You will never find a more wretched hive....

In May, it sold about $15 billion worth of mortgage-related assets to the investment firm BlackRock-but only after it agreed to finance most of the purchase price.

Somebody explain to me how this works.

benlonghair:Somebody explain to me how this works.

You want to buy my house. You can't afford my house. My house is, actually, sinking into a swamp, so I have no clue why you'd want to buy it-- probably for something shady.

So I loan you the money to buy my house. You borrow the money from me, then pay me for the house. You know own the house and owe me a lot of money, which I'll probably never seen again, but for the current moment it appears I haven't lost 15 billion.

Like that.

Obdicut: So I loan you the money to buy my house. You borrow the money from me, then pay me for the house. You know own the house and owe me a lot of money, which I'll probably never seen again, but for the current moment it appears I haven't lost 15 billion.

That's kinda what I thought.

/facepalm

benlonghair:That's kinda what I thought.

Oh, and the awesome part is if it can be demonstrated that we both knew that the mortgage-related assets weren't worth $15 billion, it's a rather large crime.

Obdicut:Like that.

Very well said.

You know how a little kid will hide under a blanket and think he/she is invisible? These guys never seemed to have progressed beyond that.

Its like the whole object permanence stage of development never happened for them.

Obdicut:Like that.

Thank you. I always seem to need some help on these lending issues.

benlonghair:That's kinda what I thought.

It gets better. You can mortgage mortgages.

I bet that's why the company borrowed to buy them. They can then get a short-term loan at huge punitive interest, use the money to do something where the money can't be recouped, do into default, and the worthless mortgages are then assumed by whoever gave them the loan, who keep passing it along.

As long as they keep up the fiction that they believe it has value, it's a hot potato and the music never stops. Just a permanent 15 billion dollar hole circulating around, like the garbage scows in the ocean that aren't allowed to dock anywhere.

Nestea Plunge:Is that kind of like what Enron was doing when they spun their debt off into these companies that didn't exist?

Sorry, I don't actually know anything much about the debt side of the Enron stuff. But if they're spinning it off into companies that don't exist, then yeah, it's so that the seizure of property seizes nothing of actual value. That can be done with the other person knowing they get nothing of value, or you sticking them with the hot potato. I think Enron stuck someone with the potato.

But like I said, I don't know. That's the standard way of doing it, though.

Obdicut:Just a permanent 15 billion dollar hole circulating around, like the garbage scows in the ocean that aren't allowed to dock anywhere.

Kind of like Bialistock & Bloom?

MorrisBird:Kind of like Bialistock & Bloom?

Not quite. They sell off 500% of the show, right? In that case they're only in trouble if the show makes money, because they have to pay out at 500%. If the show fails, they don't have to pay out anything. It's similar in that their plan involves reducing the value of their commodity to zero, but the worthless-morgtage case wouldn't ruin anyone if it turned out the mortgages suddenly were making money, it'd actually be a windfall for whoever was holding them at the moment.

I'm fairly sure mortgaging at 500% isn't, you know, legal.

In my fantasy, Graham and Rove share the same jail cell.

so the timing of the McCain throwing him under the bus in 5 seconds now looks suspicious. was this a pre-emptive bus tossing?

MorrisBird:Kind of like Bialistock & Bloom?

Less cunning and less competent.

http://finance.yahoo.com/echarts?s=UBS (new window)

I love this chart. Buy and hold.

MorrisBird:Kind of like Bialistock & Bloom?

Impressive yet subtle Godwin you did there.

quickdraw:Impressive yet subtle Godwin you did there.

You're giving me way too much credit. I honestly don't understand this shiat. I was a theater major as an undergrad. I toted tray for a lot of years. I seek out people like Obdicut to explain these things to me.

MorrisBird:I seek out people like Obdicut to explain these things to me.

As my lawyer recently said to me, "If most people really understood how the finance system worked, they'd kill everyone involved in it."

It's partially obfuscated on purpose; like making individual investors think that stockbrokers want to earn them money. Stockbrokers use individual investor's accounts as a place to dump bad stock. Randomly choosing your stocks is actually a better method than hiring a stockbroker.

The media covering a McCain scandal?



THIS IS MADNESS!

robsul82:The media covering a McCain scandal?

They're mainly covering how ill-served he is by his friends and how tragic it is for him that he has to push them away.

Poor, sad, lonely McCain.

Obdicut:Stockbrokers use individual investor's accounts as a place to dump bad stock.

I just got the bill from my stockbroker. He lost me over 50 grand this year (mind you I don't have much invested) and charged me $500 for the privilege each quarter. I should probably educate myself. I don't get this.

I bet there will be a lot of whining at Phil Gramm's country club after this story hits the media...

/if it ever does?

MorrisBird:I just got the bill from my stockbroker. He lost me over 50 grand this year (mind you I don't have much invested) and charged me $500 for the privilege each quarter. I should probably educate myself. I don't get this.

Seriously, dude-- fire your stockbroker. I swear to god that part of his job is to screw you so that he can give better deals to the megabuyers.

There are a few honest stockbrokers out there. I can't name one off the top of my head.

If you want my advice, research the precious metals involved in making solar and wind power (palladium's a good one) and invest in that. Berkshire Hathaway is always good too, though you should probably wait until Buffett dies/is reported sick, when the price will drop. It'll rebound, don't worry.

Oh, and this is-- obviously-- a perfect time to buy US financials, like this particular bank. That's another long-term buy though.

/I am not a financial adviser, I accept no liability for bad advice, your mileage may vary, and I own all of the stuff I recommend so I would benefit from your purchase of it.

MorrisBird:Obdicut:Stockbrokers use individual investor's accounts as a place to dump bad stock.

I just got the bill from my stockbroker. He lost me over 50 grand this year (mind you I don't have much invested) and charged me $500 for the privilege each quarter. I should probably educate myself. I don't get this.

dude... 50 grand?!???! what the hell do you do that you can calmly say that? I thought you said you were a theatre major???

If he and his wife walked away from Enron (he the Senator who sponsored the "Enron loophole", she on the board of directors of Enron at the same time), this ain't stickin, either.

Nestea Plunge:Obdicut

Is that kind of like what Enron was doing when they spun their debt off into these companies that didn't exist?

Enron's tactics were another level of shady. What UBS did has a kind of stoner logic to it, but Enron created new scams out of whole cloth. This video explains it in easy-to-understand terms.

Obdicut:Oh, and this is-- obviously-- a perfect time to buy US financials, like this particular bank. That's another long-term buy though.

/I am not a financial adviser, I accept no liability for bad advice, your mileage may vary, and I own all of the stuff I recommend so I would benefit from your purchase of it.

gotta disagree. banks are in for a world of hurt. defaults are UP 50% since last year. FNM and Freddie are about to blow up. its about to get a lot worse before we can even think the financial stocks are about to recover.

depmode98:I thought you said you were a theatre major???

I'm an old theater major who went to law school at age 37. Ten years of housewifery and 15 years as a reference librarian does not turn you into anything other than a financial naif.

ah. gotcha. thinking about going to law school. just got out of college, and the temp agencies won't even return my calls.

Obdicut:robsul82:The media covering a McCain scandal?

They're mainly covering how ill-served he is by his friends and how tragic it is for him that he has to push them away.

Poor, sad, lonely McCain.

True. At least it'll go into SOME brains as "why does he have this guy as his economic chief again?" And I AM still waiting for someone who isn't on "Countdown" to ask, "Um, how much of your economic plan was written by someone who thinks we're hallucinating a recession and whining about it when we do?" and not let McCain off the hook until he answers.

depmode98:gotta disagree. banks are in for a world of hurt. defaults are UP 50% since last year. FNM and Freddie are about to blow up. its about to get a lot worse before we can even think the financial stocks are about to recover.

Yes. They're not at the bottom. But if you hold them for many years, they'll get better. And waiting for the bottom, unless you're really, really, really good, is a bad strategy.

Long-term buy only. Some will go out of business. Others will rebound to 1000% of current. Ten year hold.

