If you doubted that the derivative market in sub prime loans and apparently a lot that are not, amount to a PONZI scheme not unlike Bernie Madoff's transgressions, just read this piece in the New York Times. http://www.nytimes.com/2011/03/06/business/06mers.html?pagewanted=1&hp
This kind of thing was called stacked sales in Colorado in and near Breckenridge in the early 50s. Sell high prairie ranches to far away buyers, selling the same property over and over until a buyer shows up.
Reselling packaged mortgages as investment innovations, amounts to the same thing. How many times does one mortgage show up in multiple investments? When one investment instrument owns interest in another it amounts to just that. Privatize it. Take it away from the slow meticulous county clerk and there you have it.
The real estate business has always been a dirty business. Derivatives are not regulated; that was their appeal. Big banks call it leveraging. I call it stacked sales. When it falls apart, there is the pretext of innocence and the government holds the bag. This is no different than the Savings and Loan Crisis or the HUD Loan Crisis a decade earlier -- or for that matter - Madoff.
My economics is strictly agrarian and the street of hard knocks, but I say the economy would benefit greatly by the failure of MERS. The cancellation of all the mortgages they hold, would result in the transfer of all that over inflated and over leveraged wealth back into the hands of the home owners --- Talk about a stimulus package, 60 million loans worth and nobody gets hurt, only the last foolish purchaser of derivatives and the credit default swap guys. I wonder how much Chinese money is holding these ethereal derivatives? Political embarrassment, oh well.
The sub-prime crisis was a money pump striping wealth from the general population into the hands of mortgage bankers who made themselves wealthy before the crash -- and still are. When the pump fails the water flows back.
This kind of thing was called stacked sales in Colorado in and near Breckenridge in the early 50s. Sell high prairie ranches to far away buyers, selling the same property over and over until a buyer shows up.
Reselling packaged mortgages as investment innovations, amounts to the same thing. How many times does one mortgage show up in multiple investments? When one investment instrument owns interest in another it amounts to just that. Privatize it. Take it away from the slow meticulous county clerk and there you have it.
The real estate business has always been a dirty business. Derivatives are not regulated; that was their appeal. Big banks call it leveraging. I call it stacked sales. When it falls apart, there is the pretext of innocence and the government holds the bag. This is no different than the Savings and Loan Crisis or the HUD Loan Crisis a decade earlier -- or for that matter - Madoff.
My economics is strictly agrarian and the street of hard knocks, but I say the economy would benefit greatly by the failure of MERS. The cancellation of all the mortgages they hold, would result in the transfer of all that over inflated and over leveraged wealth back into the hands of the home owners --- Talk about a stimulus package, 60 million loans worth and nobody gets hurt, only the last foolish purchaser of derivatives and the credit default swap guys. I wonder how much Chinese money is holding these ethereal derivatives? Political embarrassment, oh well.
The sub-prime crisis was a money pump striping wealth from the general population into the hands of mortgage bankers who made themselves wealthy before the crash -- and still are. When the pump fails the water flows back.
Comments