First the Bubble. Then the Short. Now the Long.
Some neighborhoods in Oakland are as devastated as any of the worst hit regions across America — Atlanta, Las Vegas, Phoenix. Now the morphing of the housing bust and foreclosure epidemic into a lucrative multi-billion dollar opportunity for major investors is also uncannily centered upon Oakland and the greater Bay Area, where companies flush with hedge fund cash are buying up homes by the thousands.
The entire sweep of the US housing bubble, financial crisis, and foreclosure wave can therefore be told by looking at persons and companies with intimate links to Oakland and the Bay Area. What follows is one account.
posted by the man of twists and turns
on Dec 11, 2012 -
Betting Against the American Dream
. In 2005, just as Wall Street started to get cold feet about the housing market, the Magnetar
hedge fund helped create a new wave of billion-dollar mortgage-backed securities, pushed bankers to include riskier sub-prime mortgages, and then shorted the securities, making millions when the bubble finally burst. Traders on both sides of the deals pocketed enormous fees even if their banks went under when the securities failed. Pulitzer Prize-winning ProPublica
, This American Life
, and NPR's Planet Money
track down some of the big winners in the housing/financial crisis. No time to read or listen? It seemed so much like a scheme from The Producers
, they even recorded a show tune to explain it all
posted by straight
on Apr 15, 2010 -
"A striking feature of the New Wall Street System business model was its relentless drive to expand balance sheets, maximizing the asset and liabilities sides.
The investment banks used their leverage ratio as the target to be achieved at all times rather than as an outer limit of risk to be reduced where possible by holding surplus capital ... One explanation is that they were doing this in line with the wishes of their shareholders (once they had turned themselves into limited liability companies) ... But there is also another possible explanation for borrowing to the leverage limit: the struggle for market share and for maximum pricing power in trading activities," Against mainstream accounts, Peter Gowan argues that the origins of the global financial crisis lie in the dynamics of the New Wall Street System that has emerged since the 1980s. Contours of the Atlantic model, and implications—geopolitical, ideological, economic—of its blow-out.
posted by geoff.
on Feb 5, 2009 -
are complex little known financial instruments (insurance contracts) that are on the brink of triggering "the most colossal rights issue in the history of the world, all at once .. mandatory." If, out of a list of several hundred major companies, any nine go bankrupt
, the CDO's are in default, which would mean a mass transfer of cash (real money) from unsuspecting investors around the world goes into the banking system. How much? Nobody knows, but it’s many trillions. Banks will be flush with cash, perhaps ending the credit crisis, while many investors (individuals, charities, municipalities) will be wiped out. Alternatively, the triggering of default on the trillions of synthetic CDOs could be a disaster that tips the world from recession into depression. Nobody knows, but it won’t be a small event. Thus far the count is six
: three Icelandic banks, Countrywide, Lehman and Bear Stearns.
posted by stbalbach
on Dec 1, 2008 -