Wednesday, July 8, 2009

Fool me once, shame on you. Fool me twice...

Unless you've been freeze dried or doing hard time, you know the catalyst for our economic problems was the financial worlds head first jump into the shaky world of subprime mortgages. Or more to the point, the way shitty debts got packaged with other debts to get higher ratings, allowing the "package" to be rated higher than it actually was.

In layman's terms, the put a little chicken salad with a lot of chicken shit, but sold it as straight up chicken salad. It cause our economy to tank, banks and brokerage houses to fail and led to the US Government having to take over banks and companies to try to prop things up.

So given all the trouble this crap caused, you would think it would be at least a full year before anyone tried to start pulling the same tricks. You would be wrong.
Two years after the credit markets began to seize up, costing the world’s
biggest financial institutions $1.47 trillion in writedowns and losses, banks
are again taking so- called structured finance securities and turning them into
new debt investments with top credit ratings. While the Morgan Stanley deal is
the first to involve CDOs of loans, banks have been doing the same with
commercial mortgage-backed securities in recent weeks.

How the hell is this any different than the crap that got us into this mess?

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