The agenda presented by the club secretary Mr. D. Brooke
Subjects presented in order
Introduction
1. Recorded Introduction:
Link to alternative site for immediate play [ASC Audio_4 07/14]
Edit. Tape Intro. Don 07/14
Edit. Tape Intro. Don 07/14
Present 1.
Undoubtedly Don (who arranges the evenings presents) was fully aware, when juxtaposing this with the second part from what he showed members 05/14. The significance of this 10 minute American Meet the Press panel Q. and A. was to promote the philosophy of a business personality (with a regular online show) -- Don introduces from time to time. The inability of two eminent economists to answer questions, that was, to the satisfaction of the "business personality" was the issue. However as one of the two explained the tools they (as economists) rely upon are not necessarily entrenched preferred positions. So, the relevance of this present to what follows (Second part from 05/14 blog), has to be taken as judgement: Big economic issues, demand big government intervention, not so said the "business personality" (?!?!)
Link to alternative site for immediate play of discussion following. [Edit. 712_0087 07/14]
Edit. 712_0087 07/14
Present 2.
Second Part: The American housing boom 1996 to 2006, house price rises, mortgage debt led to banks increasing their debt levels (leverage) this allowed by regulator FRB -- the era of "sub-prime lending" -- termed a "gigantic ponzi scheme" by one commentator and while this was taking place (a economic "bubble") the SEC didn't intervene i.e. "did nothing" to derivative markets. Told of a big insurance Co. AIG creating CDO's "credit default obligations" and how CDO's were to work, that's by investor insurers (and others) taking out insurance, hedging against CDO's going bad. These "obligations" apparently commutable and known as "swaps"*. The term "credit default swaps" appeared in an address of an independent economist prior to the GFC, his paper " Has Financial Development Made the World Riskier?" (R G Rajan) The essence "more debt more risk" contrary to then prevailing
establishment position "less regulation less risk".
The doco. gives over to addressing characteristics of Wall Street (America) career people and how the booty was dived up and spent as a result of derivative and sub-prime mortgage trading.
A leader in the financial "tragedy" Goldman Sach, we learn of the deals involving AIG and swaps and selling CDO's to unsuspected (mainly superannuation funds) this brought to attention of the general public in 2010 Congress Committee hearing.
The final serve in this part of the doco. was on the rating agencies -- those cited daily in the media -- who apparently are paid by those listed (corporate) clients, (allegedly) positioned according to how highly regarded their solvency and viability, based on "opinion" of rating agency-agencies. [Ed. This is not pure science!]
Guess the thinking was at the conclusion of this part (of 2 of 4), the grand scam (its creator/creators) may be set-up one or more integral participants as collapsible(s). That what went around (US$) would again come around (US$), incredibly believing no one would be badly hurt. [Ed. Was it going to be AIG ...?]
The doco. indicated there was "hurt" and investors (super. funds) are carrying on through the courts.
* A kind of derivative a development of AIG.
Moving on to the next part, told of the soothsayers (economic controllers) lost contact with the unfolding reality from 2004 to 2008. A suggestion evident people in high places in government were complicit in the GFC innovative fiasco. During the "crises" period, numerous warnings from diverse sources, regardless ended with large scale mortgage defaults and a drying-up of loans: "Investment banks left with 100's of billion dollars of loans, CDO's and real estate they couldn't sell". By 2008/9 the evidence was then, investment banks were in various degree of financial difficulty, though leading market rating agencies were not letting on ... Regulators and critics then interviewed and asked as to why a implausible situation had been arrived at; eventuating in "cannibalization" of the least financially viable by competing financial houses ad-finitum (significant take-overs the narrative cited, incl. the governments move on the two F.M. institutions).
The doco. next turns attention to Lehman Bros., the Barclay Bank and Lehman's London office. The consequence apparently caused further "drying-up" of liquidity on the other side of the Atlantic. At the same time AIG (American International Group) subject to a US$13 billion default. The secretary to treasury, Henry Paulson acts (critics consider belatedly) by getting the George W. Bush administration to "bail out" investment banks. The treasury, particularly its secretary gets a "serve" from the doco's initiators.
AIG link.
Expansion to credit default insurance market
A global recession 2008/9 had begun and spreads into Asia, touched leading US industrial's named ... Unemployment is the consequence and tent cities result in America. [Ed. As mentioned, did 15 million mortgage defaults eventuate?]
Link to alternative site for immediate play of discussion following.
Edit. 712_0088 07/14
CONCLUSION with a vote of thanks for the secretary evenings events.
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