Few people understand the notional value of a derivative vs. the amount at risk.
If I bet you a dollar that the Dow will go up tomorrow, the notional value is billions of dollars in trading in Dow stocks. But the most I can win or lose is still only a dollar.
And the Middle Class will pay the bill while the derivative people retire to their private islands. Ever since the Savings and Loan bailout, the slicky-boys have been after government money.
This sort of misbehavior on the part of bankers got us a Fake White Indian as a US Senator.
Keep it up and the country may vote for “public option banks”, followed perhaps by full-on Communism.
These guys just don’t know when to quit.
Nonsense. It was poor folks buying homes, you betcha.
bump
I remember that the entire home mortgage value was once estimated at $1.2 trillion dollars. Conservative dogma aside, the facts seem to show this country would have been better off to have the US Government pay off each and every home mortgage that existed in the US as a home mortgage TARP
Fix the problem by restoring the Glass Steagall law prohibiting commercial banks from engaging in speculative investment banking activities. Most businesses and individuals deal with commercial banks. The repeal of Glass Steagall gave the speculative investment bankers access to customer deposits for speculating, not the traditional commercial banking activity of making loans to support business and individuals.
Restore the conservative commercial banking sector. Let investment banks raise their own capital in the equity and bond markets for speculative trading in derivatives and mortgage backed securities. If derivatives unwind badly, the investment banks can be liquidated harming only their shareholders and bondholders and not putting the separate commercial banking system at risk.
It wasn't "fixed" last time. The only way for the government to handle these things is to not participate in any notion of fixing anything, To deregulate markets and deregulate business in general and to permanently and greatly cut tax rates. The resulting crash will be terrible but rather less terrible than the one that is inevitably going to occur after the government has consumed most of the economy/society's resources in bailout and theft schemes. And a crash that results in drastic reduction in the governmental obstacles to markets and profits will be amazingly short-lived compared to the one the wreckage of which we are still wallowing in.
BTTT!