see while your point is true about the home loans themselves, the vast majority of the problem came from the CDS (credit default swaps) derivitives sold on the top of those. when you look at where the money that got lost actually went, it’s either less than or not much higher than about 1% of the overall loses were on those mortages themselves. the losses were on the CDS placed on the mortage (over 2x the value of the mortgage itself) and the CDS placed on the first CDS (this one was double the value of the first CDS or 4x the value of the mortgage) and the CDS placed on the CDS of the CDS (this one worth once again 2x the amount of the CDS below it or 8x the value of the mortgage). and when you take that into account the forced loans weren’t really what was wrong, what was wrong is the insane gambling culture that we allow on wallstreet. where firms can place bets on bets other firms have taken regardless of if they have a stake in the initial company/mortgage at all. it would be like me taking out fire insurance on your home, obviously that’s not allowed because i would have a vested interest in seeing your home burn to the ground.
so yeah i strongly disagree that the gov’t wronged the banks /more/ than the banks wronged the american people. i do think the gov’t wronged the banks don’t misunderstand that, i just think the banks wronged us WAY more. i mean to put it into perspective, goldmann sachs who put together these subprime mortgages and derivitives KNEW how terrible the products that they put together were, we know that because they IMMEDIATELY placed bets AGAINST the products that they had just sold. and then we get to the real problem, which is that the incentives are wallstreet are FUCKED. they take no losses if they place a bet and it’s wrong, and insane profits if they place a bet and it’s right.
it would be like me going to a casino with 300$ of your money, where each time i make a bet i make 5$ regardless of the outcome of that bet (let’s say the casino pays me). with that structure and none of my own money on the line do you think i have much of a reason to care about which bets i’m making and only make good bets? or am i better off just running to random tables and making as many bets as i possibly can as quickly as possible?
it’s all about the wrong incentives, unfortunately that’s what we have.
i’m not really hating on rich kids, just pointing out that the upwards mobility in the country has gone down, and we need to fix that side of the coin. leave the rich kids alone and work to make it a reality that if you work hard enough in your life your gonna move up in life. as opposed to “you play the cards you are dealt, then you die, the end”.
I don’t really want to get into a huge thing here, but the banks weren’t looking to screw people. The government was encouraging banks to hand out bad loans by assuring them that they’d be purchased. And that was only possible because the government was using Mae and Mac as a tool for politics, rather than actually letting them be a business.
Yeah, but the way to fix that isn’t making it so if you do rise to the top, you immediately get slapped down. Unless they won the lottery (literally), somebody earned that money.
You’re fucking right I have class envy. I bust my ass for almost nothing. Paris Hilton is set for life and all she does is be a slut.
Also, Saying that without wealth, nobody would strive for anything, is like saying if tournaments didn’t offer money; nobody would try to be the best at Street Fighter (Protip: Japanese tournaments don’t offer prize money.)
i agree with the point on rich kids and i’m not at all advocating smacking them down for their success. just less rewarding the allready rich for failures, like why are the ceo’s of giant banks currently making large bonuses? last i checked they failed big-time.
anyways i agree with you that fannie/fredie were used as political tools and unable to run a proper business, but i still have to re-assert that the sub-prime crises would have been a TINY blip on the radar when it crashed as opposed to the giant calamity that it was if we had simply not allowed their casino culture of placing bets on the financial products in the first place. why do they need to be able to hedge 30+ dollars in bets for every 1 dollar they have in the bank?? and why do they need to be allowed to place bets on mortgages that they have no vested interest in?
Our gross domestic product is different from our spending on education? Glory me, I had no idea. Wait, do you think mentioning a 285 million population difference related to THE TAX IN QUESTION could be related to the discussion of distributing educational funds? Way to go deep.
Maybe it wasn’t the CEO’s fault? Maybe the CEO joined when the bank was already beyond saving? There are plenty of factors that make it so the CEO could deserve his bonus, in spite of all this. And if he’s a good CEO (or any other executive), if he doesn’t get paid by his current company, there’re plenty of other companies that are willing to pay out the money (and won’t get hated on by people who don’t know what they’re talking about).
Debt:Equity ratios are misleading. People are quick to go “blah blah blah 12-to-1” but different companies can last indefinitely with more radical numbers than that.
The point is, though, that every business is different and every move they make has a purpose. Very rarely is that purpose pure greed.
some people are born lucky, some people aren’t.
next you’ll be whining about someone who was born taller, or better looking.
if you are getting paid garbage, it’s usually your fault.
my ideal world isn’t one where everyone shares everything. my ideal world is a world where honest hard working people can get ahead and support their families and enjoy life, politicians are scrupulous and fair, and lazy/dishonest people get shit on the way they deserve.
that’s obviously not going to happen, but it would be great.
Also, you made decisions in your life that landed you in your situation. It wasn’t like you were destined to be poor. Also, even if buy your numbers that you pulled straight out of your ass. 85% wealth is luck, ok. However, we still don’t have a right to take that from someone.
And…your example is pretty irrelevant. That is a hobby we are talking about. Plus, the japanese are known to juggle their business life and SF career at the same time with little room for rest. They just take something from the game, which is different from how we appreciate them. They have more pride in winning because it’s about notoriety not money.