Revelations 3:17

"Because you say, 'I am rich, have become wealthy, and have need of nothing' - and do not know that you are wretched, miserable, poor, blind and naked."

I've spent 3 days listening to the information, mulling it over, in the link I am about to provide you. It is the economic crisis version of "Bush's War."

Given the New Orleans Saints are undefeated and I am advocating a PBS Frontline peice, I think it is safe to assume that Hell has officially frozen over.

At this site: Fools Gold (my personal title for the collective video there) you will find a timeline which includes a total of 6 investigatory documentaries. The Warning; From Dot Con; The Madoff Affair; Inside The Meltdown; Ten Trillion and Counting; and Breaking The Bank. Frontline put together various minutes from each of these 6 to create a "financial crisis time line", which is initiated and concluded with "The Warning" - it is the largest and most important of these video pieces (w/Madoff being the least important to the overall crisis), and the one which I watched premier on PBS a couple of nights ago. Within each timeline segment there are additional boxes to the right that look like they are simply quoting an expert or an official, but these too are video segments necessary to understanding the whole, so click on them at the conclusion of each main video's viewing.

Let me say this about what I believe happened to our financial sector ... there were numerous factors contributing to the 2006 collapse, but the 2 primary drivers, in my opinion, are quite clear. We here, do to various posts and self educating research, have come to the basic conclusion that the housing market was at the heart of the September 2006 collapse, and it was, but it was the proverbial "first shoe" to drop. Jambo, and even Titus because I think we posted on the subject, may remember our discussions on what you had in a Fannie Mae & Freddie Mac - a political tool which under the Community Reinvestment Act of 1977 was used to promote a social agenda. In other words here you have these quasi-private/public mortgage giants in Freddi and Fannie (a majority of the board members either come directly from or are appointed by the government) and this piece of legislation from 1977 ( adopted to ensure that low income and minority communities are to more easily access home mortgages by prohibiting discrimination in lending, etc), coupled in a way that the market would have never allowed for on its' own. These mortgage giant's purse strings are directly tied to Congress - a false market is created by people like Chriss Dodd (D) CT and Barney Frank (D) MA through one committee hearing after another. Urged on by the Clinton White House (whose campaign promise was to extend the "American dream" of home ownership to more people in lower income and minority communities unlike that bad old Reagan who "favored the rich" of course ... gag me), directed Fannie and Freddie to urge other lenders to make MORE loans to people whom would otherwise not qualify (no money down, insufficient income, etc). So Fannie and Freddie do as they're told - they go to lenders like Country Wide et al and say "hey, we don't care how you do it, just make the loans because WE are going to buy them from you anyway, and WE are backed by the feds so there's no risk to you." So the private lenders figure, "what the hell." The private market then comes up with ways to "get around" traditional borrowing requirements. Enter sub prime loans; interest only; zero down; using Welfare payments to demonstrate income, etc. This spurs a housing boom because not only do the lower income communities take advantage of these new requirements. Everyone from dentists to to real estate moguls decide they can use one of these techniques to put forth very little money up front, buy a house, and then because the equity was building so fast during this boom, sell it 3 months later and pocket say 20-30k on a $300k home all with very little skin in the game.

So successful was this that various firms from various sectors of the banking/investment community wanted in, money was being made hand over fist on housing from the mid 90's to 2006. So Fannie and Freddie began selling mortgages to groups like Lehman Bothers; Citi Bank; Meryll Lynch; AIG ... sound familiar? So these new, riskier mortgages were systemically embedded like a dormant virus throughout our entire banking and investment house system.

Ok, now ... here comes the other shoe: in the decade prior to the 2006 collapse a new "shadow market" had come into being. Over the Counter Derivatives are what they came to be called. Basically they were selling off "risk" (later to be known as "toxic assets"). These OTC derivatives are hyper inside baseball, but basically anytime as a financial institution you make a loan you are exposed to a certain amount of risk until the loan has come to term - paid in full. However, if you can sell that "risk" of not being paid back to someone else, lay it off basically, then as a lender your portfolio still shows payments being made to you, yet NOT the risk associated with the loan itself. Your portfolio is enhanced, your market earnings, your over all "rating" as a lender goes up. Now you have even more investors because they want to put their money into a lending house that looks "so healthy" - and of course you do because you've laid off all this risk in the form of derivatives. NOW, with this new investment capital coming in, as a lender, you can make even MORE loans, lay off even more risk with additional OTC derivative sales and the OTC Derivative market gets bigger and bigger and bigger. It was artificially inflating company worth, causing more derivatives to be sold - one derivative based on another, based on another, based on another, all casing an artificial swell of a companies portfolio. A self sustaining cycle which got so big that pretty soon most of the recognizable financial institutions, that now reads like a who's who of the bailout line up, each owned a peace of the other's risk. Here you have an interconnected dormant virus in the form of the OTC derivatives market, and all it would take is for an outside financial calamity to knock over these dominoes, activating this second virus throughout the entire system.

Well ... the housing bubble burst.

The "riskier" loans congress urged Fannie and Freddie to encourage and buy "oddly enough" fell through. The first of the 2 sleeping viruses within the entire banking and investment community became active. Stock fell, people began to lose money ... and they began calling in their markers on these derivatives, only as one derivative marker is called by "company A" on "company B" who bought A's, only it causes a huge debt burden to "company B', so the marker is called on "company C", whom bought B's . . . welcome to September 2006, the second virus now active, and the "need", nay the entire premise, of government bailouts.

Now keep in mind, PBS is still PBS, so they go very light on the angle of Congress artificially creating a housing boom due to a social agenda. But there is one line meant to be a throw away disclaimer that is very important to note. Not even THEY could get away with omitting its' reference entirely. Throughout the entire segments of "The Warning" they never once name in specific the investments of the firms that needed the bailout money except to say, "... they had invested heavily in real estate." But given no other mention is given to what the "bad investments" were, it speaks volumes. But the OTC Derivatives are explained in great detail, as well as the strong arming of banks whom didn't even want to participate in the bailouts.

Take the time to watch. As we all agreed that "Bush's war" was the first draft of the Iraq/Afghanistan War history, so is this for our economic crisis.

And by the way, next time Obama gives a speech exclaiming that he is "trying to clean up the mess other folks created", and those "other folks" should just, "get out of the way", consider whom his current top 2 economic advisers are, and the fact that neither the OTC Derivatives market nor Fannie and Freddie have been reigned in.