt an asset.

Even if it were in default the property is sold and money is retuned to the owner,
If you hire a car you dont consider it to be an asset and would not be taken if the balifs came.

 

[troy2000]

Obamas quite!!! he had enough to say on the riots of Syria and Libya, nothing to say on the riots of wall street and beatings of inocent by standers,-- ie one poor guy stepped off the side walk and got the **** kicked out of him . 12 officers have not reported to work in protest of bad policing.

Gonna get out the water cannons Obama? Youve about as much chance of being elected president as I have.

Oh gone all quiet now havnt we!!

I question your credentials and track record as a political analyst, when it comes to the US -- particularly since you refer to the Occupy Wall Street protests as 'riots.' Who have they beaten, what buildings have they torched, how many cars have they turned upside down?

The average basketball or football championship parade gets rowdier than this bunch....

I think Obama's chances of being reelected are better than the chances of anyone taking you seriously when you start commenting on anything that's happening in this country. Maybe you should stick to critiquing Thai cuisine, or something else you might actually know a little about.

 

[troy2000]

Perhaps 'making money' needs interpretation.

I would be horrified if banks considered a mortgage as an asset. If it cant be cashed (and it cant) then it isnt an asset.

Even if it were in default the property is sold and money is retuned to the owner,
If you hire a car you dont consider it to be an asset and would not be taken if the balifs came.

If a property is in default and gets foreclosed on, the bank has first dibs on the money. The homeowner is out of luck, unless there's something left over after the bank's claim is satisfied. Which rarely happens; I'd hazard a guess that most homeowners who get foreclosed on are upside down to begin with: i.e., they owe more than the property is worth on the open market.

A mortgage is definitely an asset, at least in theory: under normal conditions it'll either get paid off, or foreclosed on. But if the housing market is tanking, a mortgage can become a 'toxic' asset:

If John Doe buys a house and takes out a $400,000 mortgage loan with a 5% interest rate through Bank A, the bank now holds an asset - a mortgage-backed security. Bank A is now entitled to sell the asset to another party (Bank B). Bank B, now the owner of an income-producing asset, is entitled to the 5% mortgage interest paid by John. As long as house prices go up and John continues to pay his mortgage, the asset is a good one.

If, however, John defaults on his mortgage, the owner of the mortgage (whether Bank A or Bank B) will no longer receive the payments to which it is entitled. Normally, the house would then be sold. But if the house price has declined in value, only a portion of the money can be regained. As a result, the securities based on this mortgage become unsellable, as no other party would pay for an asset that is guaranteed to lose money.

In this example, the mortgage-backed security becomes a toxic asset.

http://www.investopedia.com/terms/t/toxic-assets.asp#axzz1b1Ave7NC

 

[Frosty]

I question your credentials and track record as a political analyst, when it comes to the US -- particularly since you refer to the Occupy Wall Street protests as 'riots.' Who have they beaten, what buildings have they torched, how many cars have they turned upside down?

The average basketball or football championship parade gets rowdier than this bunch....

I think Obama's chances of being reelected are better than the chances of anyone taking you seriously when you start commenting on anything that's happening in this country. Maybe you should stick to critiquing Thai cuisine, or something else you might actually know a little about.

Morning troy,--Sunday still for you is it? --nothing to do eh?

Just a small teeny weeny point ,--what is a riot then , to me it is mayhem --to run amok, to be unlawfull or social misalignment no?

So becaue youve seen worse its nothing to worry about!! well Troy its people finally getting off thier arse and doing something, instead of poo pooing it why dony you join them or do you like being a debt country. But never mind other people are doing it so you dont need to.
Chuch later?

If you vote again for a man thats more concerned about being in front of a Tv camera and looking cool when all around him runs amok then you deserve it.

So when he gets in again as you think he will , you will have no right to complain next term at all, because he is perfect in your eyes.

Thai cuisine, well I could say a bit but you woud'nt undertsand the words.

 

[michael pierzga]

Cleaning a banks books of liabilities by using mortgage backed securities to transfer these liabilities to investors was the cause of this crisis. The banks had no motivation to control risk, only the motivation to sell as many mortgages as possible. Whats frustrating about this scenario is that economists were warning of this danger long before is blew up.

As for the US protests being riots ? I read nothing of this. I do think the message of the protest is much to vague..ITS BROKEN, FIX IT. The protesters need to sharpen their message and go after one issue at a time is they expect correct policy response by their leaders.

 

[troy2000]

Morning troy,--Sunday still for you is it? --nothing to do eh?

Just a small teeny weeny point ,--what is a riot then , to me it is mayhem --to run amok, to be unlawfull or social misalignment no?

So becaue youve seen worse its nothing to worry about!! well Troy its people finally getting off thier arse and doing something, instead of poo pooing it why dony you join them or do you like being a debt country. But never mind other people are doing it so you dont need to.
Chuch later?

If you vote again for a man thats more concerned about being in front of a Tv camera and looking cool when all around him runs amok then you deserve it.

