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'The ECB with hereditary leadership and the right to employ an army'

"All this gives us one way to understand the Lannister zeal for power in King's Landing. In effect, Tywin is attempting to execute a debt-for-equity swap since his debts aren't actually recoverable. But that simply underscores the extent to which the loans to the Iron Throne are, themselves, worthless as financial assets." Economics of Ice & Fire, Part I and Part II (minor dialogue spoilers for S03E03) [more inside]
posted by Chipmazing on Apr 19, 2013 - 16 comments

From the Oakland Hills to the Bubble’s Epicenter

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 - 41 comments

Wells Fargo, You Never Know What Hit You.

Wajahat Ali, a solo practitioner from California, takes on Wells Fargo in an attempt to get his clients' home loan modified. Lots of ball dropping and passing of the buck ensues. He describes the Kafka-esque nature of the experience.
posted by reenum on Jun 20, 2010 - 41 comments

Purchase risky debt on a massive scale and then place a bet that the debt will fail!

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. (Previously, 2, 3)
posted by straight on Apr 15, 2010 - 30 comments

It Wasn't Obvious to Me

A lot of people figure things out, but it takes a special talent or maybe personality to figure it our and do something about it. Previously, we heard about the man who wrote the software that blew up the economy. Now we find out whom that software was written. [more inside]
posted by JohnnyGunn on Mar 15, 2010 - 40 comments

Minority bounty

Bank Accused of Pushing Mortgage Deals on Blacks: "They referred to subprime loans made in minority communities as ghetto loans and minority customers as 'those people have bad credit', 'those people don't pay their bills' and 'mud people,' " [a Wells Fargo subprime loan officer] said in his affidavit, filed in the NAACP's lawsuit (pdf) against 13 mortgage lenders. "The company put 'bounties' on minority borrowers. By this I mean that loan officers received cash incentives to aggressively market subprime loans in minority communities."
posted by hayvac on Jun 8, 2009 - 40 comments

UK and USA might lose AAA rating

Standard & Poor’s changed the UK's credit outlook from stable to negative a few days ago, and warned that there is a chance the UK could lose its AAA rating. Meanwhile, Moodys, another of the big 3 rating agencies, has warned that the US might also eventually lose its AAA rating. The UK announcement caused sterling to drop by 1% and the FTSE by 2%. However, many blame the same rating agencies for their part in triggering the subprime crisis. The irony of this is not lost on the Wall Street Journal, who note that "After all, those governments are jacking up spending, in part, to bail out the financial firms who gobbled up those 'AAA' asset backed securities duly blessed by the credit ratings firms." [more inside]
posted by memebake on May 26, 2009 - 38 comments

Michael Osinski wrote the software that turned mortgages into bonds

My Manhattan Project: How I helped build the bomb that blew up Wall Street. [print version]
posted by blasdelf on Mar 30, 2009 - 34 comments

Prescient Economist: Housing Crash Result of Government Incentives

Peter Wallison, an economist who arguably predicted the housing crash and bailout in 1999 explains his current views on the crash: "Other players...played a part" but "...government policy over many years--particularly the use of the Community Reinvestment Act and Fannie Mae and Freddie Mac to distort the housing credit system-- underlies the current crisis."
posted by shivohum on Feb 11, 2009 - 98 comments

AAA?

Anatomy of a Meltdown - Ben Bernanke and the financial crisis (in one page)
posted by Gyan on Nov 24, 2008 - 61 comments

Liar's Poker was not intended as a how-to manual.

The End of the Wall Street Era. “We always asked the same question,” says Eisman. “Where are the rating agencies in all of this? And I’d always get the same reaction. It was a smirk.” He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number.

The author of Liar's Poker on the collapse of the subprime industry.
posted by bitmage on Nov 11, 2008 - 57 comments

Andrew Lahde's goodbye letter

Retiring hedge fund manager Andrew Lahde: "All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America."
posted by finite on Oct 17, 2008 - 37 comments

Credit Crunchy Granola Sweet

How will the financial mess affect you? Will you still have a job? Will your mortgage go up or down? Will your bank account pay more or less? What if you want to buy a house? Or a car? Or have a child? College? Insurance? What if you are dying?What about Religion? And what if you want to get a credit card? First time things get hard? If it is tough, there is always bartering. So, who is winning? [more inside]
posted by bystander on Oct 12, 2008 - 54 comments

Well there goes Reykjavik

More subprime collateral damage. Iceland's now getting a $5B bailout from Russia. What does Russia want in return? Access to shipping lanes? The old US base? via
posted by blahblah on Oct 7, 2008 - 48 comments

It's the end of the world as we know it... lalala

Upclose and personal on the man, Nouriel Roubini, who predicted the subprime crisis. Apparently we're in for a long long haul out of this mess. Oh, and it may be the end of America (reg req'd) as we know it. [more inside]
posted by blahblah on Aug 16, 2008 - 99 comments

The Giant Pool of Money

The Giant Pool of Money. This American Life teams up with NPR News to explain the Housing Crisis. [more inside]
posted by empath on May 11, 2008 - 53 comments

The financial turmoil of 2007-?

The financial turmoil of 2007-?: a preliminary assessment and some policy considerations (pdf) "All episodes of financial distress of a systemic nature, with potentially significant implications for the real economy, arguably have at their root an overextension in risk-taking and in balance sheets in good times, masked by the veneer of a vibrant economy. This overextension generates financial vulnerabilities that are clearly revealed only once the economic environment becomes less benign, in turn contributing to its further deterioration." A scholarly, sane, relatively brief, accessible-to-the-layperson, and mostly apolitical look at the current turmoil.
posted by Kwantsar on Apr 23, 2008 - 36 comments

America's Captains of Industry!

