triple A cowboys under review

…and who say institutional traders, stock traders locked into the world of the desk have no sense of humor. Its an arcane little world that leftist populism wants to take one by one and lynch from the nearest sturdy branch. High priests/priestess types like the Naomi Klein and Michael Moore will administer last rites.

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Goldman Sachs: The liquidity grabbing of the Twlight sagas with the organic productivity the Octomom…. The dopey cowboy is like Anonymous, an invisible individual, faceless in the crowd. Its true, even a straining of credulity, but the top people at these financial companies signed off on CDO’s ( collaterized debt obligations ) without due diligence and thorough examination for the most part. Like Madoff investors, they trusted each others judgment , saw the consistent returns coming in, and willfully ignored the lurking wrecking ball. The same type of bubble process that began with something chillingly similar, yet ostensibly different as the Dutch Tulip bubble, where paper contracts on tulips were traded, eventually creating the Ponzi style conditions, collapse, and ruin for many.

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Later, when I sit down with Eisman, the very first thing he wants to explain is the importance of the mezzanine C.D.O. What you notice first about Eisman is his lips. He holds them pursed, waiting to speak. The second thing you notice is his short, light hair, cropped in a manner that suggests he cut it himself while thinking about something else. “You have to understand this,” he says. “This was the engine of doom.” Then he draws a picture of several towers of debt. The first tower is made of the original subprime loans that had been piled together. At the top of this tower is the AAA tranche, just below it the AA tranche, and so on down to the riskiest, the BBB tranche—the bonds Eisman had shorted….

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…But Wall Street had used these BBB tranches—the worst of the worst—to build yet another tower of bonds: a “particularly egregious” C.D.O. The reason they did this was that the rating agencies, presented with the pile of bonds backed by dubious loans, would pronounce most of them AAA. These bonds could then be sold to investors—pension funds, insurance companies—who were allowed to invest only in highly rated securities. “I cannot fucking believe this is allowed—I must have said that a thousand times in the past two years,” Eisman says. Read More:


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