They're using the "D" word

from HuffPost:



Howard Schweber
Posted September 17, 2008 | 09:11 PM (EST)
They're using the "D" word



They're Using the "D" Word

You want to know how all of this ends? In the year 2025, after secret meetings with European and selected Asian finance ministers, the United States selectively defaults on its bonds: only those held by China.

Okay, that's not a serious suggestion. Neither is this: The failure of Fannie Mae, Freddy Mac, and AIG - and who knows how many others - was deliberately engineered by the Bush administration to pay for the Iraq War.

THAT WAS NOT SERIOUS EITHER! Sheesh. And yet . . .

Let's do a quick review. The economic world is going to hell in a handbasket because . . .well, because an enormous amount of capital became tied up in instruments that were entirely outside the system of regulation of required transparency, and an equally enormous volume of more traditional, regulated securities had their values attached to these new "shadow" financial instrument.

Okay, that's still too complicated. You know who we need? Bill Clinton. Bill may be the only politician in history who could explain this in a way that the American people would understand. I'm going to try and channel Bill.

Two things happened at the same time. One was that banks gave mortgages to people on less collateral, on more favorable term, with less attention to risk, than at any time in our modern economic history. The second was that Alan Greenspan pedaled a theory of super-low interest rates and the magic of the self-correcting markets, and led everybody into borrowing against everything they owned. ......(more)

The complete piece is at: http://www.huffingtonpost.com/howard-schweber/theyre-using-the-d-word_b_127310.html