The financial geniuses were never smarter. Remember that next time you hear arguments

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<p>about policies. You can bet, the arguments on what we should do for the economy are self-serving trash.</p>

<p>We do not have free markets. We have never had free markets. If you think we do, try getting a seat on a major exchange. </p>

<p>Even the free market guys don’t argue for free markets when they are in trouble.</p>

<p>Here are three links, short articles, explaining a little about what is going on in this world. </p>

<p>A hint…Goldman Sachs and Morgan Stanley are borrowing money at 2.5%. How much do you get to borrow at 2.5%? By the way, the money they are borrowing? That’s taxpayer money.</p>

<p>[The</a> Great Unwind has started, avoid leverage, Citigroup says - MarketWatch](<a href=“The Great Unwind has begun, Citigroup warns - MarketWatch”>The Great Unwind has begun, Citigroup warns - MarketWatch)</p>

<p>[Fed</a> is now the lender of first resort - MarketWatch](<a href=“http://www.marketwatch.com/news/story/fed-now-lender-first-resort/story.aspx?guid={9A2414E3-11C6-4240-9307-79BB5DEED596}]Fed”>Fed is now the lender of first resort - MarketWatch)</p>

<p>[Monsoon</a> Capital hit hard by Indian stock market slump - MarketWatch](<a href=“http://www.marketwatch.com/news/story/monsoon-capital-hit-hard-indian/story.aspx?guid={93692CDA-DA0A-4AF8-8D18-17839C31B476}]Monsoon”>Monsoon Capital hit hard by slump in Indian stocks - MarketWatch)</p>

<p>As I said before, the financial firms and the subprime borrowers engaged in the same activities. Both financial firms and subprime borrowers put very little down and borrowed aggressively. The financial firms made larger bets and subprime borrowers don’t get to borrow at 2.5%.</p>

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<p>[Former</a> Fed Chair Volcker: Financial Crisis Not Over | Reuters](<a href=“http://www.reuters.com/article/telecomm/idUSN1933392020080320]Former”>http://www.reuters.com/article/telecomm/idUSN1933392020080320)</p>

<p>[Paul</a> Volcker - Charlie Rose](<a href=“http://www.charlierose.com/guests/paul-volcker]Paul”>http://www.charlierose.com/guests/paul-volcker)</p>

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<p>First rule of investing–all Wall Street cares about is making themselves money. If you can align your interests with theirs you might do OK but everything they say is for THEIR benefit–not yours.</p>

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<p>In any transaction, where there is unequal benefit, one Half is smarter and the the other Half is dumber, when an outside observer makes their analysis. </p>

<p>Collorary to first rule: Be on the winning side of Wall Street’s financial geniuses</p>

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<p>That’s hard. Most of their game is the fees. They don’t invest much long term.</p>

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<p>“In any transaction, where there is unequal benefit, one Half is smarter and the the other Half is dumber, when an outside observer makes their analysis.”</p>

<p>One half is STRONGER, the other weaker. The first rule of corporate socialism (they aim to keep it that way.)</p>

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<p>^ The oblique vision.</p>

<p>Rule of Might: The strong employs the weak.</p>

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<p>[The</a> sunshine is great but that’s about it :: Herald News :: Malcolm Berko](<a href=“Chicago Suburbs News - Chicago Tribune”>Chicago Suburbs News - Chicago Tribune)</p>

<p>“Dear Mr. Berko: I own a three-bedroom home in Boca Raton, Fla. It’s appraised at $211,000, and my mortgage is $133,000, so I have $78,000 equity. My interest rate is 8.125 percent, and some banks are offering 6 percent rates, which if I could refinance would lower my payments. Because my equity is high, a new mortgage would lower my payments and eliminate the $76 a month for private mortgage insurance, saving me $300 a month. But they won’t let me refinance. I don’t understand because I’ve never missed a mortgage payment. My problem is that an ex-friend ruined my credit, and I have a low credit score. I don’t have a credit card; I don’t owe money to any company or any person. However, I don’t have any reportable earnings and did not file a tax return in 2003 or 2004 or 2005 or 2006. My mortgage is with GMAC, and when I spoke to them, they said they couldn’t help. I have an 18-year-old at home who pays $200 a week, and I made $23,000 last year. I tried to tell this to GMAC, but they told me not to call until I got myself a “real job.” I must lower my payments by at least $250. My home insurance has nearly tripled, and my property taxes went to $2,496 from $1,540. It’s my fault that I bought a house, but I believed I would always be able to make the payments. But the increase in insurance and taxes and gas has knocked me over the edge and my health insurance just increased $106 a week. This just is terrible. Is there anything you can do to help me refinance my home? I’ve recently painted the outside, and the inside is neat as a pin with nice furniture, and the air-conditioning runs good. I have a mortgage in good standing with GMAC. When they gave me a mortgage, they knew that I had very low income. Please explain why GMAC won’t make me a new loan at a lower interest rate, but they will continue the current loan with $76 a month PMI that I don’t need now. Please help me. I could really use the extra $300 per month.”</p>