So when he gets in again as you think he will , you will have no right to complain next term at all, because he is perfect in your eyes.

Thai cuisine, well I could say a bit but you woud'nt undertsand the words.

I repeat: there's a difference between a demonstration or protest and a riot. If you don't understand the difference, I hope no one ever hires you for crowd control.

I disagree with your assessment of Obama; I think you're just talking to hear your head rattle. On what do you base your assertion that he's more interested in looking cool than he is in doing his job? Seems to me he's been as busy as any other President I've watched, and there's been a round dozen of them in my lifetime.

Maybe you're just jealous because he's better looking than you, or a better dancer?

 

[troy2000]

Cleaning a banks books of liabilities by using mortgage backed securities to transfer these liabilities to investors was the cause of this crisis. The banks had no motivation to control risk, only the motivation to sell as many mortgages as possible. Whats frustrating about this scenario is that economists were warning of this danger long before is blew up.

I agree. And in my opinion, the rating companies that played along by slapping inflated ratings on sub-prime garbage should be held criminally liable for fraud.

As for the US protests being riots ? I read nothing of this. I do think the message of the protest is much to vague..ITS BROKEN, FIX IT. The protesters need to sharpen their message and go after one issue at a time is they expect correct policy response by their leaders.

But they don't really have a message; they're just venting the general frustration the country is feeling.

To go beyond that they'll have to start organizing, and it strikes me as basically an anarchistic movement. I'm surprised they get it together enough to show up in the same place at the same time....

 

[michael pierzga]

The mortgage backed security is a good product.. it lowered the risk premium and thus enabled banks to lend a lower cost... good for consumers. BUT..as with anything GOOD it carried unintended consequences.

You would think that the best policy response by government would be to expand the bureaucracy which scrutinizes the financial industry so that in future ...whatever new innovative financial product designed to bring efficiencies , will carry correct oversight

 

[Frosty]

I disagree with your assessment of Obama; I think you're just talking to hear your head rattle. On what do you base your assertion that he's more interested in looking cool than he is in doing his job? Seems to me he's been as busy as any other

Difficult to put my finger on, If I had have known that I was going to be asked this question I would have wrote it down, however without dates etc I have felt that he busys himself with foriegn afairs too much, talking about things that have hardly anything to do with him yet America is debt ridden and he has little time to lecture Libyia or Syria.

He was accused of being business unfriendly or un sympothetic but I feel that this is just his way --he oozes a kind of un panic which can be construed as 'I dont care Im too cool to panik'

He is not genuine , he not a guys guy , Hes distant, Hes put himself on a pedistal, he --hes -- I cant put my finger on it.

 

[powerabout]

The mortgage backed security is a good product.. it lowered the risk premium and thus enabled banks to lend a lower cost... good for consumers. BUT..as with anything GOOD it carried unintended consequences.

You would think that the best policy response by government would be to expand the bureaucracy which scrutinizes the financial industry so that in future ...whatever new innovative financial product designed to bring efficiencies , will carry correct oversight

I dont think there was any unintended consequence, everyone in the know knew what was going to happen. Rich got richer, poor got poorer
Those in the know knew as soon as the war started several of the major players would start printing money like crazy ( always happend for over 300 years) this causes massive asset inflation so we all went out and borrowed to the hilt and as the asset bubble grew you just got out before the explosion.
Just go and look at UK and US polititians and how many and what size mortgages they had during the 2 wars.

 

[michael pierzga]

Sure, but as the bubble was forming, and everyone saw it inflating , perhaps a wothwhile policy response would have been make it more expensive to " SPECULATE" in the housing market. A hefty tax on short term sales. The "financial product" undoubtably encouraged speculators , but it also Lowered borrowing cost and benifited many ,many , financialy sound home buyers.

 

[powerabout]

Sure, but as the bubble was forming, and everyone saw it inflating , perhaps a wothwhile policy response would have been make it more expensive to " SPECULATE" in the housing market. A hefty tax on short term sales. The "financial product" undoubtably encouraged speculators , but it also Lowered borrowing cost and benifited many ,many , financialy sound home buyers.

Not sure, they got cheap loans on massively over priced homes then to fix the issues the governments need to raise interest rates ( financially sound but political expedience says they dont so they get into bigger problems later)
and then many people cant pay the higher rate ( that was so easy to get) and with falling property prices ( back to reality)they hand over the keys with debt.
Its all happend before.
The cynical banker says thanks to government policy, I made a fortune on speculation, got huge bonus for all the loans and then selling the CDA's and moved onto my yacht that I bought after the crash because I was cashed up ( had to leave anyway to avoid Capital Gains tax)and go sailing for 5 or more years whilst the rest live in hell for 5 or more years which I had planned the day Tony meglamaniac Blair invented weapons of mass distraction.

 

[hoytedow]

You must put the blame where it belongs; on crooked congressmen who stood to profit from their manipulation of the system. Dodd, Frank and Obama to name a few.