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<title><![CDATA[Comments for entry "Things I Don't Understand" at Dilbert.com Blog]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/136]]></link>
<description><![CDATA[Regular thoughts and updates from Dilbert.com]]></description>
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<title><![CDATA[Comment  from webgrunt]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/13447]]></link>
<description><![CDATA[&quot;As I understand it, a bunch of geniuses used something called math to make it seem like a good idea to loan money to people who are unlikely to pay it back. But here's the part I don't understand: Who invested in these risky securities?&quot;

As I understand it, the people who lent the money to people who weren't likely to pay didn't care, because they knew they could sell the loans to other businesses.  They accomplished this by conveniently forgetting to mention they were largely worthless.  The truth is of course more complex than this, but not by much.]]></description>
<pubDate><![CDATA[FriPMPDTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from robrjohnson]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/12852]]></link>
<description><![CDATA[The problem is that the bad mortgages were bundled in with good mortgages and it was not possible to tell how much risk was embedded in the security.
http://www.newscientist.com/article/mg19926754.200-the-blunders-that-led-to-financial-catastrophe.html]]></description>
<pubDate><![CDATA[FriPMPDTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from Stomper]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/12684]]></link>
<description><![CDATA[While it is true that some people get cheated when they rely on an expert to help them cope with complexity, it is also true that there are many experts who make a good living by helping the non-experts without cheating them.

From personal experience, I can attest to this in the law, in organized religion, and in automotive repairs.]]></description>
<pubDate><![CDATA[ThuAMPDTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from Will Von Wizzlepig]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/12633]]></link>
<description><![CDATA[Upon reading your opening line, &quot;As a general rule, wherever you find a large group of people who are baffled by complexity, you will find a smaller group of people making a good living !$%*!$%* them.&quot;, I immediately thought:

'Organized religion'.

And then I thought- Dawkins and Myers would be proud.]]></description>
<pubDate><![CDATA[WedPMPDTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from dellb]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/12628]]></link>
<description><![CDATA[Re:  &quot;fire your financial advisor&quot;   Easier said than done.  It's a corp 401K plan with only a few selections to choose from; we do get some company match on this, however.   As you point out  in 10/15 post, I believe,  &quot;you think you are diversified, but you are not.&quot;  Oh -- and the list of Top 10 Holdings for my plan includes 3 of Fannie Mae's offerings and also AIG  ---   Arrrgghhh!    Luckily for me, I did not put ALL my eggs in the 401K basket!]]></description>
<pubDate><![CDATA[WedAMPDTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from Stomper]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/12619]]></link>
<description><![CDATA[Here's a Wshington Post article which, among other things, notes that the responsible lenders are really ticked off that they will now be competing against irresponsible lenders subsidized by ShrubCo.

http://tinyurl.com/492moo

Funny how those responsible lenders aren't complaining about being forced into bad loans and insolvency by the CRA.  They seem to think it is fair to characterize the failing lenders as &quot;irresponsible&quot; rather than as victims of legislation passed 30 years ago.  But they just work in the finance industry.  What do they know?]]></description>
<pubDate><![CDATA[WedAMPDTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from tleddy]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/12611]]></link>
<description><![CDATA[Here is TRVTH (WARNING - CHEERFULLY OBSCENE SITE)

This is &quot;The Subprime Primer&quot;

http://docs.google.com/TeamPresent?docid=ddp4zq7n_0cdjsr4fn&amp;skipauth=true&amp;pl

Enjoy...]]></description>
<pubDate><![CDATA[WedAMPDTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from opustheblue]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/12610]]></link>
<description><![CDATA[Ahh, I work for a company that got horribly burned by investing in mortgage backed securties and had had to sell off a big part of the company to survive.  The stock lost 95% of it's value.  They bet the farm and they lost.  It's clear the people buying this financial instruments did not understand them.  The rating agencies who rated these investment items as solid securities don't understand them or the impact they would have.

