A 60+ trillion market with no regulation is the very definition of insanity.

Why Congress is fiddling as the hedge funds continue to burn is way beyond me. In today’s environment it’s far, far easier to make money from fear than greed, so no matter what people say I’m convinced in their last ditch efforts to make money before the inevitable sunlight (regulation) shines into their darkened lairs, they are shorting the hell out of any stock they can get their hands on from 3-4pm everyday.

Until Congress grows a pair and regulates these a-holes, the volatility in the equity markets will continue, and the average investor (who is essential to orderly markets) will stay on the sidelines.

How Greenspan can go before Waxman’s committee today and say he didn’t see this coming is bullshit.

Waxman pointed out he had over 200 Ph.D.’s on a staff of 400 at the Federal Reserve, but he had no clue.

Greenspan even offered he still doesn’t exactly know what went wrong.

Really?

Spending a couple of days around here would be a good start.

I don’t get what the betting part outside of the original loan agreements, bundling and then passing them on is all about?

Somebody thought the mortgages would fail (because anybody with sense would know that) and got a bunch of CDSes, like an investment, like a bet for 10% down and 100% payoff when the mortgages/CDOs failed. Just a bet like a short sale on stock. Like betting a $1 on a horse to NOT win for a payoff of $2.

Of course, someone who didn’t own an asset has no business getting insurance to cover it’s loss.

Does anyone here really understand this? My understanding is just by changing the names of normal loans that banks and other lending institutions operated completely outside of normal oversight. By changing the names of defaulted loans to “credit default swaps” lenders, buyers and those who bet on these loans were able to pass the responsibility of backing these loans onto the next guy or insurance agencies until the bottom fell out? Am I close?

This reminds me of how Addington and others in the Bush administration were able to change the language and call Prisoners of War to “enemy combatants” and then operate outside of the Geneva convention

Same bunch of nuts/criminal/neocons/Ponsi-schemers, etc.

SEE MORE AT http://parodyandson.blogspot.com

A point there about banks being insolvent: by definition, banks as we know them are insolvent, even in ordinary cases. They’re always hedging that the capital they have on hand will aways at any given moment be sufficient to cover day-to-day debits from their books. There’s a fed minimum they are obliged to adhere to, but most banks stay above that minimum. Nevertheless, in a strictly accounting sense, banks are by definition bankrupt as a matter of course. It’s just that they manage to stay at least one step ahead of the grim reaper.

House Committee on Oversight and Government Reform: Federal Regulation of Financial Markets

Senate Committee on Banking, Housing and Urban Affairs: Regulatory Response to the Credit Crisis

… relied upon a twenty-year bull market in real estate (brought on by duel working families, the lowering interest rates enhanced by a generous Fed policy), complex algorithms developed by geeks trained at Harvard, Stanford, Cal Tech and MIT who had chased the big bucks on Wall Street. They also relied upon the word (and the historical practices) of Fannie Mae and Freddie Mac.

So why would Greenspan not want these hedge funders held accountable?