Member 614124
Ex Member
- Joined
- Aug 21, 2012
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We all know basically how the recession started. A lot of banks lent money to people who cannot repay them and eventually went bankrupt.
But what really happened inside this poisonous cloud of misinformation. In a few words, the rich and powerful CEO's did as they pleased. Devising a master plan, knowing but not caring about the consequences. They made their millions, why should they care about the rest of the people? Even the US government crumbled beneath their heel.
It all started during the boom of 1998 to 2006 when banks were generous and giving for no apparent reason. People never questioned that, they were happy that the bank was lending them money and they felt rich and powerful. They all believed that more money, means more spending which means good and strong economic growth for the country. All too well, but that cannot go on forever. What actually was happening behind closed doors, had a completely different aim. Bank owners and managers have found a way to become even richer by bending the law and even getting away with it. They started lending more and more loans to people who cannot repay them. They knew they were lending out risky loans but that did not matter, they had a bigger plan. They combined those 'acidic loans' with other possibly safer bonds, mixed them up a little bit and created collateral debt obligations (CDOs) out of them. They gave them over to the big 3 rating agencies at the time Standard&Poor, Moody's and Fitch Group, who gave the the top AAA rating, even though these CDO's would inevitably go bad. Then the banks sold these highly credited CDOs on the stock market and made millions.
Once the CDO's went bad, the investors demanded a refund from the banks. Unfortunately, the banks had no money left due to the excessive amount of loans they had given out and the very low leverage ratio. They could not repay the investors and had to declare themselves bankrupt. The rich bankers bailed early and went somewhere nice to spend their fortune. Afterwards, the house market collapsed devaluing the assets of many people and making people from 'hero to zero' over night.
I ask, why should billionaires rule the world and do as they please? Where did all the human morals go?
I'd like to hear what you think about the recession and the things that have been going on around the world lately and hopefully share my opinion.
But what really happened inside this poisonous cloud of misinformation. In a few words, the rich and powerful CEO's did as they pleased. Devising a master plan, knowing but not caring about the consequences. They made their millions, why should they care about the rest of the people? Even the US government crumbled beneath their heel.
It all started during the boom of 1998 to 2006 when banks were generous and giving for no apparent reason. People never questioned that, they were happy that the bank was lending them money and they felt rich and powerful. They all believed that more money, means more spending which means good and strong economic growth for the country. All too well, but that cannot go on forever. What actually was happening behind closed doors, had a completely different aim. Bank owners and managers have found a way to become even richer by bending the law and even getting away with it. They started lending more and more loans to people who cannot repay them. They knew they were lending out risky loans but that did not matter, they had a bigger plan. They combined those 'acidic loans' with other possibly safer bonds, mixed them up a little bit and created collateral debt obligations (CDOs) out of them. They gave them over to the big 3 rating agencies at the time Standard&Poor, Moody's and Fitch Group, who gave the the top AAA rating, even though these CDO's would inevitably go bad. Then the banks sold these highly credited CDOs on the stock market and made millions.
Once the CDO's went bad, the investors demanded a refund from the banks. Unfortunately, the banks had no money left due to the excessive amount of loans they had given out and the very low leverage ratio. They could not repay the investors and had to declare themselves bankrupt. The rich bankers bailed early and went somewhere nice to spend their fortune. Afterwards, the house market collapsed devaluing the assets of many people and making people from 'hero to zero' over night.
I ask, why should billionaires rule the world and do as they please? Where did all the human morals go?
I'd like to hear what you think about the recession and the things that have been going on around the world lately and hopefully share my opinion.
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