They were outside of the regulations because of the uniqueness of the instruments.  So many if's were built into them, that it was possible to have this happen.  You toss in the credit swaps to insure the instruments and you have a bunch of non-existant money that only exists if people can no longer pay for their mortages, people who were stretched to buy mortages.  So when the housing bubble popped we were screwed.  The longer things went on this way, the worse it was going to be when things changed.

I suspect this was figured out by a group of mathematicians kept changed in dungeon of a financial company who are never allowed to see the light of day.  Who forgot to mention &quot;Oh by the way it only works if housing prices continue to rise and we increase the number of mortages/refinances we write per year by 10%.&quot;

The more I look at this with these tiered mortage backed financial instruments and the credit swaps, the more it looks like nothing more than elaborate Ponzi scheme.  It was going to crash no matter what, it was more a matter of when.  So instead of prison time the people who created this are losing their jobs, but they're wealthy.
The rest of us acquire debt on a national level, jobs loses, home loses and so on,  This mortgage frenzy gave way to people seeing weath and tossing out morality and common sense.  However, never mix morality and legality.  Enough people exist on the edge or in the gray area of legality and exploit the loop holes for financial gain.]]></description>
<pubDate><![CDATA[WedAMPDTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from dansls1]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/12609]]></link>
<description><![CDATA[You don't get your news from the right sources if you didn't see what caused all this. Plus, according to the Wall Street Journal, the regulatory changes to prevent it in the future were made a couple years ago.

The issue was that the laws let the high risk loans be sold without labelling them as high risk. Rules are now in place to prevent that, but it didn't stop the backlash from the original issue.]]></description>
<pubDate><![CDATA[WedAMPDTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from oayche]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/12605]]></link>
<description><![CDATA[Luckily in Britain our humourists are on the ball (well, some of them anyway) .. check out this clip .. it explains the Subprime Crisis in glorious comedy ..

http://www.youtube.com/watch?v=pFmYIFk5i1Q]]></description>
<pubDate><![CDATA[WedAMPDTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from bertramH]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/12603]]></link>
<description><![CDATA[Nothing is real. Imaginary money is invested in imaginary values until someone says out loud that the emperor is naked.

What really strikes me is that the whole system is based on trust. In a cruel world where everybody screws everybody, trust seem to be the weakest concept possible to base anything on. Trust in the value of mortgaged homes: that value only exists in the imagination of people who would (or rather wouldn't) buy these homes - that means you trust in the vague feelings of total strangers you never met.

Only idiots (sorry - induhviduals) would invest on such a basis, and since there are six billion of those, there are six billion answers to your question. If that isn't overkill, I don't know what is.]]></description>
<pubDate><![CDATA[WedAMPDTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from sensetriad1]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/12602]]></link>
<description><![CDATA[I saw either on David Ramsey or Suze Orman, someone who lost all their savings in Lehman brothers, which then offered him five cents on the dollar. The man said he tried to get his money out, but he said his financial manager wouldn't let him. He didn't really seem sure why they wouldn't let him get his money out. 

