Where did the money go?

[spinbaby]

Homeowners don't have the money--they're being foreclosed on.

Mortgage companies don't have it--they're folding up.

The companies that bought the mortgages and repackaged them into weird financial instruments don't have it--they're being bailed out by the government.

The government doesn't have it--they had to bail out the companies that bought the mortgages.

Who made money on this deal? Where did it go?

I don't get it.

[Joanne98]

1. I think the shorts got it!

[remember2000forever]

2. We have to protect the "Rigged" stock market and it's investors!

[Phoebe Loosinhouse]

3. The CEO's and the upper corporate tier got a big chunk.

As did the traders with their gigantic bonuses. That wasn't pretend money, that was real money.

[spinbaby]

8. Can we get it back?

I think we need it more than they do.

[Phoebe Loosinhouse]

13. If there are fraud prosecutions or shareholder lawsuits, some may be recovered.

I mean, look at Enron. Those guys had to give back a lot as part of their settlements. If I were a Lehman Brothers shareholder I would be pissed and would want to turn their books inside out. Same with Bear Sterns.

Not specifically about the financial markets, but related:

marmar posted a thread yesterday about a class action suit by the employees of the LA Times suing their billionaire CEO for a violation of his fiduciary duties to them as employees as well as shareholders. Here is an article about that.

http://www.latimes.com/business/la-fi-tribune17-2008sep17,0,6909971.story

[Loge23]

15. Real money, real crimes

Remember all of those hefty parachute deals with failed CEO's??
Pfizer & Home Depot's ex-Ceo's (Henry McKinnell & Robert Nardelli) received approx $200 Million each to go away!! (link below)
Think of that when you shell out for pharms or hardware!
There were hundreds more like them. Now ex-McCain pitbull Carly Fiorina received an estimated $45M to leave HP. (abcnews link below)
The Lehman thief and the axed heads of Freddie and Fannie aren't begging in the streets today either. Rather, they are in the process of safeguarding whatever they have left, which I'm certain is a whole lot more than you or I will ever see without a Lotto win. And didn't that Enron creep supposedly drop dead (conveniently) in his mountain retreat in Aspen?
Crime pays when the Repukes rule - as long as you're one of them.

And I remember all the stories in the WSJ during the bubble about the punks on WS taking in tens of millions in year-end bonuses and holding lavish parties at the most expensive joints in London, NY, and Paris.

The rest of the money was never there. It was in inflated valuations for real estate that was accepted by the banks as real collateral. That chunk of "money" has vaporized.

http://www.aflcio.org/corporatewatch/paywatch/goldengoodbyes.cfm
http://blogs.abcnews.com/politicalradar/2008/09/mccain-economic.html

[Virginia Dare]

4. China and the Sauds mostly..

although apparently many of them lost a boatload in the bank failures. The extreme upper echelon of the coporate elite such as the Walton family are still doing very well.

[MrMonk]

5. Was the money ever really there?

Or was it credit extended without regard to the actual value of collateral or the borrower's ability to pay?

[tnlurker]

12. This is the right answer

The money to buy all those houses was created out fo thin air with a couple of clicks of the mouse. Nothing was really there to back it up except the value of the house that was bought.

[slackmaster]

6. China holds a lot of mortgage-backed securities, as well as being biggest exporter of consumer goods

:nuke:

[liberal N proud]

7. China, Dubai and other countries who own our debt

[spinbaby]

9. If it's debt, then they don't have the money, either.

We just owe it to them.

[slackmaster]

11. And we will pay them

It will ultimately come out of all of our pockets.

[dipsydoodle]

10. It exists, in effect,

as a substantial amount of the housing stock of the USA and as such it cannot be realised.

[rucky]

14. After they were packaged, they were rated.

And good chunk of those packages now have no value. They're still being serviced and earning interest as agreed - unless the borrower is in default. Then the money's in the value of the home, which has also gone down.