The investment banks actually preferred subprime loans because they carried higher interest rates. ibid.
Lehman Brothers was the top underwriter of subprime lending. ibid.
The Securities and Exchange Commission conducted no major investigations of the investment banks during the bubble. ibid.
Credit Default Swaps worked like an insurance policy ... Speculators could also buy Credit Default Swaps from AIG in order to bet against CDOs they didn’t own. ibid.
According to a Bloomberg article business entertainment represents 5% of revenue for New York derivatives traders and often includes strip clubs, prostitutes and drugs. ibid.
Goldman Sachs sold at least $3.1 billion of these toxic CDOs in the first half of 2006. ibid.
By late 2006 Goldman had taken things a step further: it didn’t just sell toxic CDOs it started actively betting against them at the same time. ibid.
The three ratings agencies – Moody’s, S&P [Standard & Poor] & Fitch made billions of dollars giving high ratings to risky securities. ibid.
As early as 2004 the FBI was already warning of an epidemic of mortgage fraud. ibid.
The market for CDOs collapsed. ibid.
In March 2008 the investment bank Bear Stearns ran out of cash and was acquired for $2 a share by J P Morgan Chase. The deal was backed by $30 billion in emergency guarantees from the Federal Reserve. ibid.
Neither Lehman nor the federal government had done any planning for bankruptcy. ibid.
The AIG bailout cost taxpayers over $150 billion. ibid.
The men who destroyed their own companies and plunged the world into crisis walked away from the wreckage with their fortunes intact. ibid.
It has corrupted the study of economics itself. ibid.
Even after the crisis many of them opposed reform. ibid.
Mid-2010 not a senior financial executive had been criminally prosecuted or even arrested. ibid.
The financial system turned its back on society, corrupted our political system and plunged the world economy into crisis. ibid.
It wasn’t the government that got us into this mess – if what you mean by mess is an ugly recession, an unbalanced economy, profound uncertainty over recovery, grossly indebted consumers, disadvantaged communities hit hard again and a budget deficit of £175 billion. What got us into this mess above all was the 30-year rise of Big Finance before which governments unfurled the white flag. Bankers used their power to bend the rules at home and abroad, to lend ever more riskily and supported by less capital, until, finally, a vastly overextended banking system backed by very little capital collapsed. The result is today’s economic calamity.
There were many culprits in this story, but the damage stemmed from an obsession to keep government small and markets big. Thus, mergers that created banks that were too big to fail went ahead and their daffy mathematical models went unchallenged. We need to reform our financial system from top to bottom, but neither shadow chancellor George Osborne nor shadow business secretary Ken Clarke began to address this question. Their twin attack was on the state – Osborne’s because it was borrowing too much, Clarke’s because it was regulating too much. Will Hutton, The Observer online article 11th October 2009
This is the story of the biggest financial catastrophe in living memory. An unprecedented boom has morphed into bust. It’s the story of how a desperate government fought to prevent a banking meltdown. Will Hutton, Dispatches: Crash: How Long Will It Last? Channel 4 2009
It turned banks into branches of a gigantic global betting shop. ibid.
The bankers sold trillions of dollars of complex new financial products. But their values depended on real things like US house prices. ibid.
Summer 2007 saw the first financial earth tremors. ibid.
Northern Rock had been a dramatic example of how banks ran out of cash when the money markets froze on them. It was not heeded. ibid.
By 2008 RBS had lent more than Britain’s annual gross domestic product, but its balance sheet was a high risk mess of subprime mortgages and bad loans. ibid.
Brown’s faith in the city had betrayed him. ibid.
Brown had combined decisiveness with weakness. He’d shied away from taking a stake in all of the banks, and for the £37 billion he’d handed over, he demanded no direct control or restructuring. Even bonuses were not directly capped. ibid.
Britain’s lead was now being followed in Washington. ibid.
It came at an awesome price. Worse, the banks were now the walking dead. ibid.
Around a quarter of all bank loans are so dodgy they have had to be insured: an astonishing indictment of the banks’ lending practices. ibid.
£1.3 trillion in guarantees, loans and investments to the banks. ibid.
What bankers do with our money is of vital public interest. ibid.
Finance picks up the profits, the taxpayer picks up the risks. ibid.
British finance is a double menace: it threatens us with another financial Armageddon at the same time as it shamefully neglects British business. As our own research has shown, British banks direct money into property and derivative trading but not into British business and entrepreneurship. Will Hutton, Dispatches: How the Banks Won, Channel 4 2010
Today in Britain the government spends more than all private individuals and companies put together. Martin Durkin, Britain’s Trillion Pound Horror Story, Channel 4 2010
Today in Britain the public sector is bigger than the private sector. ibid.
In the next five years annual government spending will climb from £697 billion to £757 billion. ibid.
We now have a national debt of £4.8 trillion. ibid.
Counted out in £50 notes our national debt would form a stack no less than 6,561 miles. Or to put it another way, if we sold off all the houses and flats in the whole of the UK, we would still be the best part of a trillion pounds short of paying our debt. ibid.
British governments have been steadily debasing the currency or printing money for decades through the deliberate expansion of credit. ibid.
It’s very much in the interests of politicians to spend money. ibid.
The idea that public spending will stimulate growth is the biggest myth of the twentieth century and is the cause of Britain’s economic decline. ibid.
What do they all do? ibid.
The idea that we need state monopolies in order to look after the poor is obviously untrue. ibid.
A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life. Suze Orman
It was presented scientifically. But then they always present it scientifically. As being the only way of doing it; there is no alternative. And this gripped people. But at the same time you must never forget that politics is in pursuit of an interest and an ideological ... So the conflict between as it were Milton Friedman and Keynes was a political conflict. Tony Benn, televised interview
The love of money as a possession – as distinguished from the love of money as a means to the enjoyments and realities of life – will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease ... But beware! The time for all this is not yet. John Maynard Keynes
If however a government refrains from regulations and allows matters to take their course, essential commodities soon attain a level of price out of the reach of all but the rich, the worthlessness of the money becomes apparent, and the fraud upon the public can be concealed no longer. John Maynard Keynes
Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers’, who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat ...