Was Irrational Exuberance Really Just Dirty, Sexy, Money???

Alan Greenspan, former chairman of the Board o...

Alan Greenspan via Wikipedia

The bailout..what is it exactly bailing out?  Or perhaps more importantly, WHO is it bailing out?

Well to get to these answers, which of course you won’t find coming out of any of the mainline media, you have to look back.  In fact, if you go back to 1999 the time was the Clinton administration and the place was a conference on mortgage markets for America’s Community Bankers.

Speaking at the conference was chairman of the Federal Reserve Alan Greenspan:

“The recent rise in the homeownership rate to over 67 percent in the third quarter of this year owes, in part, to the healthy economic expansion with its robust job growth. But part of the gains have also come about because innovative lenders, like you, have created a far broader spectrum of mortgage products and have increased the efficiency of loan originations and underwriting. Ongoing progress in streamlining the loan application and origination process and in tailoring mortgages to individual homebuyers is needed to continue these gains in homeownership…Community banking epitomizes the flexibility and resourcefulness required to adjust to, and exploit, demographic changes and technological breakthroughs, and to create new forms of mortgage finance that promote homeownership. As for the Federal Reserve, we are striving to assist you by providing a stable platform for business generally and for housing and mortgage activity.“*

Greenspan had previously addressed the Mortgage Bankers’ Association where he had strongly promoted real estate mortgage backed securitization as the wave of the future. That speech included:

“Greater stability in the supply of mortgage credit has been accompanied by the unbundling of the various aspects of the mortgage process. Some institutions act as mortgage bankers, screening applicants and originating loans. Other parties service mortgage loans, a function for which efficiencies seem to be gained by large-scale operations. Still others, mostly with stable funding bases, provide the permanent financing of mortgages through participation in mortgage pools. Beyond this, some others slice cash flows from mortgage pools into special trenches that appeal to a wider group of investors. In the process, mortgage-backed securities outstanding have grown to a staggering $2.4 trillion…, automated underwriting software is being increasingly employed to process a rapidly rising share of mortgage applications. Not only does this technology reduce the time it takes to approve a mortgage application, it also offers a consistent way of evaluating applications across a number of different attributes, and helps to ensure that the down-payment and income requirements and interest rates charged more accurately reflect credit risks. These developments enabled the industry to handle the extraordinary volume of mortgages last year with ease, especially compared to the strains that had been experienced during refinancing waves in the past. One key benefit of the new technology has been an increased ability to manage risk . Looking forward, the increased use of automated underwriting and credit scoring creates the potential for low-cost, customized mortgages with risk-adjusted pricing. By tailoring mortgages to the needs of individual borrowers, the mortgage banking industry of tomorrow will be better positioned to serve all corners of the diverse mortgage market.” * Source: F. William Engdahl

Asset securitization became a multi-trillion dollar business and basically converted not easily sold assets into liquid assets.  (For more see: Financial Crisis: Asset Securitization)

The new financial architecture brought us to where we are today.  (And yes Barney Frank, you’ve been on top of it, in it, and behind it all along.  Your fingerprints are all over this mess!)

The Wall St. millionaires who everyone is so furious with, helped to forumulate the blueprint for this financial chaos.  And in the middle of the design was none other than Henry Paulson, former chairman of Goldman Sachs!

The head of Goldman Sachs was one of the principal architects of the securitization markets and is now the principal charged with designing the solution to the collapse of America’s financial markets.

Why the bailout for AIG and not Lehman?

According to sources, “were Goldman Sachs to go down with AIG, Secretary Paulson would have reportedly lost $700 million in Goldman Sachs stock options.” **

Why does Paulson get to write a $700 billion check for whomever or whatever he deems appropriate to buy asset-backed securities, or toxic paper, with VERY LITTLE OVERSIGHT which he specifically requested?

Are we not talking about his Wall St. cronies?

Does he not have a personal financial stake in this process from his i-bank days?

The $700 billion question is this: to some degree, at the heart of the financial mess is Paulson.  Doesn’t a vested interest represent a HUGE conflict of interest regarding this situation?

What does the bailout do for us taxpayers?  Are we helping ourselves?  Or are we really helping arrogant traders, executives, friends, and cronies who helped pound the final nails into our financial coffins?

Why aren’t we asking these questions?  Why aren’t we vetting who should be responsible for designing the blueprint to recover from the most complex, intricate, costly financial collapse of our time?

Are we going to spend $700 billion only to find that we haven’t fixed the problems at the root of the issue, and consequently we’re in an even bigger mess?

We should be asking questions LOUDLY!  We should be DEMANDING answers!  We should not be rushing for a “quick fix” because an election is weeks away.

Source: “F. William Engdahl is the author of A Century of War: Anglo-American Oil Politics and the New World Order (Pluto Press) and Seeds of Destruction: The Hidden Agenda of Genetic Manipulation, www.globalresearch.ca. The present series is adapted from his new book, now in writing, The Rise and Fall of the American Century: Money and Empire in Our Era. He may be contacted through his website, http://www.engdahl.oilgeopolitics.net.”

I urge you to look at the detailed information Engdahl has been writing regarding these issues.

See what he has to say and look closely at the journey we took to get here.

Research the past; and ask the questions our futures depend on.

Was irrational exuberance really just dirty, sexy money?


Bailout: Sweetspot or Handout?

Financial Asset Securitization

Financial Tsunami: The End of the World As We Know It

* Source: F. William Engdahl

JOHN PRESCOTT

BostonKayakGuy

Top Real Estate Agent for more than 14 years, serving the real estate needs of  Wellesley, South Natick, Weston, Needham, Wayland, Newton, Framingham and other MetWest communities.  www.johnprescott.net

JOHN PRESCOTT

Vice President

Century 21 Commonwealth

508-523-9252

BostonKayakGuy…The MetWest Scene

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