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, Thu, 21 Jul 2011 01:04:47
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People who bought in 2007 mostly made out all right, as most of the $240k was probably borrowed with next to nothing down. They can rent after handing over the keys. The ones nearing retirement and put down substantial equity in 2007 were the ones got screwed.
Them, and the taxpayers and dollar holders the world over as they are forced by politicians to bail out the lenders on the other side of the trade on those upside down deals as well as multipliers as consequence of multiple derivative contracts riding on each of those bad loans; i.e. taxpayers in many countries are being forced to cough up multiple times the $140k/house lost. It's a clever scam to enslave the world's population at large:
Say, Bank A with $24k capital lent to home buyer $240k with $0 down in 2007, and simultaneously bought a default insurance from Bank B; while Bank B also having only $24k capital lent to a similar home buyer for a similar house also with $0 down, and took out a default insurance from Bank A. Then market appeared to be falling over in 2008, each bank took out a 5x multiplier put option/"insurance" from each other on the odius loan securitizations. Now both houses lost $140k, and thanks to the multiplier derivatives, each bank owes each other $840k, for a total of over $1680k in nominal bad debt, way more than the capitalization ratio from their $24k capital each would allow. Now the bought and paid for politicians come along and tell the people that they have to bail out the banks. It gets even better (for the banks): where would the government get the money? why, through borrowing from the very same Bank A and Bank B by promising future enslavement of the people (future taxes) of course. With that government promise, Bank A and Bank B are suddenly solvent by conjuring up another $1.68 mil out of thin air to lend to the government (government bonds are 100% counted as cash equivalent assets). They get to be paid three times:
1. when the bad loans and bad insurances were underwritten at the peak of the bubble: bonus for performance.
2. when they get bailed out.
3. when they get to collect principle and interest payment on the very money that bail them out.
Any wonder the TBTF banking cartel loves bubbles and busts?
posted by 24.91.39...
, Thu, 21 Jul 2011 01:04:47
, Thu, 21 Jul 2011 11:24:45, Thu, 21 Jul 2011 05:36:17, Thu, 21 Jul 2011 07:48:52, Thu, 21 Jul 2011 15:08:44
, Wed, 20 Jul 2011 21:34:03
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