Just, wow. (OK, this has been in the wild for weeks, but we’ve been buried under snow up here and this is the first time I’ve watched it. I think Tufte would approve.)
Excellent.
Although…the way he describes CDO’s would better apply to MBS/RMBS. Somewhere along the way (as they were making all those no doc. loans) they began to have problems selling those bottom trays at desirable prices. So they came up with the idea of turning them into feeder lines to whole new sets of trays (CDO’s) which would then have a whole new set of AAA, BBB, down to Ccc, ratings. They still wound up with a bottom tray that was pure junk but the higher prices on the upper trays made them very proud and very rich. They had miraculously turned undesirable junk into quality investments.
My brother liked it too That may expose Jarvis’ work to a more generalized audience. It’s unfortunate that the links to Jonathan’s university work seem to be defunct (maybe he graduated?) I wouldn’t mind seeing his thoughts on the theory behind this work.
The Option ARM also had a nice accounting twist, which allowed WaMu to turn a potential negative into a positive. It could book the unpaid interest as noncash income. Negative amortization accounted for more than $1 billion in income in 2006 and again in 2007.
The main point that is being missed by all your pundits is this: The Fed is a figment of imagination of bankers and lawyers, and federal reserve notes are worthless credits and debits in a global system of finance that has collapsed:
Mish's Global Economic Analysis
Ohio Fraudclosure
Northern Virginia Housing Bubble Fallout
UK House Bubble
Bubble Meter
Breaking News
Excellent.
Although…the way he describes CDO’s would better apply to MBS/RMBS. Somewhere along the way (as they were making all those no doc. loans) they began to have problems selling those bottom trays at desirable prices. So they came up with the idea of turning them into feeder lines to whole new sets of trays (CDO’s) which would then have a whole new set of AAA, BBB, down to Ccc, ratings. They still wound up with a bottom tray that was pure junk but the higher prices on the upper trays made them very proud and very rich. They had miraculously turned undesirable junk into quality investments.
Yay! Glad you liked it.
I thought the visuals made it exceptionally clear.
NVmike,
My brother liked it too
That may expose Jarvis’ work to a more generalized audience. It’s unfortunate that the links to Jonathan’s university work seem to be defunct (maybe he graduated?) I wouldn’t mind seeing his thoughts on the theory behind this work.
… and yes, it really was that bad:
“Washington Mutual Option ARM fueled negative amortization time bomb”, by Gary Jacobson and Brendan Case, Dallas Morning News, March 1, 2009.
Excellent video and explaination.
All the bail-out is going to do is reward these greed balls and they will just do it again until there is nothing left for anybody.
Igor always has a way with words “outraged’
The main point that is being missed by all your pundits is this: The Fed is a figment of imagination of bankers and lawyers, and federal reserve notes are worthless credits and debits in a global system of finance that has collapsed:
http://www.associatedcontent.com/article/538095/how_our_global_economy_will_deflate.html?singlepage=true&cat=3
That’s a great video that clearly describes exactly why we’re all so smart and stupid at the same time. Greed is an amazing force isn’t it?