The Big Takeover -The global economic crisis isn't about money - it's about power

W4rl0ck · Mar 22, 2009

http://www.rollingstone.com/politics/story/26793903/the_big_takeover/

ByLoSellHi · Mar 22, 2009

Great article.

Paulson is such an enormous POS. He should be hung.

Cdntrader · Mar 22, 2009

Quote from W4rl0ck:

http://www.rollingstone.com/politics/story/26793903/the_big_takeover/

garbage.

stevegee58 · Mar 22, 2009

Quote from Cdntrader:

garbage.

I was gonna say. Sad times when you're getting financial/economic news from a hippie rag.

tmarket · Mar 22, 2009

Seems like a well written piece:

the Patient Zero of the global economic meltdown â was one Joseph Cassano, the head of a tiny, 400-person unit within the company called AIG Financial Products, or AIGFP. Cassano, a pudgy, balding Brooklyn College grad with beady eyes and way too much forehead, cut his teeth in the Eighties working for Mike Milken, the granddaddy of modern Wall Street debt alchemists. Milken, who pioneered the creative use of junk bonds, relied on messianic genius and a whole array of insider schemes to evade detection while wreaking financial disaster. Cassano, by contrast, was just a greedy little turd with a knack for selective accounting who ran his scam right out in the open, thanks to Washington's deregulation of the Wall Street casino. "It's all about the regulatory environment," says a government source involved with the AIG bailout. "These guys look for holes in the system, for ways they can do trades without government interference. Whatever is unregulated, all the action is going to pile into that."
The mess Cassano created had its roots in an investment boom fueled in part by a relatively new type of financial instrument called a collateralized-debt obligation. A CDO is like a box full of diced-up assets. They can be anything: mortgages, corporate loans, aircraft loans, credit-card loans, even other CDOs. So as X mortgage holder pays his bill, and Y corporate debtor pays his bill, and Z credit-card debtor pays his bill, money flows into the box.

The key idea behind a CDO is that there will always be at least some money in the box, regardless of how dicey the individual assets inside it are. No matter how you look at a single unemployed ex-con trying to pay the note on a six-bedroom house, he looks like a bad investment. But dump his loan in a box with a smorgasbord of auto loans, credit-card debt, corporate bonds and other crap, and you can be reasonably sure that somebody is going to pay up. Say $100 is supposed to come into the box every month. Even in an apocalypse, when $90 in payments might default, you'll still get $10. What the inventors of the CDO did is divide up the box into groups of investors and put that $10 into its own level, or "tranche." They then convinced ratings agencies like Moody's and S&P to give that top tranche the highest AAA rating â meaning it has close to zero credit risk.

W4rl0ck · Mar 22, 2009

He had some stuff in there I hadn't heard before.

So far Michael Lewis and this guy, MATT TAIBBI, have the most interesting articles I've seen on the CDS scam.

Interesting that they're both slightly outside the MSM.

Quote from tmarket:

Seems like a well written piece:

nkhoi · Mar 23, 2009

exchange between Rep. Alan Grayson of Florida and Federal Reserve vice chairman Donald Kohn

when Grayson asked if the purchased assets were "marked to market"

Kohn answered, mysteriously, "The ones that have market values are marked to market."

"Well, how much of them don't have market values?" asked Grayson. "How much of them are worthless?"

"None are worthless," Kohn snapped.

"Then why don't you mark them to market?" Grayson demanded.

"Well," Kohn sighed, "we are marking the ones to market that have market values."

which one? we will never know!

texrex2002 · Mar 23, 2009

Quote from Z.O.G.:

LOL

Well, if you're stupid enough to allow your central bank to be run by people with names like "Donald Kohn", then you pretty much get what you deserve.

So are you like the designated local anti-semite or someting?

Just curious.

TraderZones · Mar 23, 2009

Quote from texrex2002:

So are you like the designated local anti-semite or someting?

Just curious.

No, he is just jealous. No one in his family ever got beyond third grade...

TorontoTrader2 · Mar 23, 2009

Quote from texrex2002:

So are you like the designated local anti-semite or someting?

Just curious.

Why don't we have the freedom to criticize the israelis who have hijacked the financial system and destroyed it? Keep clinging to the myth that these powerbroker elites actually care about Joe 6-pack or Sally Lunchbucket.