Sunday, January 03, 2016

"The BIG Short" and the BIG issue...

I met Stephen Moore at a Conservative convention near Washington DC a few years back and heard him speak about what would happen if Senator Obama was to be elected and he pretty much was right on. Bought his book "The end of prosperity" and if we knew then what we know now...

He has a good piece here at Investors Business Daily about the move "The Big Short" which is out now and makes several good points.

One lesson of the real estate crash is that markets don't always work perfectly, far from it — but they work better than any alternative. It's critically important that investors, bankers, taxpayers and politicians learn why things went haywire so they don't happen again.

The new hit movie "The Big Short," based on Michael Lewis' bestselling book, is an entertaining and suspenseful reenactment of all the breakdowns in the banking and housing industries that caused the financial world to go collectively mad and the many unsavory characters.

It brings back bad memories of how symbiotic relationships among auditors, credit rating agencies, banks and insurance companies created dastardly conflicts of interest.

Very much true we need to learn from our mistakes and unfortunately we do not have a leader in the White house and in fact one who is dividing more than anything.

I've never understood why auditors and credit rating agencies work for the financial institutions, not the investors. It's like the old joke about the CEO who asks his accountant: "What is two plus two?" The accountant looks around and whispers, "What do you want it to be?"
McDonald's workers were getting half million-dollar mortgages. One Miami stripper owned five houses and had five mortgages. The credit agencies were giving triple-A bond ratings to junk mortgage-backed securities without even examining the unpayable low down payment "NINJA" (no income, no job) loans in the portfolios. These ratings were handed out right up to the very eve of the crash.

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