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View Diary: Open thread for night owls: The keeping-up-with-the-Joneses myth (66 comments)

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  •  "Predatory lending in poor areas" (8+ / 0-)

    ..Sell to people who have the least financial and political voice to fight back it sounds like to me.

    In 2009  of Matt Taibbi wrote about securities fraud. From page 4 of The Great American Bubble Machine

    Goldman, who created vehicles to package those shitty mortgages and sell them en masse to unsuspecting insurance companies and pension funds.

    Goldman used two methods to hide the mess they were selling. First, they bundled hundreds of different mortgages into instruments called Collateralized Debt Obligations.

    So it was not homeowners deliberately going out on a spending spree as the republicans accuse lower wage worker/homeowners of doing. These folks were targeted as the "marks" for a securities fraud scheme that was deliberate short term - in & out rip-off

    However, our risk bias in that market was to be short, and that net short position was profitable." In other words, the mortgages it was selling were for chumps. The real money was in betting against those same mortgages.

    "That's how audacious these assholes are," says one hedge fund manager. "At least with other banks, you could say that they were just dumb — they believed what they were selling, and it blew them up. Goldman knew what it was doing."

    I ask the manager how it could be that selling something to customers that you're actually betting against — particularly when you know more about the weaknesses of those products than the customer — doesn't amount to securities fraud.

    "It's exactly securities fraud," he says. "It's the heart of securities fraud."

     - emphasis added

    Thx MB
    •  The Banksters Simply Exploited Human Nature (3+ / 0-)
      Recommended by:
      WakeUpNeo, JeffW, Eric Nelson

      Look, a big part of the scam was the easing of the requirements to get huge loans by the banksters-- the zero money down, "ninja" loans, balloon rate loans to, eventually, anyone who could write their name on the loan app.

      "you don't have a job? or-- your income level is $35,000 per year? NO PROBLEM! you still qualify for a $600,000 mortgage for your dream home using our new loan rules!"

      just sign the app here...

      it's wayyy more about word getting around to people who could never in the past qualify for this type of loan, than it is "keeping up with the Joneses".

      the mortgage brokers like Countrywide were doing this to generate the paper for the big boys like Goldman Sucks who were bundling these "AAA rated loans" into the CDO's they then sold to unsuspecting investors.

      are the banksters making $500,000 loans to people with $35,000 per year income now? Of course not, and these loans should have never been made back in the early part of the 2,000's.

      Now, people who DO have income and collateral can't even get a small business loan to start/grow their business.

      FAIL.

      "It is essential that there should be organization of Labor. Capital organizes & therefore Labor must organize" Theodore Roosevelt

      by Superpole on Sat Jan 25, 2014 at 03:08:48 AM PST

      [ Parent ]

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