News Banks Bundled Bad Debt, Bet Against It and Won

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The discussion centers on the investigation into major financial firms, particularly Goldman Sachs, for potential violations of securities laws during the housing market collapse. Reports indicate that these firms created and sold mortgage-linked securities while simultaneously betting against them, leading to significant losses for clients like pension funds and insurance companies. This practice raises questions about the ethical obligations of banks in disclosing the risks associated with these investments. Participants debate whether the actions of these banks constitute fraud, particularly if they misrepresented the quality of the securities sold. The conversation also touches on the role of government entities like Fannie Mae and Freddie Mac in creating demand for risky loans, suggesting that while banks made poor lending decisions, government policies contributed to the crisis. The discussion highlights the complexities of accountability in the financial sector, the implications of regulatory frameworks, and the ethical considerations of profit-making at the expense of clients. Overall, the thread emphasizes the need for transparency and the potential for reform in financial regulations to prevent similar crises in the future.
  • #91
nismaratwork said:
Intersting... my grandfather fought for the USA in the Pacific theatre... still, neither of us are our parents. I think it's very important to draw a distinction between a child or even a young person swept up in events without having any real exposure to their consequences, and a sociopath. I don't know your mother obviously, but there's a world of difference between... and really, I meant nothing in general about Nazis; it was specifically the utter lack of self restraint and the predatory "sleepwalker" analogy.

I think you're right, but that's not the analogy I was drawing... it was a comparison between two organized sociopaths.
Ok. I think I know where you are coming from now. But I still consider it a tenuous comparison.
Adolf Hitler said:
I go the way that fate has pointed me, like a man walking in his sleep.
I interpret this as; "Don't blame me. Destiny makes me do what I do."

Whereas, Wall Street CEO's seem to be saying; "Don't blame me. This is what everyone is doing."



We have rules and regulations which pick up the minnows; the sharks find a way throught he nets, often because they're the ones making them to begin with.

In general, I wouldn't compare the endevour of fraud to mass murder and genocide. It is possible to compare the mental dysfunction of two people, who while they hurt the world in different ways, have the same non-ethos.

It's rare that a predator tells you how it hunts, and it's wise prey that listens carefully.

Yes. And it's even more fun when they come clean, and try and point out the thorns of the "machine".

To put the matter simply, market forces, if they are given complete authority even in the purely economic and financial arena, produce chaos and could ultimately lead to the downfall of the global capitalist systemhttp://www.leftbusinessobserver.com/Soros.html"
circa 1998

Guess the author!
 
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  • #92
WhoWee said:
In spite of the the rhetoric about the evils and greed of "Wall Street", I trust the US system to protect me from harm more than the Asian and European capital markets.

For some reason I don't find that statement very reassuring. :rolleyes:
 
  • #93
OmCheeto said:
Ok. I think I know where you are coming from now. But I still consider it a tenuous comparison.

I interpret this as; "Don't blame me. Destiny makes me do what I do."

Whereas, Wall Street CEO's seem to be saying; "Don't blame me. This is what everyone is doing."





Yes. And it's even more fun when they come clean, and try and point out the thorns of the "machine".

circa 1998

Guess the author!

I can see your point, but again, it's more to do with the way that a sociopath is thought to perceive the world. Remember, lacking the kind of executive functions you'd expect in others, you find that the more organized ones tend to feel guided. At some point they need to explain their success, and in rare moments of what passes for their reflection, you get a sense of just how deeply lost they are in a world of morals.

More than that, these are two people talking about their own complete lack of responsibility in a way that only a psychopath can after doing so much harm. It's certainly not my best comparison ever, but I think it holds.

@WhoWee: We have more of a safety net, the behavior is essentially the same. I think we'd both agree we've burned that net by now too, and much of it is now appearance and habit that the world may decide to break one day.

Anyway, the kind of sharks I'm talking about always find a way; not all of them, but you ALWAYS have sharks in your nets if you fish long enough (sub large sample size).
 
  • #94
edward said:
For some reason I don't find that statement very reassuring. :rolleyes:

Probably because it's a choice between Scylla and Charibdis...
 
  • #96
edward said:
The DVD of the documentary Inside Job will be available in stores starting on March 8th.

