Wall Street Coup | 19 comments (19 topical, 0 hidden)
Ya Great, for Goldman Sachs (none / 0)
You have to look at how all the pieces fit together. Not to be smart, but you do know what a margin call is, right?

When a 100,000 commercial property owners have to start dumping properties into the real estate market at the same time, while rates were high and values were already declining it creates a massive downward spiral on property values. Fire sales, and that is if you can actually sell the property.

At the same time this was going on, you had more or less the same process happening in stocks, corporate bonds and CDO's due to short selling, all triggering CDS payouts to the very people doing the short selling and creating the margin calls. Not to mention making money on the shorts. Oil as well. Behr, Merrill Lynch and Lehman were all neck deep in oil at $140 a barrel, even Buffet.

Not only did the developers and speculators get caught with their pants down in real-estate, they lost everything they had in the stock market as well. The fire sales happened so fast that people instantly started walking away from their home, particularly if they got trapped into having 2. Our builder sold the model with all the upgrades and fully furnished for 100k less than the base price of the house the year before, he needed the money.

So to answer your question. No it's not a good thing to force people to sell at the bottoma, unless your Goldman Sachs.

by sisco66 on 02/10/2010 10:36:49 PM EST

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one more step (none / 0)
Many of the people who purchased with ARMs or sub-primes but could have probably afforded a 30 year fixed were unable to refinance without paying PMi insurnce once the rate expired or reset, due to the loss of equity. PMI on a 400k house is probably close to an extra $400 a month. That's a lot of cash when gas is $4 a gallon and all your credit card rates are 30%.

It was an across the board assult on the a American people, a true act of terrorism. And it was done and continues to be done to us by our government on behalf of  Goldman Sachs, JP Morgan, Citi and BOA.

Note: The bankruptcy rule changes only applied to people, not corps. It would have been very easy for the OTS (office of thrift supervision) to shut down AIG's thirft or bankrupt it without killing the insurance company, as Cenk suggested.

by sisco66 on 02/10/2010 10:50:31 PM EST

[ Parent ]

Wall Street Coup | 19 comments (19 topical, 0 hidden)