The Wall Street Money Machine: CDOs Interlocking Ownership (ProPublica Reports)

Brand new from ProPublica.

• "I'll buy your crap and you'll buy mine."

• "And we'll both report higher sales."

• "Then we can both have bigger bonuses."

• "Sweet.  See you on the tarmac at 3 pm."

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As we reported last month with NPR’s Planet Money, in the two years before the meltdown Wall Street bankers perpetrated one of the greatest episodes of self-dealing in financial history.  As part of our story, we wrote of 85 instances during 2006 and 2007 in which two CDOs bought pieces of each other's unsold inventory. 

The trades enabled the completion of $107 billion worth of CDOs and underscore the extent to which the market lacked real buyers.

Check out both links at ProPublica, though I think it was hand-built for Janet Tavakoli:

• Which CDOs and Banks Had Deals With the Most Cross-ownership? (article)

• The Wall Street Money Machine -- CDOs’ Interlocking Ownership (infographic)

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More detail:

On Wednesday, we launched an interactive news application to help readers understand the cross-owned nature of Collateralized Debt Obligations (CDOs) in 2006-2007.  This cross-ownership helped inflate the bubble, and ultimately made the financial crisis worse.

• http://www.propublica.org/nerds/item/the-rainbow-connection-how-we-made-our-cdo-connections-graphic

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And some very quick background from last month:

•  Rampant CDO Fraud At Merrill, Citigroup, Other Banks (ProPublica article)



Comments

[DailyBail]

Which CDOs and Banks Had Deals With the Most Cross-ownership?

http://www.propublica.org/article/who-was-self-dealing-cdos

[DailyBail]

China Blocks Rare Earth Shipments to Japan

http://www.nakedcapitalism.com/2010/09/china-blocks-rare-earth-shipments-to-japan.html

We bailout banks and China buys up all the rare earth elements...hmm...which seems smarter...

[DailyBail]

U.S. covert paramilitary presence in Afghanistan much larger than thought

http://www.washingtonpost.com/wp-dyn/content/article/2010/09/22/AR2010092206241.html

[DailyBail]

Loan Mod Program Falling Short of Govt’s Vague Goals

http://www.propublica.org/article/mod-program-falling-short-of-govts-vague-goals

[DailyBail]

More private contractors than soldiers were killed in Iraq and Afghanistan in recent months, the first time in history that corporate casualties have outweighed military losses on America’s battlefields.

http://www.propublica.org/article/this-year-contractor-deaths-exceed-military-ones-in-iraq-and-afgh-100923

[DailyBail]

Mock All You Want, Republicans And Conservatives Take Witchcraft Seriously

http://tpmdc.talkingpointsmemo.com/2010/09/mock-all-you-want-republicans-and-conservatives-take-witchcraft-seriously.php

[DailyBail]

Rand Paul's Long History Of Hitler Fear-Mongering (VIDEO)

http://tpmdc.talkingpointsmemo.com/2010/09/rand-pauls-long-history-of-hitler-fear-mongering-video.php

TPM does not like rand paul...makes me even more excited for his eventual victory...

[Z]

In a stunning pledge for an American president, Obama told the U.N. diplomats that since Wall Street caused their problems, he would take responsibility for fixing their financial mess.

http://www.foxnews.com/opinion/2010/09/23/richard-grenell-obama-united-nations-speech-susan-rice-israel-washington-new/

[Z]

Obama (from UN speech)...http://blogs.wsj.com/washwire/2010/09/23/transcript-of-obamas-remarks-to-the-un-general-assembly/

Outside the doors of this hall, the blocks and neighborhoods of this great city tell the story of a difficult decade. Nine years ago, the destruction of the World Trade Center signaled a threat that respected no boundary of dignity or decency. Two years ago this month, a financial crisis on Wall Street devastated American families on Main Street. These separate challenges have affected people around the globe. Men and women and children have been murdered by extremists from Casablanca to London; from Jalalabad to Jakarta. The global economy suffered an enormous blow during the financial crisis, crippling markets and deferring the dreams of millions on every continent. Underneath these challenges to our security and prosperity lie deeper fears: that ancient hatreds and religious divides are once again ascendant; that a world which has grown more interconnected has somehow slipped beyond our control.

[Shalom Patrick Hamou]

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Our economy is slowly dying, your job, lifestyle are dominated by anxiety.

The economy is kept alive artificially.

No one is proposing a solution because no one has the slightest idea of why it is happening and many have vested interest in the present system.

However an objective observation of the phenomenon can help us understand it and provide us with an innovative solution.

Of course we can't solve the problem with the tools that brought us there in the first place and we need a new ideology.


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- Do you feel that your ideology pushed you to make decisions that you wish you had not made?

- Well, remember that what an ideology is, is a conceptual framework with the way people deal with reality. Everyone has one. You have to -- to exist, you need an ideology. The question is whether it is accurate or not. And what I'm saying to you is, yes, I found a flaw. I don't know how significant or permanent it is, but I've been very distressed by that fact.

- You found a flaw in the reality...(!!!???)

- Flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.

- In other words, you found that your view of the world, your ideology, was not right, it was not working?

- That is -- precisely. No, that's precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.


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In order to alleviate those economic woes wee need to create, as fast as possible, a new credit free currency that will solve the credit crunch and bring incremental jobs, consumption and investments to the present system.


An Innovative Credit Free, Free Market, Post Crash Economy

A Tract on Monetary Reform

http://post-crash.com/credit-free.html


It is urgent if we want to limit social, political and military chaos.


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Is the fulfilment of these ideas a visionary hope? Have they insufficient roots in the motives which govern the evolution of political society? Are the interests which they will thwart stronger and more obvious than those which they will serve?

I do not attempt an answer in this place. It would need a volume of a different character from this one to indicate even in outline the practical measures in which they might be gradually clothed. But if the ideas are correct — an hypothesis on which the author himself must necessarily base what he writes — it would be a mistake, I predict, to dispute their potency over a period of time. At the present moment people are unusually expectant of a more fundamental diagnosis; more particularly ready to receive it; eager to try it out, if it should be even plausible.

But apart from this contemporary mood, the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.

Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.

Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil.


_______________________________


An Innovative Credit Free, Free Market, Post Crash Economy

A Tract on Monetary Reform

http://post-crash.com/credit-free.html


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