Inside Job 2010 Documentary - Global Economic Crisis of 2008
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Inside Job 2010 Documentary - Global Economic Crisis of 2008
This documentary, narrated by Matt Damon, explains how the Global Economic Crisis of 2008 happened, which cost millions to lose their jobs, savings, and homes.
In old days, banks loaned money and expected to be paid back. Some of these mortgage loans could take 30 years or more to pay back, so the banks had to be very careful and evaluate their customers with great detail to obtain potential risk.
In the late 90’s, early 2000’s, things changed as securitization came into play.
This is when banks sold the loans as fast as the approved them for huge profits, so they had NO worries if the loans were going to be paid back as they just sold them as debt marketable securities as quickly as they made them.
Banks no longer gave a sh*t about whether the borrowers were able to pay them back because they were not going to own the loans, they were selling them like iHop sells hotcakes.
Who did the Banks sell the loan debt to?
Investment Banks.
What did the Investment banks do with the debt?
They “bundled” them into “security packages” which included home mortgages, commercial mortgages, student loans, corporate debts, car loans and credit card debt.
These bundles were called CDO’s – Collateralized Debt Obligations.
The Investment Banks then sold these CDO’s to investors after they paid the Rating Agencies to rate the CDO’s.
Well, that is exactly like Big Pharma pays the FDA to “evaluate” their drugs for safety and efficacy.
How’s that working out?
It doesn’t work as they all become dependent on one another, so ethics is ignored and liability is just passed to the next buyer.
The Rating Agencies were raking in the dough also. Loans were being made at all time record highs.
From 2000 until 2003 the amount of mortgage loans QUADRUPLED.
Home buyers no longer paid the banks they borrowed from as their loans were continually sold. They now paid whatever investment firm purchased their mortgage which was in one of these “debt packages.”
Sound Crazy?
Damn Straight.
It was absolutely NUTS. Literally.
Firms were making loans and selling them as fast as they could and individual loan officers were getting rich overnight from sheer VOLUME alone. The purchasing criteria was thrown out the window. There were bad loans galore being made.
A homeless man could purchase a used suit and tie from a thrift shop and lie on his mortgage application and be approved. There was NO regulation.
It wasn’t just the mortgages, it was all kinds of debt because they were being packaged and sold.
It was a flat out a Ponzi Scheme with the last investor left holding the debt bag was the loser in these game.
It was insane and it was ALLOWED. Fed Chairman Alan Greenspan said regulation was not needed as these were “professionals.”
He is either the biggest idiot in the history of Federal Reserve Chairman or the bankers were “scratching” his back.
It was a bubble that inflated very rapidly.
The Rating Agencies – Moody’s, S&P Global Ratings and Fitch were supposed to be evaluating these packages of various loans, but it appears they just “cherry picked” them and gave them Triple A – AAA ratings, which means the probability of the loans being repaid is very high.
It’s difficult enough to rate a single loan, but a derivative package of them, no way.
The Rating Agencies didn’t give a sh*t if their ratings were wrong as they had NO liability in the game (just as Big Pharma has no liability if their vaccines kill people.)
When a company has no liability for their product, how do you think the quality of that product will be?
It was a disaster that EVERYONE should have forecasted. But who cares, everyone was raking in the dough, right?
This was Worldwide Investment Banking Mayhem.
Nobody wanted to hold the CDO’s too long, so they did their own “repackaging” their own derivatives and they paid for these ratings.
The loans were being resold and resold, again and again.
It was like musical chairs, eventually there will not be enough chairs for everyone.
It wasn’t about making good, sound loans, it was just about making loans – volumes of loans.
Risky Loans are called “Subprime Loans.” Subprime loans were included in these packages of CDO’s and they were still receiving TRIPLE AAA Ratings.
The investment banks preferred subprime loans as subprime loans carried higher interest rates. Loans were being approved to people who had no chance of repaying them.
Subprime Lending increased from $30 Billion a year to over $600 Billion a year in a 10 year period.
Predatory Lending began to skyrocket. Borrowers were being exploited and the vulnerable were being targeted and deceived into “predatory” loan contracts, with high fees and interest rates.
Homebuyers were borrowing OVER 99% to purchase homes. Virtually NO money down. It was an obvious recipe for disaster.
Traders and CEO’s became extremely wealthy as there were enormous cash bonuses based off of the volume of loans being made.
What happens when just about anyone can buy a home?
Prices INCREASE.
Taxes INCREASE.
Home prices DOUBLED from 1996 to 2006.
The SEC and Federal Reserve Chairman, Alan Greenspan felt no need to monitor this, even when the economic growth was obviously unnatural.
The ratio between borrowed money and the money that banks had on hand is called Leverage. Some banks leverage ratios were over 30:1. Which is insanely irresponsible.
In 2006, high risk mortgages accounted or 40% of ALL originations3.
Buyers of CDO’s began demanding that the seller provide insurance in case of defaults.
AIG, was the worlds largest insurance company and they were selling lots of derivatives, called Credit Default Swaps.
For the investors who owned the CDO’s these credit default swaps were like insurance policies. Investors would pay AIG a premium for these Credit Default Swaps. If the CDO went bad, AIG promised to pay for the losses.
Then you had the gamblers, the speculators that could also buy credit default swaps from AIG in order to bet against CDO’s they didn’t own.
The speculators converted these credit default swaps into “Synthetic CDO’s3” as you will see just how Goldman Sachs used these credit default swaps as synthetic CDO’s as an investment. Goldman used them just as you would short a stock or bet that something loses significant value, in this case, they bet on the CDO’s defaulting. They were supposed to be used as insurance, but Goldman was creative.
These packaged CDO’s could be insured multiple times. You don’t have to own it, to insure it.
That’s how the derivative markets can be played. If an investment firm researches a specific CDO and believes it will default, they can place a bet on it.
That means that AIG better being doing their Due Diligence and not be holding a sh*t load of bad loans.
Well, AIG was rewarding their employees with huge bonuses once contracts were signed and purchased. They were falling for the easy money scam just as everyone else was.
AIG was NOT regulated and did not have to have a specified amount of money in case of significant loss or claims were made. To say they were taking risks is an understatement.
They were living on HOPE. Hoping the market would continue to thrive and hoping economic growth could continue. If it didn’t, they would be in big, big trouble.
AIG issued $500 Billion worth of credit default swaps during the bubble build up, many of them that were packaged full of subprime mortgages.
The 400 employees at AIG Financial Products division made $3.5 Billion between 2000 and 2007. If every employee was paid equally, they would have made over $1 million a year, but that’s not how it works. Joseph Cassano, the head man of the division, made $315 million.
These financial idiots live like kings.
Are they ever punished for their extreme f*ckups?
NO. In fact, they are incentivized. More on that in a bit.
Loans were being graded AAA when they had no equity, no collateral and the money loaned was over 99% of asset value. They were rating these as safe as Government Securities.
How could this be?
When you have ALL parties involved incentivizing for volume, honesty gets kicked to the curb.
This is like a father making a hefty donation to a college if his daughter gets straight A’s and if there is one B, no massive multi-million donation. That girl is going to get A’s whether she shows up or not.
It was all about the quick buck, period. There was no forward thinking. Consequences did not even enter the minds of the boards and CEO’s of these financial companies because EVERYONE involved was making incredible amounts of fast money.
Everyone was selling Toxic Assets as fast as they could. They would get bundled and rebundled over and over again.
Goldman Sachs sold over $3 Billion of toxic CDO’s in the first half of 2006.
Henry Paulson was CEO of Goldman at this time.
On May 30th, 2006 George Bush Jr nominated Henry Paulson as US Secretary of Treasury. Good ole Henry had to sell his stock at Goldman Sachs before he took the meager paying government job.
How much did Henry get for selling his stock? $485 Million.
Oh, and get this; since Henry had to sell his holdings before assuming Secretary of Treasurer, he didn’t have to pay ANY taxes on it. It saved him $50 Million bucks.
Allan Sloan came out with an article called “Goldman Sachs’ House of Junk” on October 28, 20072 and by this time the dominos were beginning to fall as 1/3 of the mortgages were in default.
Many retirement funds were the victims of purchasing these toxic CDO’s.
They ended up being the “bagholders” of these worthless, assets in default.
All while the average wage of a Goldman Sachs employee was $600,000 and the Henry Paulson, CEO of Goldman, $31 MILLION in 2005 and as mentioned, had stockholdings of $485 million and paid absolute NO taxes.
Quite the incentive.
Goldman Sachs was recommending these toxic CDO’s to investors all while betting AGAINST them. They KNEW they were worthless but yet they peddled them to any investor they could dupe into purchasing them. Yes, then they would use AIG to bet that they would default.
They were betting against the very same CDO’s they were selling to their customers.
In my book that is called FRAUD.
As soon as they sold the CDO’s they would buy Credit Default Swaps from AIG.
Oh it gets better – Goldman Sachs spent $22 Billion on these Credit Defaults, betting these CDO’s would collapse. Then it dawned on them, what if these do all collapse, will AIG be capable of paying us?
Guess what they did next? They bought $150 million of insurance in the case of AIG’s collapse.
Tell me, how do these thugs differ from gangsters?
It gets even BETTER – In 2007, Goldman Sachs began selling CDO’s specifically designed to bet against the very assets they were selling, so the more their customers lost, the more Goldman Sachs made.
Can you imagine the cunning meetings they had dreaming up these criminal schemes that would guarantee enormous profits at the expense of their very own customers who they were lying to?
After the eventual collapse in 2008, they were put in front of Congress for the Dog & Pony Show for the public, but they were not punished, just at the Covid Criminals.
It wasn’t just Goldman who was betting against the assets they were recommending and selling to their customers, Morgan Stanley did this also.
Moody’s, Standard & Poor’s Global Ratings and Fitch were compensated MORE for Triple A ratings. If you are going to get a big bonus for rating a CDO AAA, they will find a way to “justify” a Triple A rating to get that extra compensation.
Every party involved seemed to be involved in fraud.
Do you think that investors relied on these ratings?
YES, they absolutely did.
What did the ratings company say about this?
They testified that these “ratings” are “opinions” and they should not be relied on. All 3 of them said this.
Did they tell their customers paying the big bucks that these ratings may not be reliable?
Nope.
Deven Sharma – of Standard & Poor’s Credit Rating said that the ratings “do not speak to the market value for security or the suitability as an investment.”
Don’t you just love how these criminals flat out tell you they were lying to their customers but they can NOT be held liable?
Why do investors fall for this time and time again?
It’s called “FOMO” – Fear of Missing Out. They see another monkey behaving carelessly making bank and they think they can clone what that monkey is doing make quick moola too.
America was the original monkey and other countries saw the “easy money” being made by trading CDO’s and they tried the monkey see, monkey do approach and they all borrowed, loaned and traded among each other until the bubble could expand no more and CDO’s lost their value.
When 40% of the CDO’s are Sub-Prime Mortgages, you are going to have a bubble and if the recklessness continued, the bubble would ever expand until it popped.
That’s what happened.
Ben Bernanke was the Chairman of the Federal Reserve and CNBC’s Maria Bartiromo asked him about a potential housing bubble – he responded, “it’s an unlikely possibility, we’ve never had a housing crisis at a nation wide basis.”
If there is a lesson to be learned from all of this, it is NEVER believe a single word that a Federal Reserve Chairman says as the exact opposite just may occur.
In 2004, the FBI warned of Mortgage Fraud, Inflated Appraisals and Fake Loan Documents.
You don’t think that something like this could happen?
CDO’s and Synthetic CDO’s are still actively traded today.
Were the GREEDY ones punished the first time? Most of then received huge buyouts, some over a half billion dollars.
Why wouldn’t they want to do it again?
I think the next one will be worse, because I believe it will be intentional to steal America’s land and property for pennies on the dollar, simultaneously robbing the wealth of hard working Americans.
What caused all of this?
GREED.
It’s funny how we have tight regulations for just about everything but when it comes to regulating banks, investment firms and hedge funds, there were limited restrictions on lending, leverage, collateral, borrowing, creating derivatives, and volume bonuses.
They also were free to re-securitize / repackage CDO’s
When there are no rules to follow and you know you are too big to fail and the deer ole government will bail you out, then why would you act responsibly?
Especially when you are compensated with huge bonuses to act irresponsibly!
Sources:
1. Linda_0246 -- https://www.bitchute.com/video/762GFxy24bvI
2. Sloan, Allan. “Goldman Sachs’ House of Junk.” Fortune, 14 June 2024, fortune.com/article/goldman-sachs-house-of-junk-mortgage-bonds.
3. Morris, Charles R. The Two Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash. Black Inc., 2009.
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