It won the Academy Award for best documentary last night.

http://www.insidejob.com/video/inside-job-official-trailer-in

No doubt it will be labeled as some kind of "leftist hollywood elite... blah blah". Too bad, because it really is quite god, and very informative. Conclusive... no, but quite damning.
 
  • #97
nismaratwork said:
@WhoWee: We have more of a safety net, the behavior is essentially the same. I think we'd both agree we've burned that net by now too, and much of it is now appearance and habit that the world may decide to break one day.

Anyway, the kind of sharks I'm talking about always find a way; not all of them, but you ALWAYS have sharks in your nets if you fish long enough (sub large sample size).

Not sure of 100% agreement - some people have only themselves to blame. Rule of thumb when making an investment - don't pretend you understand a market (derivatives for instance) that you don't understand - because of potential returns.
 
  • #98
WhoWee said:
Not sure of 100% agreement - some people have only themselves to blame. Rule of thumb when making an investment - don't pretend you understand a market (derivatives for instance) that you don't understand - because of potential returns.

Some people should have been more responsible, but that still makes the blame more than your own. I have no sympathy for predators of human nature, only contempt and a cold desire to see them gone. Population size means that you will always find marks, and I find it hard to believe that you'd blame many other crimes on the victim.
 
  • #99
Aprops: USA Today published a far more honest and even-handed article on exactly the same topic as the Rolling Stone article:
Why aren't more meltdown moguls indicted?

Should Americans be outraged that the meltdown moguls aren't headed for the slammer, as director Charles Ferguson suggested Sunday night when his documentary, Inside Job, won an Academy Award? Perhaps. But, nearly three years after the financial crisis hit, a better way to look at the lack of high-level indictments is as an indictment of the entire financial system — a system that was rife with avarice, ignorance and double-dealing. How do prosecutors find the bad apples in a putrid landfill?

...Why hasn't the financial crisis resulted in more criminal charges? It's possible that the Justice Department, focused on terrorism and short on financial-fraud experts, has dropped the ball in its investigations.

But a more likely explanation is that outright fraud was concentrated at the bottom of the food chain, with mortgage brokers who wrote up falsified loan applications. The big fish at the top were guilty mainly of greed, shortsightedness and mass delusion— which did far more damage.
http://www.usatoday.com/news/opinion/editorials/2011-02-28-editorial28_ST_N.htm

In the middle is a list of people we'd like to see go to jail but won't.
 
  • #100
OmCheeto said:
To put the matter simply, market forces, if they are given complete authority even in the purely economic and financial arena, produce chaos and could ultimately lead to the downfall of the global capitalist system.
circa 1998

Guess the author!
I'll guess it's a left wing nut-job like George Soros. Especially given the strawman tactic/faulty logic used in suggesting that anyone advocates "market forces" being "given authority". The statement makes no logical sense.

George Soros. Final answer.
 
  • #101
Al68 said:
I'll guess it's a left wing nut-job like George Soros. Especially given the strawman tactic/faulty logic used in suggesting that anyone advocates "market forces" being "given authority". The statement makes no logical sense.

George Soros. Final answer.

Left wing "nut-job"? He's definitely left, but in what way is he a nut? He strikes me as extremely bright, but overly ideological... not an uncommon theme it seems...
 
  • #102
nismaratwork said:
Left wing "nut-job"? He's definitely left, but in what way is he a nut? He strikes me as extremely bright, but overly ideological... not an uncommon theme it seems...

:bugeye:
 
  • #103
nismaratwork said:
Left wing "nut-job"? He's definitely left, but in what way is he a nut? He strikes me as extremely bright, but overly ideological... not an uncommon theme it seems...
I consider the inability to comprehend how depriving people of their liberty is harming them to be "nutty". That was my technical word for http://en.wikipedia.org/wiki/Sociopath" , ie a disregard for, and/or violation of the rights of others, and/or an associated lack of remorse/empathy for others.
 
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  • #104
Al68 said:
I'll guess it's a left wing nut-job like George Soros. Especially given the strawman tactic/faulty logic used in suggesting that anyone advocates "market forces" being "given authority". The statement makes no logical sense.

George Soros. Final answer.

The quote was an excerpt from Soros' book, The Crisis of Global Capitalism, and a bit off topic.
 
  • #105
russ_watters said:
Aprops: USA Today published a far more honest and even-handed article on exactly the same topic as the Rolling Stone article:
http://www.usatoday.com/news/opinion/editorials/2011-02-28-editorial28_ST_N.htm

In the middle is a list of people we'd like to see go to jail but won't.

the problem is a system that allowed it to happen in the first place. that is, Greenspan and other chiefs at the Federal Reserve actively opposed federal oversight.

the corruption, even if you want to say it is only corrupt thinking, is at the heart of government.
 
  • #106
Al68 said:
I consider the inability to comprehend how depriving people of their liberty is harming them to be "nutty". That was my technical word for http://en.wikipedia.org/wiki/Sociopath" , ie a disregard for, and/or violation of the rights of others, and/or an associated lack of remorse/empathy for others.

Ooooooh... I'm familiar with ASP/ASPD/Sociopathy/Psychopathy (reverse time-line of the name). I'm not clear that Soros comes close to being sociopathic; he plans, he reflects, he learns from errors; simply lacking compassion (and I'm not saying that he does or doesn't) is not sociopathic. A decent, if VERY one-sided and simplistic view that hits all of the technical points approachably: 'Bad Boys, Bad Men: Confronting Antisocial Personality Disorder' ... just don't STOP there, or you'll have all kinds of wrong notions. Still, it's a good entry to the subject if it's not really your area of interest.

Anyway, given his past I see him as very ruthless, and obviously he has an immense ego, but no more so than many in finance, and certainly more philanthropic than many.


I'd add... "nuts" is usually reserved, when used at all, for those disorders which have elements of psychosis.
 
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  • #107
nismaratwork said:
Ooooooh... I'm familiar with ASP/ASPD/Sociopathy/Psychopathy (reverse time-line of the name). I'm not clear that Soros comes close to being sociopathic; he plans, he reflects, he learns from errors; simply lacking compassion (and I'm not saying that he does or doesn't) is not sociopathic. A decent, if VERY one-sided and simplistic view that hits all of the technical points approachably: 'Bad Boys, Bad Men: Confronting Antisocial Personality Disorder' ... just don't STOP there, or you'll have all kinds of wrong notions. Still, it's a good entry to the subject if it's not really your area of interest.

Anyway, given his past I see him as very ruthless, and obviously he has an immense ego, but no more so than many in finance, and certainly more philanthropic than many.


I'd add... "nuts" is usually reserved, when used at all, for those disorders which have elements of psychosis.

eh, i dunno, from what i remember, it fits the mold. but sociopathy is more the benign flavor, and psychopathy the malignant one. sociopaths and psychopaths can certainly plan, reflect, and learn from errors.
 
  • #108
Proton Soup said:
eh, i dunno, from what i remember, it fits the mold. but sociopathy is more the benign flavor, and psychopathy the malignant one. sociopaths and psychopaths can certainly plan, reflect, and learn from errors.

No, but that's a common misconception.

Origin:
Pinel: “Manie sans delire” (Mania without delirium)
Pritchard: Moral Insanity
Around the same time...
'Moral Imbelicity'
Then: Psychopathic inferiority
Then the Germans: Psychopathology (Psychopath)
Partridge for the AMA: Sociopath (referring to the SAME thing)
DSM: "Personality Disorder: Antisocial Type"
DSM-**: "Antisocial Personality Disorder"

You're going by Hervey Cleckley (Mask of Sanity), but in fact the word evolved along with the definition.
 
  • #109
russ_watters said:
Aprops: USA Today published a far more honest and even-handed article on exactly the same topic as the Rolling Stone article:
http://www.usatoday.com/news/opinion/editorials/2011-02-28-editorial28_ST_N.htm

In the middle is a list of people we'd like to see go to jail but won't.

I think the USA Today article is more even-handed, but perhaps less honest. Bear-Stearns was pushed over the cliff by a whole bunch of naked-short-sells. This is illegal- but there hasn't been a serious investigation.

After the bottom dropped out of subprimes, it took months for the securities (supposedly based on these same mortgages) to fall. In these months, market makers like Goldman unloaded tons of bad investments. Why haven't there been investigations into the market makers? What propped these markets up just long enough for the maker's themselves to get rid of their bad investments?

What about the regulators interviewed by Taibbi who claim insider trading cases are not being pursued?

In short, there is quite a bit of circumstantial evidence that fraud was committed somewhere. But, because the very same people who should be pursuing investigations are hoping to one day work for the banks, it seems unlikely that any real digging will be done.
 
  • #110
I can't believe I'm saying this about such a pig, but flaws or not, we need Eliot Spitzer back on Wall Street.
 
  • #111
nismaratwork said:
I can't believe I'm saying this about such a pig, but flaws or not, we need Eliot Spitzer back on Wall Street.

Would that restore confidence in the markets?:rolleyes:
 
  • #112
WhoWee said:
Would that restore confidence in the markets?:rolleyes:

I don't really care; he was effective. If we remove everyone who's effective in public office because they're borderline or full-blown sociopaths, we'll have no public officials left.

Besides, you think he was somehow alone in procuring those services? On Wall Street, it's a win if you're not drunk or on cocaine.
 
  • #113
  • #115
WhoWee said:
Would that restore confidence in the markets?:rolleyes:

by "confidence", i assume you mean "confidence" game. that's exactly what we don't need. for some reason, we always fall prey to this sort of rhetoric from the very people that need to be placed on a short leash.
 
  • #116
Proton Soup said:
by "confidence", i assume you mean "confidence" game. that's exactly what we don't need. for some reason, we always fall prey to this sort of rhetoric from the very people that need to be placed on a short leash.

They have money, and power... or rather, money as a means of exercising power. Most people still cling to the American Dream, because the alternative would be to admit a privatized kleptocratic undertone to all of it.
 
  • #117
Proton Soup said:
by "confidence", i assume you mean "confidence" game. that's exactly what we don't need. for some reason, we always fall prey to this sort of rhetoric from the very people that need to be placed on a short leash.

By confidence, I mean regulators we can trust - not Spitzer.
 
  • #118
nismaratwork said:
I don't really care; he was effective. If we remove everyone who's effective in public office because they're borderline or full-blown sociopaths, we'll have no public officials left.

Besides, you think he was somehow alone in procuring those services? On Wall Street, it's a win if you're not drunk or on cocaine.

That sounds a bit like a Charlie Sheen quote. Do you honestly believe the norm in the investment banking world is working under the influence?
 
  • #119
WhoWee said:
That sounds a bit like a Charlie Sheen quote. Do you honestly believe the norm in the investment banking world is working under the influence?

Not as bad as Sheen, but Wall Street investment bankers and traders do have a high rate of drug use.

With the down economy they are switching from cocaine to pot.

http://www.efinancialnews.com/story/2010-08-24/wall-street-employees-swap-cocaine-pot-pills

http://articles.cnn.com/2009-10-24/justice/madoff.lawsuit_1_bernie-madoff-kpmg-jp-morgan-chase?_s=PM:CRIME

Edit
Come to think of it that could explain a lot of the irrational decisions that were made in real estate.

This Deal Journal post about drug use on Wall Street caught our eye on Friday. Buried in the middle of the post was this nugget: “The highest levels of drug abuse in the financial sector seem to be a real estate investment trust companies

http://blogs.wsj.com/developments/2...y-reits-top-list-for-drug-use-on-wall-street/
 
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  • #120
edward said:
Not as bad as Sheen, but Wall Street investment bankers and traders do have a high rate of drug use.

With the down economy they are switching from cocaine to pot.

http://www.efinancialnews.com/story/2010-08-24/wall-street-employees-swap-cocaine-pot-pills

http://articles.cnn.com/2009-10-24/justice/madoff.lawsuit_1_bernie-madoff-kpmg-jp-morgan-chase?_s=PM:CRIME

Edit
Come to think of it that could explain a lot of the irrational decisions that were made in real estate.

http://blogs.wsj.com/developments/2...y-reits-top-list-for-drug-use-on-wall-street/

my bold

Does 7% of all employees represent a high rate of drug use among traders and brokers? How does 7% compare to workers in other industries and the population in general (at similar age groups).
 
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