As is the custom these days, GMAC Bank is suing mortgage broker HTFC for selling them improperly secured loans. The deposition of HTFC's CEO Aron Wider reads like a Joe Pesci role with 73 creative uses of the f-word over twelve hours of testimony. A federal judge fined Mr. Wider and his attorney $29K for Mr. Wider's constant use of bad language, insults, refusals to answer questions, and his lawyer's failure to control his client.
posted by uaudio on Mar 20, 2008 - 53 comments

The Invisible Fist of the Free Market

What market has grown from $900 billion in 2000 to more than $45.5 trillion and is completely unregulated? Welcome to the world of Credit Default Swaps. Speculative derivatives have been described as "financial weapons of mass destruction" by some guy named Warren Buffet. Some people wonder how you can have "$1 trillion in swaps bet on the success or failure of GM when the entire market cap of GM is a mere $15 billion." Credit Default Swaps are being triggered from Northern Rock in the UK to ANZ Bank down under as the "subprime" crisis unravels. AIG's CDS loss portfolio has already climbed to $5 billion from a previsouly estimated $1 billion. [more inside]
posted by ryoshu on Feb 18, 2008 - 87 comments

Subprime Artistry

The Subprime Primer. [via] An entertaining, lo-fi, comic-book style explanation of the complex Subprime Mortgage mess.
posted by afx114 on Feb 17, 2008 - 77 comments

The You Generation

Is foreclosure right for you? Walking, a click away.
posted by wallstreet1929 on Jan 29, 2008 - 32 comments

Tough times for bond insurers.

This is definitely not a good time to be in the bond insurance business. With large-scale insurers Ambac and MBIA -- and with smaller players faring no better -- one could well think that in the end the lending crisis has brought to light considerable flaws at the very basis of the American -- and indeed global -- financial sector. (all links above except the first lead to 6-month stock charts) [more inside]
posted by clevershark on Jan 23, 2008 - 19 comments

Newsfiltered: A Big National Story That's A Lot of Big Local Stories

Yes, the Subprime Mortgage Crisis was 2007's top national business news story for the second year in a row (and odds on favorite to Threepeat), #2 news story overall (TIME put Pakistan at #1, for AP, it was the Virginia State Massacre). But then I saw that it was the #1 local news story in my town. [more inside]
posted by wendell on Jan 4, 2008 - 14 comments

Your Underground Real Estate Agent©

You have to make sure that St. Joseph is facing your house, if you face it out, the neighbor's house across the street will sell instead. "We buried our little gem under the for sale sign just like we were supposed to do. On October 4th, yes the 4th, just 24 hours after we buried him, we had a showing and after several counter-offers back and fourth, we finally signed a contract on October 19th!!!!! 7 months after the house was sitting and not getting any bites at all and after 1 day, its sold!!! I have complete and utter faith." America's desperate homesellers and realtors are turning to St. Joseph, Your Underground Real Estate Agent.
posted by quonsar on Nov 18, 2007 - 80 comments

Cui bono?

On Tuesday, the Federal Reserve cut interest rates by 0.5%. Wall Street aggressively demanded the cut to stop the sub-prime mortgage contagion from triggering a credit crisis among large US and foreign investment banks and the collapse of their over-leveraged hedge funds, which ultimately threatened to drag the US economy into recession. The market rallied this week in response to the Fed's move. But there is no free lunch. [more inside]
posted by Pastabagel on Sep 20, 2007 - 99 comments

A severe case of the runs

A run on the bank: Ever since the Bank of England announced that they were offering Northern Rock an emergency line of credit, people have been queueing to withdraw to withdraw their money in the first bank run in the UK for decades. [more inside]
posted by pharm on Sep 17, 2007 - 44 comments

This is what happens when you lend money to poor people.

"I had no idea how my open-handedness could be made to look, after the fact. At the time I bought the subprime portfolio I thought: This is sort of like my way of giving something back. I didn't expect a profile in Philanthropy Today or anything like that. I mean, I bought at a discount. But I thought people would admire the Wall Street big shot who found a way to help the little guy. Sort of like a money doctor helping a sick person. Then the little guy wheels around and gives me this financial enema. And I'm the one who gets crap in the papers!" -- Michael Lewis on the subprime meltdown
posted by GrammarMoses on Sep 8, 2007 - 42 comments

Minsky Meltdown ahead?

Minsky Meltdown ahead? Named after Hyman Minsky, an economist who was known for his research concerning financial crises, specifically asset bubbles based on credit cycles. [much more inside]
posted by umop-apisdn on Aug 29, 2007 - 75 comments

Subprime contagion

This isn't 1998. There's no model for what's happening now in the housing and mortgage industries. 116 mortgage lenders have imploded since 2006. 11 hedge funds have imploded in just the last couple months. Time to warm up the helicopters?
posted by wallstreet1929 on Aug 11, 2007 - 126 comments

A world of Casey Serins

What's the link between:
1) the quickly-growing number of American homeowners becoming unable to pay their mortgages after their ARM's reset (a trend nicknamed "ARMageddon" -- applicable in the UK too), which is translating into soaring foreclosure rates, and in turn forcing at least 60 US semi-shady mortgage brokers to go belly-up in the past year (i.e. the "subprime meltdown"), and...
2) the recent implosion and impending financial bailout -- which may become the biggest since the Long Term Capital Management fiasco of 1998 -- of two Bear Stearns hedge funds which dealt in mortgage securities? [more inside]
posted by Asparagirl on Jul 11, 2007 - 123 comments

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