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<p>The Wall Street culture is not going to change; therefore, regulation is needed. </p>

<p>[Wall</a> Street culture not likely to change - Yahoo! News](<a href=“http://news.yahoo.com/s/ap/20080322/ap_on_bi_ge/wall___main]Wall”>http://news.yahoo.com/s/ap/20080322/ap_on_bi_ge/wall___main)</p>

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<p>The Scene:
A close friend bought a fixer house for rental with 70% downpayment. Very good credit scores, also own other properties and rentals, all without mortgages. Closed 2 years ago, 2005.</p>

<p>The process:
A traditional bank offerred 30 year, fixed, no prepayment. A 15 year was also offerred. His big CU offerred 15 year at 4.75%, fixed, which beat out traditional bank by 0.75%. I told friend, that was too big of an interest difference to be an apple to apple comparison. </p>

<p>This week he got a letter from his CU telling him that his mortgage will reset in 3 years and there is a prepayment penalty for refi for the first 3 years. He is mad beyond mad. He told the loan person that he wanted a fixed loan - I said and that is what you got, “fixed for the first 5 years” , " you have to remember that the loan people get more commission for selling the more exotic products, and if you do not ask the Right questions, you do not know what you will get. “How many people understand interest payments and know how to interpret mortgage papers in the 2-3 days after signing the papers?”</p>

<p>He asked, “Next time, I am going to use a lawyer.”</p>

<p>I replied, “What is the lawyer going to say? The paper work is all inorder, it is legal, complete, and explained everything in great detail. You signed the paperwork and you said nothing in the Right of Refuse period.”</p>

<p>I then explained, “You have to asked the lawyer the same questions that you would have to ask the mortgage person at the CU. If you do not know the Questions to ask, you Will be taken advantage. How many people do you know , that will give you the questions and answers that will Prevent a sale, especially when the commission is in the thousands $?”</p>

<p>He said, " I trusted these people, I’ve done business with them for decades. It is my Credit Union, I am part owner."</p>

<p>Conclusion: A big sigh.</p>

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<p>If the economy goes into deep recession, his reset may be lower than 4.75%. He just needs to have patience.</p>

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<p>dstark,</p>

<p>It goes back to the idea of moral hazard again. As long as people are not held fully responsible for their action, we are encouraging the rise of the psychopath as a ruling class.</p>

<p>Robert Hare is correct. Wall Street is the worst, next to the prison population.</p>

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<p>I haven’t been priviledge to see the mortgage papers but… the rate could be pegged to LIBOR or PRIME plus ~6% to ?. Variable and hybrid loans are guaranteed to be another refinance and commission. I would guess that a near 0 loans will reset below 8.5%. </p>

<p>The trouble with Wall Street is that they don’t see the rot that unlies their risks. The trouble with the common folk is that the sellers, sell, and the buyers, buy. We only have to see what happens on CC Forums to confirm the transaction between student and college. </p>

<p>The biggest psychopaths are the buyers and the sellers. The Money People just make it happen.</p>

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<p>The buyers and sellers are greedy, some of them may be psychos. The ones who put the subprimes together, the ones who authorize it, and the ones who sell them for commission have to be psychos.</p>

<p>Psychopath is a clinical diagnosis. The following from ABC radio helps to delineate what and who they are:</p>

<p><a href=“ABC Radio National”>ABC Radio National;

<p>Here are two excerpts:</p>

<p>"Enron Trader 1: Burn, baby burn, that’s a beautiful thing.
Announcer: They ooze charm and charisma, with more sizzle than a steak…
Enron CEO, Ken Lay: I’ve never seen the company stronger, I’ve never seen a better position.
Announcer: They’ll do whatever it takes…
Enron Trader 2: Oh, just tell ‘em a bunch of lies. Weave a bunch of lies and that’s what we did.
Announcer: And take whatever is offered…
Enron Trader 3: Can we rephrase that?
Enron trader 4: OK, he “arbitrages” the California market to the tune of a million bucks or two a day.
Announcer: They thrive on risk, chaos and upheaval…
Enron trader 5: Well why don’t you just go ahead and shut it down if that’s OK.
Enron trader 6: Enron, oh, holy ****, that thing got smoked.
Announcer: And when things go wrong, they won’t be the ones apologising…
Ken Lay: Obviously I wish what happened hadn’t happened, but we can’t re-do history now.
Announcer: Corporate psychos, coming soon to a workplace near you.
Enron trader 6: Oh God, I can’t handle it anymore.
Announcer: Corporate psychos. "</p>

