1. The banks made loans to guys who couldn't pay. How could they know? They sliced n diced and sold them off within days. They then sold slices of bundled up loans to each other, then sliced them again, and sold the new slices along with other stuff (like fees you know, that suff goes with the loans every time) to investors, or to overseas banks, and made more loans. Then they bet on how this mess would weather realities and called that "derivatives". Leverage, right? You loan a quid to the barber round the corner, book it as 2 quid, charge the barber three quid, sell the quid loan to a norwegian investor for ten quid plus insurance at 6 quid and you pocket 10 or 15 percent (twenty if you can) whenever you move the barber's one quid loan a further step away from your desk. Move it, you know. Wherever. Like far away. You got the picture? Sweet deals forever making money mighty fast.
2. The bad loans went bad. How could they know? It all just blew up and was unexpected. They had turbo-trading programmes, you know, run by things called Alorithms worked out by the smartest guys in MIT, but there you go: no-one figured in the power of bonuses to multiply free riders.
3. It was basically a kind of scheme like a cross between bonds (the Original Ponzi Scheme) and securities and rating agencies were paid to say nice things about them. Nobody else knows what to say, so rating agencies like, speak up to settle doubts.It's only investors in doubt who take a look a the ratings; the others just listen to their broker, y'know? Yeah. Cool. Settling doubts is the Job rating agencies DO (they don't get paid much for doubts). You got the bonds then you securitized them, didn't pay coupons but charged banking fees. Banks paid themselves the coupons, and backhandered as many doofuses as they could manage. Spread it: it works a treat. They all did great. They laughed on the way to the banks and found the bankers laughing and everone laughing and maybe on coke. But hey! Government issue, what can you say?
4. More dollars than sense? Looks like it. When Big Banks got round to foreclosing on not-so-bad home loans, as more and more people lost their jobs as spending tightened to prop up the banks which made and sold the bad loans (to keep them afloat), it turns out that, erm, well. Banks didn't hold title, and had to fabricate and create fake documents to snatch back the homes which would have been rated BBA if there hadn't been a blow up. Back to the beginning: they didn't bother to register title because (a) it was boring to do and (b)they were making money so fast, right? We'll get round to that later, they said, if we need to foreclose.
5. Making money forever, right, you don't need to bother to stop. Stop making money, you go broke, right? Salaries, bonuses, profits offshore: the money you made last year's all gone anyhow. Don't worry about it: make more. And you can always sell off the barber's home for a dollar, or a bit less. Just so's the barber doesn't get to stay in it without paying at all.
6. But to forclose on the top-rated slices which (not the slumdog loans they were leading with) banks aren't allowed to fabiricate fraudulent titles. Who knew? Banks didn't. Big smart-face banks filled with dernier cru MBAs been making up rat-arsed paperwork for more than 18 months. Like Sid's 3 dollar bills. You don't say. What do they teach these guys in Business School? who recruits them? Who reads their resumés? And suddenly the courts won't sign off on any more fake title/loan documents. They signed off on some to the tune of 6,000 a day for months. Whoa! Can we have a recall on those?
So the monsters are melting away.
Los contradiciones das kapitalissimo: hoist with its own pétard.
Somehow this ought to be good for a laugh. Round about now we ought to be able to make a cat laugh with this stuff. The show should run for about an hour.