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>>You are approximately right, but I don't think that they deliberately crashed the economy. Deliberately, no. But they knew it was unsustainable. Many industr

>>You are approximately right, but I don't think that they deliberately crashed the economy. Deliberately, no. But they knew it was unsustainable. Many industry insiders, as well as outside observers, likened the system to a house of cards. And when you play with a house of cards, you know damn well that it will come crashing down sooner or later.

totalZero 10y ago
That doesn't make any sense. The derivative products were rated AAA. Banks bought these products and put them on their balance sheets. Why would they knowingly throw away money? Three investment banks totally collapsed, and several more barely survived.
- enraged_camel 10y ago
  >>That doesn't make any sense. The derivative products were rated AAA. Those ratings were created as a result of significant conflict of interest. You should read John Bogle's treatise on the subject (he's the founder and retired CEO of The Vanguard Group): http://johncbogle.com/wordpress/wp-content/uploads/2006/02/Princeton-4-30-09.pdf http://johncbogle.com/wordpress/wp-content/uploads/2006/02/P... "Market participants—now dominated by speculators, not investors—also joined the parade of miscreants, and our professional security analysts failed to do their job of appraising company balance sheets, largely ignoring the huge credit risks assumed by the new breed of bankers and investment bankers. And let’s not forget our credit rating agencies, which happily bestowed AAA ratings on securitized loans in return for enormous fees that were paid in return by the issuers themselves. (It’s called “conflict of interest.”) Yes, there’s plenty of blame to passaround."
nl 10y ago
This is approximately correct. I think it is worth noting the subtleties around "they", though. Some people thought it was unsustainable. Others were dumb and didn't. Many didn't care and just wanted to be paid, now.

totalZero 10y ago

That doesn't make any sense. The derivative products were rated AAA. Banks bought these products and put them on their balance sheets. Why would they knowingly throw away money? Three investment banks totally collapsed, and several more barely survived.

enraged_camel 10y ago
>>That doesn't make any sense. The derivative products were rated AAA. Those ratings were created as a result of significant conflict of interest. You should read John Bogle's treatise on the subject (he's the founder and retired CEO of The Vanguard Group): http://johncbogle.com/wordpress/wp-content/uploads/2006/02/Princeton-4-30-09.pdf http://johncbogle.com/wordpress/wp-content/uploads/2006/02/P... "Market participants—now dominated by speculators, not investors—also joined the parade of miscreants, and our professional security analysts failed to do their job of appraising company balance sheets, largely ignoring the huge credit risks assumed by the new breed of bankers and investment bankers. And let’s not forget our credit rating agencies, which happily bestowed AAA ratings on securitized loans in return for enormous fees that were paid in return by the issuers themselves. (It’s called “conflict of interest.”) Yes, there’s plenty of blame to passaround."

nl 10y ago

This is approximately correct. I think it is worth noting the subtleties around "they", though. Some people thought it was unsustainable. Others were dumb and didn't. Many didn't care and just wanted to be paid, now.