Robert Reich: “The Big Short” and Bernie’s Plan to Bust Up Wall Street

[eridani]

http://www.nationofchange.org/news/2016/01/12/the-big-short-and-bernies-plan-to-bust-up-wall-street/

The movie gets the story essentially right: Traders on the Street pushed highly-risky mortgage loans, bundled them together into investments that hid the risks, got the major credit-rating agencies to give the bundles Triple-A ratings, and then sold them to unwary investors. It was a fraudulent Ponzi scheme that had to end badly – and it did.

Yet since then, Wall Street and its hired guns (including most current Republican candidates for president) have tried to rewrite this history.

They want us to believe the banks and investment houses were innocent victims of misguided government policies that gave mortgages to poor people who shouldn’t have got them.

That’s pure baloney. The boom in subprime mortgages was concentrated in the private market, not in government. Wall Street itself created the risky mortgage market. It sliced and diced junk mortgages into bundles that hid how bad they were. And it invented the derivatives and CDOs that financed them

The fact is, more than 84 percent of the subprime mortgages in 2006 were issued by private institutions, and nearly 83 percent of the subprime loans that went to low- and moderate-income borrowers that year.

Why has Wall Street been pushing its lie, blaming the government for what happened? And why has the Street (along with its right-wing apologists, and its outlets such as Rupert Murdoch’s Wall Street Journal) so viciously attacked the movie “The Big Short?”

So we won’t demand tougher laws to prevent another crisis followed by another “too-big-to-fail” bailout.

[Enthusiast]

1. Kicked and recommended!

[mountain grammy]

2. K&R

[DhhD]

3. Wall Street needs a Bern backing. no text

[abelenkpe]

4. K&R

[Divernan]

5. BigBanks poised to do it again;hence huge donations to HRC

The movie is powerful. Helps to google/read up on collateralized debt obligations (CDOs) and "bespoke tranche opportunities" beforehand.

Three of the "too big to fail banks" are bigger than ever and pushing a newly relabeled and slightly modified form of the lethal CDOs.

Goldman Sachs Hawks CDOs Tainted by Credit Crisis, Under New Name

I saw the film, The Big Short, this weekend - very powerful and disturbing, ending with the warning that the big banks are bigger than ever and Wall Street has relabeled CDOs in anticipation of pulling the same financial rape of investors yet again.

(The previews before the feature film included one for 13 Hours: The Secret Soldiers of Benghazi - that is one of 3 Benghazi films to be released in the coming year. Either one of these films will castrate the Clinton campaign. But back-to-back? And both in good time for the early primaries.)

So stay the fuck away from any "Bespoke Tranche Opportunity" which is a slightly tweaked CDO. A piece of shit by another name will smell as putrid. No wonder Wall Street/Big Banking are cramming millions into Hillary's bank accounts, whether via her campaign, her private speaking fees or "donations" to the Clinton Family Foundation. They have BIG plans for a Hillary Clinton administration. Make that "had" big plans, because I am increasingly confident that Hillary's nomination is bernt-to-a-crisp Toast!

You really need to see The Big Short to get an understanding of how cleverly these CDOs ripped off the American economy, destroying pension plans, homeowners with mortgages, etc. And GoldmanSachs et al are ready to do it again. Ya know - Goldman Sachs of which Hillary's hedge fund owning son-in-law
is a proud alumni. http://www.bloomberg.com/news/articles/2011-11-29/former-goldman-traders-grau-mallon-are-said-to-start-fund-with-mezvinsky

http://www.bloomberg.com/news/articl...under-new-name

The 2008 financial crisis gave a few credit products a bad reputation.
Like collateralized debt obligations, known as CDOs. Or credit-default swaps. But now, a marriage of the two terms (using leverage, of course) is making a comeback -- it’s just being called something else.

Goldman Sachs Group Inc. is joining other banks in peddling something they’re referring to as a “bespoke tranche opportunity.” That’s essentially a CDO backed by single-name credit-default swaps, customized based on investors’ wishes. The pools of derivatives are cut into varying slices of risk that are sold to investors such as hedge funds.

The derivatives are similar to a product that became popular during the last credit boom and exacerbated losses when markets seized up. Demand for this sort of exotica is returning now and there’s no real surprise why. Everyone is searching for yield after more than six years of near-zero interest rates from the Federal Reserve, not to mention stimulus efforts by central banks in Japan and Europe.

The transactions offer the potential for higher returns than buying a typical corporate bond, especially if an investor focuses on first-loss slices or uses borrowed money, or both. Obviously, the downside may be much greater, too.

[Roland99]

6. using algorithms to make money off of moving money around. not actually producing anything.

yeah...sound advice.

[Duppers]

7. Recommended.

This is a handy counter to those ignorant FoxSnooze-watching distant family members.

[Divernan]

8. Closing scene from "On the Beach":Banner saying "There is Still Time, Brother."

Human/animal life on the planet has been slowly destroyed by drifting clouds of nuclear fallout from an all out nuclear war. You see a deserted city, with the banner floating in the breeze.

Well, The Big Short ends with the warning that the too big to fail banks are bigger than ever and are starting the same lethal scam again with the poshly labeled, slightly tweaked version of CDOs. These are called "Bespoke Tranche Opportunities" (See post 5 in this thread for more detail).

Morgan Stanley plans on making a killing from these.

But hey! if you really, really believe in Hillary - then you should just dash on over to her son-in-law's hedge fund and invest what little life savings you may have hung onto.

For the rest of, there IS still time, brothers and sisters. So keep on doing all you do to support Bernie Sanders and get him elected President!

[daleanime]

9. K&R.....

[CanonRay]

10. K&R

[Dustlawyer]

11. Bernie also has the plan to attack the "ROOT PROBLEM," campaign finance that allows

Wall Street and other big companies/industries to buy off our politicians. By pushing for Publicly Funded Elections! This is the key to turning things around!

[Festivito]

12. Lik'n it. But, wish he'd take it further.

We went from trade surpluses under Clinton to trade deficit under Bush.

This gave China our cash paper, so they invested cash paper in our housing market. This gave the banks cash paper. Being cash paper rich the banks offered incentives of interest in cash up front if you bought their CDO/CDM and CDS papers. (Probably putting them into the back end of unsuspecting retirement plans that have yet to try and cash them in.)

Bush SEC decided to allow banks to extend the 10% rule in APRIL 2004 (a few months before that Bush second SELECTION) -- but, it was NOT REPORTED by m$m until OCTOBER 2008 (FOUR YEARS LATER) while everything was tanking.

Bu, bu, but the economy seemed so nice -- while we were borrowing our way to oblivion!

China figured it out, so they traded their CDSs for our a piece of our national debt. (That's how that happened under Bush. But, IOKIYAR.)

FYI:
That 10% rule was stretched by CDOs being called as good as cash, so if you had 1 million dollars you could lend 10 million. Make 10 million in CDOs and call it cash, you can lend 100 million. Put that 100 million into CDOs and you can lend 1 billion. No wonder that the big economy measuring numbers looked so good.

Trouble is: There was only the one million dollars as cash for cash flow and we TAXPAYERS had to infuse OUR TAX DOLLARS CASH to keep the banks from not being able to cash a check at the teller window.

Can you tell that I'm angry?

[eridani]

13. Excellent points. Thanks n/t