Politics alert, with a touch of ranting

I'm a bit crankypants today, which comes partly from having been dealing with students again (ARGH! Why so LAZY?) and partly from being so far behind in my life. So you may want to skip my political ranting.

It will come as no surprise to anyone who has listened to my previous cheer at living in countries with public health care that I am a pinko commie at heart. But many of my dearest friends and a few relatives are conservatives. While I don't agree with private health care, I do believe in a reasonable amount of deregulation and am annoyed at people who live on benefits for no reason (while, at the same time, wanting to protect those who are on benefits for a reason, and yes, I recognise the big grey area in the middle, but can we just boot the obvious freeloaders?)

Anyway, this is all preamble to two things that have really raised my narkometer today.

If you are a Republican in the US, and your Presidential candidate is gracious and gentlemanly, YOU DO NOT FUCKING BOO HIM! You say, "Gee, John, you sound like the guy who was by far the better candidate in the 2000 race before the extreme Rove-Cheneyfication of the GOP and bankruptcy of our nation's economy and political soul. Maybe we should go back to those times?"

Fuckers.

Also, in economic news I have now read the third editorial in a non-loony publication that suggests the reason for the current economic disaster was – essentially – lending money for homes to black folks and Latinos. Bzzzzt! I am sorry, that answer is INCORRECT!

Many commentators have rushed to lay the blame on loan defaulters and declared that the urge to lend money to poor Americans was the source of the problem. Not so.

Enter Moody's, Standard & Poor's and Fitch. These are  bond-rating firms. If you've ever had anything recommended to you as a AAA-rated stock, that rating came from one of these firms.  Ten years ago, a mortgage came from your bank, and was repaid by you over 10 to 30 years. But around that time, Moody's et al realised that this was an untapped sector of the market. They packaged up thousands of mortgages into securities and then gave them AAA ratings. The banks received their money quickly, which meant they had more money to lend, and which also meant that relaxed their standards for those they were lending to. House prices went up, because there was more money in the marketplace in the form of loans.  Because there were loads of mortgages being signed, there was more product to be packaged into securities.

It wasn't just banks, non-bank lenders came in on the act, too, because there was enough money in the market to allow them to package mortgages DESPITE THE FACT THEY HAD NO DEPOSITS TO OFFSET THEIR MORTGAGE RISKS, which was the one thing that had always made bank mortgages a relatively safe prospect.

This is the important bit. Investors INVESTED in these securities because they were given triple-A ratings by Moody's, Standard & Poor's and Fitch. It wasn't a case of investors being stupid, they had every reason to believe that the product they were putting their money into was a good product.

( But wait, there's more! )

I had something nice to say, I might make a separate post ...

Politics alert, with a touch of ranting

I'm a bit crankypants today, which comes partly from having been dealing with students again (ARGH! Why so LAZY?) and partly from being so far behind in my life. So you may want to skip my political ranting.

It will come as no surprise to anyone who has listened to my previous cheer at living in countries with public health care that I am a pinko commie at heart. But many of my dearest friends and a few relatives are conservatives. While I don't agree with private health care, I do believe in a reasonable amount of deregulation and am annoyed at people who live on benefits for no reason (while, at the same time, wanting to protect those who are on benefits for a reason, and yes, I recognise the big grey area in the middle, but can we just boot the obvious freeloaders?)

Anyway, this is all preamble to two things that have really raised my narkometer today.

If you are a Republican in the US, and your Presidential candidate is gracious and gentlemanly, YOU DO NOT FUCKING BOO HIM! You say, "Gee, John, you sound like the guy who was by far the better candidate in the 2000 race before the extreme Rove-Cheneyfication of the GOP and bankruptcy of our nation's economy and political soul. Maybe we should go back to those times?"

Fuckers.

Also, in economic news I have now read the third editorial in a non-loony publication that suggests the reason for the current economic disaster was – essentially – lending money for homes to black folks and Latinos. Bzzzzt! I am sorry, that answer is INCORRECT!

Many commentators have rushed to lay the blame on loan defaulters and declared that the urge to lend money to poor Americans was the source of the problem. Not so.

Enter Moody's, Standard & Poor's and Fitch. These are  bond-rating firms. If you've ever had anything recommended to you as a AAA-rated stock, that rating came from one of these firms.  Ten years ago, a mortgage came from your bank, and was repaid by you over 10 to 30 years. But around that time, Moody's et al realised that this was an untapped sector of the market. They packaged up thousands of mortgages into securities and then gave them AAA ratings. The banks received their money quickly, which meant they had more money to lend, and which also meant that relaxed their standards for those they were lending to. House prices went up, because there was more money in the marketplace in the form of loans.  Because there were loads of mortgages being signed, there was more product to be packaged into securities.

It wasn't just banks, non-bank lenders came in on the act, too, because there was enough money in the market to allow them to package mortgages DESPITE THE FACT THEY HAD NO DEPOSITS TO OFFSET THEIR MORTGAGE RISKS, which was the one thing that had always made bank mortgages a relatively safe prospect.

This is the important bit. Investors INVESTED in these securities because they were given triple-A ratings by Moody's, Standard & Poor's and Fitch. It wasn't a case of investors being stupid, they had every reason to believe that the product they were putting their money into was a good product.

( But wait, there's more! )

I had something nice to say, I might make a separate post ...