if you would like to stay in my 800 sq ft bathroom when times get tough, just pm me

thanks, although honestly I just don't know that even educating oneself about it will do anyone any good- I mean, for most people, myself included, the last 8 years have not been easy ones, nor even realistically difficult, they've been out and out retardedly difficult economically-and that's including the 3 or 4 year period at the beginning of the decade when the dotcom bubble was still growing because as soon as it began to show signs of slowdown for those companies- and the companies that did business with them, everything changed drastically- so a bump in pay really wasn't an indicator of what was to come in the future. My entire department was closed down by 2004.

Anyway, what I'm saying is this couldn't happen at a worse time- and I'm not even in much debt compared to a lot of people I know- plus I have great credit, but I think even with those kinds of pluses, it's going to be horribly difficult to get through the next few years and I see no way around it.

It's fairly terrifying, and I see no way of avoiding it.

Pfft, that's the size of my linen closet.

M.T.: You don't think the unregulated CDS market was a major factor in the current crisis? Were you watching when AIG almost went under? Were you watching the Lehman collapse?

B.Y.: I think that Fannie Mae and Freddie Mac were also major factors. And I believe that many of the problems in the mortgage area can be attributed to the confluence of Democratic and Republican priorities: the Democrats' desire to give mortgages to people, particularly minorities, who could not afford them, and the Republicans' desire to achieve an "ownership society," in part by giving mortgages to people who could not afford them. Again, I believe that if you are suggesting that the financial crisis is a Republican creation, or even more specifically a McCain creation, I think you're on pretty shaky ground.

M.T.: Oh, come on. Tell me you're not ashamed to put this gigantic international financial Krakatoa at the feet of a bunch of poor black people who missed their mortgage payments. The CDS market, this market for credit default swaps that was created in 2000 by Phil Gramm's Commodities Future Modernization Act, this is now a $62 trillion market, up from $900 billion in 2000. That's like five times the size of the holdings in the NYSE. And it's all speculation by Wall Street traders. It's a classic bubble/Ponzi scheme. The effort of people like you to pin this whole thing on minorities, when in fact this whole thing has been caused by greedy traders dealing in unregulated markets, is despicable.

B.Y.: I was struck by the recent Senate testimony of James Lockhart, who is head of the Federal Housing Finance Agency, about the sheer recklessness of Fannie in recent years. Despite "repeated warnings about credit risk," Lockhart testified, Fannie became more reckless in 2006 and 2007 than they had been in the scandal-ridden tenure of Franklin Raines (who departed in 2004). In 2005, Lockhart said, 14 percent of Fannie's new business was in risky loans. In the first half of 2007, it was 33 percent. So something terribly wrong was going on there, and it became a significant part of the present problem.

M.T.: What a surprise that you mention Franklin Raines. Do you even know how a CDS works? Can you explain your conception of how these derivatives work? Because I get the feeling you don't understand. Or do you actually think that it was a few tiny homeowner defaults that sank gigantic companies like AIG and Lehman and Bear Stearns? Explain to me how these default swaps work, I'm interested to hear.

Because what we're talking about here is the difference between one homeowner defaulting and forty, four hundred, four thousand traders betting back and forth on the viability of his loan. Which do you think has a bigger effect on the economy?

B.Y.: Are you suggesting that critics of Fannie and Freddie are talking about the default of a single homeowner?

M.T.: No. That is what you call a figure of speech. I'm saying that you're talking about individual homeowners defaulting. But these massive companies aren't going under because of individual homeowner defaults. They're going under because of the myriad derivatives trades that go on in connection with each piece of debt, whether it be a homeowner loan or a corporate bond. I'm still waiting to hear what your idea is of how these trades work. I'm guessing you've never even heard of them.

I mean really. You honestly think a company like AIG tanks because a bunch of minorities couldn't pay off their mortgages?

B.Y.: When you refer to "Phil Gramm's Commodities Future Modernization Act," are you referring to S.3283, co-sponsored by Gramm, along with Senators Tom Harkin and Tim Johnson?

M.T.: In point of fact I'm talking about the 262-page amendment Gramm tacked on to that bill that deregulated the trade of credit default swaps.

Tick tick tick. Hilarious sitting here while you frantically search the Internet to learn about the cause of the financial crisis — in the middle of a live chat interview.

B.Y.: Look, you can keep trying to make this a specifically partisan and specifically Gramm-McCain thing, but it simply isn't. We've gone on for fifteen minutes longer than scheduled, and that's enough. Thanks.

M.T.: Thanks. Note, folks, that the esteemed representative of the New Republic has no idea what the hell a credit default swap is. But he sure knows what a minority homeowner looks like.

B.Y.: It's National Review.

This is a pretty hilarious exchange. It pretty much in line with the discussion I was having with Sun Devil a few days ago about how much fault for the current mess can be placed with underqualified borrowers, and how much is the result of things like MBSIs and Credit Default Swaps. The scale of the CDS market is what blew my mind in this piece, well, that and the fact that the National Review guy obviously had no idea what a CDS was (and neither did I until I heard that NPR piece last weekend).

http://nymag.com/daily/intel/2008/10/ma ... k_but.html




That last line was hilarious. Correcting a misnaming of his magazine was his big gotcha moment.

Interesting there's no mention of monetary policy in there.

See, the thing is - you're right. The only advice I give people is:

1) Try not to lose your job
2) Do NOT spend money on things you don't need

I feel you too Malice. I don't believe we're headed for another Great Depression but this is my first real recession.
I bought a house in '07. I didn't overbuy, the mortgage is less than 40% of my monthly take home pay and is locked in at 5.85%. Otherwise I don't have any real debt. I have no college loans. I drive an eight year old car that is paid for and runs well; I want to get it through ten years. I have a couple hundred dollars on the credit card (yes, I have just one) that was actually paid off before my refrigerator went kaput last month. It's just me so I don't have a family to support. Outside of my 401k I have a few stocks on my own but nothing significant.
I've always been consertive with my money and I how I spend it. I like to think I will be okay but I have a white collar cubicle job and potientally could be right sized or, God forbid, I have a serious illness or injury.
Thanks by the way to our resident money guys. I've gotten more out of your postings than most of the talking heads on cable.

bear in mind i'm not a financial adviser, but IMO, you're in good shape.

the only thing missing from your portfolio, again in IMO, is sufficient ammo and MREs. and don't worry, squirrel is an acquired taste.

Yeah, I'd say I'm in the same boat. I'm thinking I should use the weekend to stock up on clean water, dry food, and munitions.

What about building materials for your underground bunker?

g2t, are you on here?

http://brokershandsontheirfacesblog.tumblr.com/

if you would like to stay in my 800 sq ft bathroom when times get tough, just pm me

You're part of the problem, Doug. And I saw how much money you said you lost before you removed the post, the last dive the stock market took. The problem with rich people is they bitch and moan over this kind of shit yet support policy and practices that have engendered this kind of crisis.
I hope you still have that 800 square foot bathroom in a couple six months or so because at this point you're just as likely to end up on the street as me before this is over.
Feel free to PM me if you need some tips on how to make ends meet when that happens, because of the two of us, at least I already have experience in it, no thanks to you and yours.

g2t, are you on here?

http://brokershandsontheirfacesblog.tumblr.com/

Gallows humor (n) - a type of humor that arises from stressful, traumatic or life-threatening situations such as wartime events, hostilities, and/or mass murder. Occurs often in circumstances where death is perceived as impending and unavoidable. It is similar to black comedy but differs in that it is made by the person affected.

lighten up.