You want safe, invest in palladium, platinum, and aluminum.

Donald_McRonald:Enron's tactics were another level of shady. What UBS did has a kind of stoner logic to it, but Enron created new scams out of whole cloth. This video explains it in easy-to-understand terms.

Thanks for that. Man. What utter farking bastards.

depmode98:the temp agencies won't even return my calls.

Been there, done that. Good luck. It gets better.

For people who believe capital punishment is a deterrent, if Obdicut:MorrisBird:I seek out people like Obdicut to explain these things to me.

As my lawyer recently said to me, "If most people really understood how the finance system worked, they'd kill everyone involved in it."

It's partially obfuscated on purpose; like making individual investors think that stockbrokers want to earn them money. Stockbrokers use individual investor's accounts as a place to dump bad stock. Randomly choosing your stocks is actually a better method than hiring a stockbroker.

The more I've dug into this, the more it looks like the financial markets have created the biggest con job in the history of the world. All they had to do was make it so huge and complicated of scam that nobody could believe it was really happening.

I'm up for instituting capital punishment for executives at financial corporations that swindled $1 billion or more (I'd go lower, but that's a good start). They could get more lenient sentences only if they help to snitch out 2 or more of their pals.

MorrisBird:Been there, done that. Good luck. It gets better.

Seconded. Keep your chin up and don't-- don't-- don't be afraid to use your contacts to get a job. That's how most people do it, there's nothing unethical about it. They know you, they can recommend you.

All this, so a few assholes can buy frikkin $6,000 shower curtains.

IAmNotGryn:The more I've dug into this, the more it looks like the financial markets have created the biggest con job in the history of the world. All they had to do was make it so huge and complicated of scam that nobody could believe it was really happening.

The SEC is rather clearly complicit in it.

IAmNotGryn:I'm up for instituting capital punishment for executives at financial corporations that swindled $1 billion or more (I'd go lower, but that's a good start). They could get more lenient sentences only if they help to snitch out 2 or more of their pals.

I don't believe in capital punishment, but I do believe in penetrative asset forfeiture. It's not as cool-sounding, but it means a judge using logical means to penetrate liability shields.

ObdicutI don't believe in capital punishment, but I do believe in penetrative asset forfeiture. It's not as cool-sounding, but it means a judge using logical means to penetrate liability shields.

Put 'em in prison, where they can experience a little penetrative ass, too.

Obdicut:Thanks for that. Man. What utter farking bastards.

The best one is the can't-lose derivatives contract. It's just so brazen in its disregard for the law, ethics, reality, etc.

Obdicut:I do believe in penetrative asset forfeiture.

Tee hee, he said "penetrative asset forfeiture. Okay, sorry. This is a serious thread about money. I have trouble talking about money. Sex, I understand. Money scares me.

I killed another thread, didn't I? Damn, I hate me.

MorrisBird:I killed another thread, didn't I? Damn, I hate me.

Smooth move assethole.

Falcc:Smooth move assethole.

Buy me a beer?

Nestea Plunge:Obdicut

Is that kind of like what Enron was doing when they spun their debt off into these companies that didn't exist?

Sort of. It's like one of the things that Enron did. They basically formed their own sub companies, and ran that scam, "shifting" all liabilities onto the sub companies.

They also price fixed, by cutting off electricity on hot days.

Obdicut:...
As long as they keep up the fiction that they believe it has value, it's a hot potato and the music never stops. Just a permanent 15 billion dollar hole circulating around, like the garbage scows in the ocean that aren't allowed to dock anywhere.

I didn't think that economics could be poetry.

Love Boat: whine

WHARRGARBL

It is the cyclical nature of the financial markets compounded by the use of increasingly complicated financial engineering that most market participants do not understand. Do not play unless you understand the rules.

All right, now the press has to reveal Carly Fiorina's dealings with Iran as CEO during the boycott, and Nancy Pfotenhauer's role as director of Koch Industries, which was bailed out by the Bush admin. before the higher ups went to jail for epic scale air pollution...