<p>And,</p>

<p>" 1)Does your boss or workmate come across as smooth, polished and charming?
2)Do they turn most conversations around to a discussion about them?
3)Do they discredit or put others down in order to build up their own image and reputation?
4)Can they lie with a straight face to their co-workers, customers, or business associates?
5)Do they consider people they’ve outsmarted or manipulated as dumb or stupid?
6)Are they opportunistic, ruthless, hating to lose and playing to win?
7)Do they come across as cold and calculating?
8)Do they sometimes act in an unethical or dishonest manner?
9)Have they created a power network in the organisation, then used it for personal gain?
10)Do they show no regret for making decisions that negatively affect the company, shareholders, or employees?</p>

<p>Ian Walker: If you scored at least six out of ten, there’s a good chance you’ve already met what’s known as an industrial or ‘corporate psychopath’."</p>

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<p>“If you scored at least six out of ten, there’s a good chance you’ve already met what’s known as an industrial or ‘corporate psychopath’.”</p>

<p>Or simply a run-of-the-mill capitalist. ;)</p>

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<p>Canuckguy, that post barely dignifies a response. How, exactly, do the executives who knowingly and deliberately lied about Enron and singlehandedly destroyed it have any similarity to the Wall Street investment analysts who miscalculated on this housing issue?</p>

<p>Lovely schadenfreude everyone here is wallowing in. “Yeah, I’d love to watch the rich guys fall, hard!”</p>

<p>Disgusting.</p>

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<p>If they did any actual calculations they should have known the wheels would come off around 2006. They did not and ignored all the rational analysts. On a scale of 1-10 Enron being a 10 they are about a 7.5.</p>

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<p>Nice to see different sides agreeing her (Barrons and Mini–it’s beautiful). So 1in42, do you just think those analysts were kind of dim, or what?</p>

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<p>Is there actually anyone, anywhere, who was unaware that the goofy loan practices were contributing to an unsustainable runup of housing prices by 2006, and that the bubble had to burst? The key to a successful Ponzi scheme is to cash out before the house of cards comes crashing down - so you actually kind of have to figure that the poor saps holding the bag at Bear Sterns in 2008 were the dimmest bulbs on the street. (The part time CEO, who was “only” making eight figures a year, probably just couldn’t be bothered to pay attention between golf games.) Everyone else probably figured they could dodge the fallout - that was just hubris.</p>

<p>But it’s still true - if Wall Street catches cold, Main street gets pneumonia. We all know what flows downhill. How bad is it for the guys who were at the middle of the scam and made the most bucks from it while it was running? The Bear Sterns CEO has seen his stock holdings fall from 9 figures to a low 8. The outrageous injustice of it!!!</p>

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<p>This is a great article from the Economist magazine.</p>

<p>The finance business is going to have to get smaller.</p>

<p><a href=“http://www.economist.com/finance/displaystory.cfm?story_id=10881318[/url]”>What went wrong;

<p>"For the critics of modern finance, Bear’s swift end on March 16th was the inevitable consequence of the laissez-faire philosophy that allowed financial services to innovate and spread almost unchecked. This has created a complex, interdependent system prone to conflicts of interest. Fraud has been rampant in the sale of subprime mortgages. Spurred by pay that was geared to short-term gains, bankers and fund managers stand accused of pocketing bonuses with no thought for the longer-term consequences of what they were doing. Their gambling has been fed by the knowledge that, if disaster struck, someone else—borrowers, investors, taxpayers—would end up bearing at least some of the losses.</p>

<p>Since the era of frock coats and buckled shoes, finance has been knocked back by booms and busts every ten years or so. But the past decade has been plagued by them. It has been pocked by the Asian crisis, the debacle at Long-Term Capital Management, a super-brainy hedge fund, the dotcom crash and now what you might call the first crisis of securitisation. If the critics are right and something in finance is broken, then there will be pressure to reregulate, to return to what Alistair Darling, Britain’s chancellor of the exchequer, calls “good old-fashioned banking”. But are the critics right? What really went wrong with finance? And how can it be fixed?"</p>