Aki wrote:
The recent money crisis is easily traceable to a number of things that don't include conspiracies that I won't get into so as to not drag this too far off in the direction of the bailout.
Normally I don't go in for the conspiracy theories, but here's one I
do believe in:
Fanny Mae and Freddie Mac began writing mortgages to millions of people who could not afford to pay them off because they could get AIG to insure them and make it profitable for them to suck what they could out of the housing bubble and screw the rest (since they were going to get paid one way or the other). Then they sold those "sub-prime" mortgages to AIG who repackaged them as "securitized" investments, also known as credit-default-swaps. AIG then sold the repackaged horses**t on the market to all kinds of other investors who had no clue which of the mortgages were good and which were not, but bought AIG's assurances that they were sufficiently diversified investments, enough so that Wachovia and Bank of America were willing to buy this cr*p.
Then they sold investment insurance on the credit default swaps, theoretically "securitizing" them further, and buying them back so that they could re-repackage the now (theoretically) more valuable investment packages. Then they sold the re-repackaged swaps, and... (wait for it)...
SOLD INSURANCE POLICIES ON THE STUFF AGAIN!!! Theoretically "securitizing" the assets even further and proceeding to repeat the whole process again and again. They felt entirely comfortable doing this because:
A. Glass-Steigal had been repealed under the Clinton Administration, and made all this legal.
and
B. The SEC, which might otherwise have stepped in, was effectively de-fanged by the neo-conservatives because
their guy was in the White House!
The last I heard, the SEC had managed to uncover one of these legalized Ponzi schemes AIG was running, and had revealed seven iterations of this cycle, and they were working on uncovering number eight. Oh, yeah, I almost forgot the best part: Nobody at AIG had to worry about getting caught (and not just because this had actually been made legal), because AIG is too major for the Feds to allow it to fail, so instead of carting all the bozos off to prison for running the entire planet into what may turn out to be a second Great Depression, we've given them something like $200,000,000,000 dollars more, and still counting!!!
Fanny Mae, Freddy Mac, and AIG. Now,
that's a conspiracy.
