Since wall street got "bailed out", is it any surprise that DIDN'T LEARN ANYTHING AT ALL?
Remember how we were experiencing the greatest financial collapse since the great depression?? Well the president apparently thinks healthcare "reform" is more important than addressing the fundamental flaws in the American financial system. This would explain why he has done next to nothing for the last 8 months to address these problems.
What do you think?? Did Obama get his priorities out of order??
And even as the economy begins a "return to normalcy," Obama said, "normalcy cannot lead to complacency."
Nevertheless, Obama said, "Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they are choosing to ignore them."
His tough message warned the financial community to "hear my words: We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses."
Wall Street may have discovered a way out from under the bad debt and risky mortgages that have clogged the financial markets. The would-be solution probably sounds familiar: It's a lot like what got banks in trouble in the first place.
In recent months investment banks have been repackaging old mortgage securities and offering to sell them as new products, a plan that's nearly identical to the complicated investment packages at the heart of the market's collapse.
"There is a little bit of deja vu in this," said Arizona State University economics professor Herbert Kaufman.
But Kaufman said the strategy could help solve one of the lingering problems of the financial meltdown: What to do about hundreds of billions of dollars in mortgages that are still choking the system and making bankers reluctant to make new loans.
These are holdovers from the housing bubble, when home prices soared, banks bought risky mortgages, bundled them with solid mortgages and sold them all as top-rated bonds. With investors eager to buy these bonds, lenders came up with increasingly risky mortgages, sometimes for people who could not afford them. It didn't matter because, in the end, the bonds would all get AAA ratings............"There's no voodoo going on here. It's just math," said Sue Allon, chief executive of Allonhill, which helps investors analyze such hard-to-price investments.
Financial gurus call it a "resecuritization of real estate mortgage investment conduits." On Wall Street, it goes by the acronym Re-Remic (it rhymes with epidemic).
"It actually makes a lot of fundamental sense," said Brian Bowes, the head of mortgage trading at Hexagon Securities in New York. "It's taking a bond that doesn't necessarily have a natural buyer and creating two bonds that might have a natural buyer for each."
The risk is, if the housing market slips even more, even the AAA-rated investments may not prove safe. The deal also relies on the rating agencies, which misread the risk at the heart of the subprime mortgage crisis, to get it right.
And then there's the uncertainty about the value of the underlying investments, which FBR Capital Markets analyst Gabe Poggi called "totally combustible." Poggi likes the deals because they appear to have breathed some life into the market, but he said it only works if everyone knows exactly what they're buying.
The Obama administration is also working on a plan to get banks buying and selling risky bonds. But the public-private partnership announced this spring is still in the works and has yet to help investors figure out what those bonds are worth. By creating Re-Remics, banks can help start the process themselves.
- Anonymous1 decade agoFavorite Answer
MR. ROTHSCHILD'S ENERGY DISCOVERY
What Mr. Rothschild had discovered was the basic principle of power, influence, and control over people as applied to economics. That principle is "when you assume the appearance of power, people soon give it to you."
Mr. Rothschild had discovered that currency or deposit loan accounts had the required appearance of power that could be used to induce people (inductance, with people corresponding to a magnetic field) into surrendering their real wealth in exchange for a promise of greater wealth (instead of real compensation). They would put up real collateral in exchange for a loan of promissory notes. Mr. Rothschild found that he could issue more notes than he had backing for, so long as he had someone's stock of gold as a persuader to show his customers.
Mr. Rothschild loaned his promissory notes to individual and to governments. These would create overconfidence. Then he would make money scarce, tighten control of the system, and collect the collateral through the obligation of contracts. The cycle was then repeated. These pressures could be used to ignite a war. Then he would control the availability of currency to determine who would win the war. That government which agreed to give him control of its economic system got his support.
Collection of debts was guaranteed by economic aid to the enemy of the debtor. The profit derived from this economic methodology mad Mr. Rothschild all the more able to expand his wealth. He found that the public greed would allow currency to be printed by government order beyond the limits (inflation) of backing in precious metal or the production of goods and services.
- 1 decade ago
Most banks are still offering 97% home financing which is the crux of what got us into this mess in the first place. As far as I can see, no lessons have been learned.
- Anonymous1 decade ago
They learned that we the people will pay their tab. Obama doesn't seem to want to do anything to really solve the problem.