Garrett is as Garrett does

An autoblogographic view of things.

'Garrett is as Garrett does'

Mess up big enough and you too can walk away clean…

March 18th, 2008
by garrett

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For a surprisingly adept explanation of how the sub-prime mortgage problem is cascading into other markets, check out this Google Docs slide-show: The Subprime Primer

Back? Good. Over the weekend there some new directly related to the sub-prime mess: The Week That Shook Wall Street: Inside the Demise of Bear Stearns

Nutshell: Over the weekend, the Federal Reserve System (aka The Fed) changes its rules so investment banks can borrow money from the Fed slightly more cheaply, then the Fed takes $30 Billion in really risky debt securities as sole collateral for a loan to an investment bank (JPMorgan Chase), then brokers a liquidation of another major investment bank (Bear Stearns) to the first investment bank. The purchasing bank set the price near $2 a share – a 92% discount from 4 days ago. All in the name preventing a complete financial meltdown, because really, our current partial financial meltdown is plenty, thanks.

Guess who’s left holding the bag when the CDO’s default (aka. don’t pay as expected)? Go on, I dare you.

I double-dog dare you.

That’s right – us, the taxpayers.

Link to Epilogue

Click and Enjoy!

Failing any useful outlet, I made an epilogue in homage to the original (above):

Disclaimer: I bought a house within my means back in Sept./Oct. 2001, just before the local real-estate market went from ‘Hot’ to ‘Stupid’. I went with a fixed 30-year loan. I’m just pissed I have to pay because I wasn’t quite dumb enough to buy a home beyond my means and ignore the fineprint. Grump.

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