I think that if you really don't have time to do much investing, you should start with bonds, F-DIC insured CD's, Ira's etc. and cover your butt at retirement age first. That's the route I'm trying to go.]]></description>
<pubDate><![CDATA[TuePMPDTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from KevinKunreuther]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/12601]]></link>
<description><![CDATA[I am assuming that you, Scott, will not be affected badly by this turn of events, because you follow your own common sense one page financial advice. It's just kind of awesome to bear witness to such an historic economic tsunami unfold, and watch amusingly but with a whiff of terror and a touch of terror, a bunch of milquetoasts running around with both thumbs jammed firmly inside their fundaments, trying to plug the gushing torrents from the badly constructed levees with their big toes and falling over and spinning like upended tortoises.
I feel prepared myself for The Next Big One (or even an average depression) , but I am concerned about how woefully unprepared 95% the rest of the country is to handle such a calamity. It's one thing if people lose faith in the financial institutions, but what happens if citizens lose faith in the governments propping up these institutions - it makes me woozy thinking what would happen next. Do we have leaders who would be strong, rise to the occasion, inspire the citizenry, or would it all fall apart amidst bickering, partisanship, petty ideologue battles, while the rest of civilization collapses?]]></description>
<pubDate><![CDATA[TuePMPDTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from ThisSucks]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/12596]]></link>
<description><![CDATA[The Subprime Primer:
http://docs.google.com/Present?docid=ddp4zq7n_0cdjsr4fn&amp;skipauth=true
This is a funny powerpoint-like presentation with hand drawn stick figures. It is funny and may actually answer your question of who bought all the crap.]]></description>
<pubDate><![CDATA[TuePMPDTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from tragicmishap]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/12595]]></link>
<description><![CDATA[The banks sold the mortgages and loans to other banks.  Those banks sold them to other banks, and so on.  It was a big game of hot potato and institutions like Wachovia, Lehman Brothers and Washington Mutual lost.]]></description>
<pubDate><![CDATA[TuePMPDTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from bwbeeman]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/12593]]></link>
<description><![CDATA[As a former stock broker, I sold CMO's (Colateralized Mortgage Obligations) to individuals.  There were also Freddie Mac securities, and there were Federal Home Loan Bank securities tied to mortgages. With the appointed Democrat criminal managers of Fannie Mae like Franklin Raines and Jamie Gorelic, this whole thing got out of hand.  The entire world got screwed by buying these mortgage investments.

So, yes, there are lots of widows and orphans with these worthless CMO's and CDO's in their portfolios.  There are also lots of widows and orphans with worthless Lehman Brothers bonds and notes in their portfolios.  How about some jail time for the Lehman Bros chairman and the former managers of Fannie Mae?

We were all taken in by the socially appealing idea of affordable housing for poor people.  We were all taken in by Fannie Mae.  

]]></description>
<pubDate><![CDATA[TuePMPDTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from Fire@will]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/12591]]></link>
<description><![CDATA[In the 90's, I had an honest job in respectable division of Countrywide.  One day a fellow cubicle rat explained about a small department that bundled loans and sold them as investments (I think the minimum size was 10 million dollars).  I thought my friend must be pulling my leg, especially when he claimed that one little department produced far more revenue than the rest of the company combined.]]></description>
<pubDate><![CDATA[TuePMPDTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from Stomper]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/12588]]></link>
<description><![CDATA[PhantomII:  If the CRA forced lenders to make sub-prime loans, then how do you explain the numerous banks that didn't?  Chase, Bank of America, and numerous local banks all avoided sinking into this quicksand, without violating the CRA.]]></description>
<pubDate><![CDATA[TuePMPDTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from lezone]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/12587]]></link>
<description><![CDATA[If you want to understand it in layman's terms you should check out the Planet Money podcast.  They have the most clear investigation into the crisis.

http://www.npr.org/blogs/money/

This American Life also had several good programs that covered it.  &quot;Giant Pool Of Money&quot; is a full show serving as a primer and the roots of the crisis:

http://www.thislife.org/Radio_Episode.aspx?episode=355

&quot;Another Frightening Show About the Economy&quot; covers it again in more detail and covers more of why it all cascaded into disaster:

http://www.thislife.org/Radio_Episode.aspx?sched=1263

And there's a good followup story in &quot;A Better Moustrap&quot; though it's not the whole episode, just Act 2, Financial Mousetrap:

http://www.thislife.org/Radio_Episode.aspx?sched=1265

Dan]]></description>
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<title><![CDATA[Comment  from OrionStyles]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/12583]]></link>
<description><![CDATA[If money grew on trees, at least then it would have some value, as orcahrds require maintenance. In a fractional reserve banking system, money is conjured out of thin air and constantly devalued.

As I understand it, servicing companies consolidated the mortgages and sold them off to inverstors in chunks before they went bad (and I bet they knew it was coming). Many of these investors used, of course, their own property assets as collateral. (people who invest in property like to invest more in property)

So you are hearing about these investors indirectly.... the banks own their collateral (property defaults) now too. :)

This is were I be all sinister and say that this was all done intentionally. Soon enough, the property will be devalued enough and the uber rich will swoop in and scoop them all up. So, they will still control all the money and own more of the real tangible things too, at everyone else's expense.]]></description>
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