The Real Villains in Our Financial Crisis

You have to love how people are bashing those who took out mortgages they couldn't afford but downplay the fraud, deceit, or negligence of all those who really capitalized before the crash in the marketplace.

The lenders and brokers who allowed people to skirt the time honored lending practices of the past while pulling in huge sums in bonuses and compensation plus the speculators who drove oil, commodities and stocks via hedge funds and credit default swaps are the real villains.

The wealthy who are supposed to generate all those jobs with the "Trickle down philosophy are the high on the list of culprits.

The top 10% of families reporting adjusted gross income on their tax returns control 47 and 1/2 percent of all reported income and they as investors in the hedge funds are responsible for the 50% plunge in the market since the October 2007 high.

Hedge funds (you have to have a million dollars to join) have been forced to sell assets to cover the people wanting to get out of the fund. They have also been forced to sell stocks to cover short positions because most of them leverage about 30dollars of debt to every dollar invested according to reports. As stocks began to fall they had to buy stocks at lower prices to cover short positions. That is how Volkswagen got to be the largest company in America for a short time when it was discovered the Porsche owned a large part of the company, so other investors drove the price sky high on the news.

Hedge funds compounded the problem by buying credit default insurance from dummies like AIG and insurance divisions of Investment brokers meaning they passed along the risk of their highly leveraged gambling to someone else. That's what the 8 1/2 trillion dollars is really all about, taxpayers are paying for that insanity. Incidentally, remember when the sub prime mortgage fallout was only supposed to be 5% of all the mortgages out there. That figure is probably correct but it doesn't explain the massive credit problem does it?

Joe

Hedge Funds and the Financial Crisis

It wasn't enough that the top 10% control almost half of the total income of the United States taxpayers, nor was it enough that they incited inflation with speculating in commodities and oil in particular, but they had to destroy our IRA's and 401k's while they were doing it.

You have to have a million dollars to join most hedge funds. They speculated heavily in the markets with about 30 dollars of debt for every dollar of assets. When the housing market and the stock market began dropping, they moved into commodities. They bought insurance against their gambles with credit default swaps paying a small premium and passing the risk of loss to investment firms and insurance companies. They shorted stocks while the market fell often getting caught, as in the case of Volkswagen, and created the wild swings of 5 to 10% upwards
and downwards movement in the stock market.

Almost everyone got caught up in the greed of the housing boom but no one was greedy as the rich and the hedge funds who have been allowed to wreck the life styles of the working American.



Joe