RE: More Teabagger Craziness

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AnimusRex -> RE: More Teabagger Craziness (10/2/2010 10:51:01 AM)
I was an enthusiastic campaign volunteer for Ronald Reagan, both terms. I was a campus Republican, and avid reader of National Review all through the 70's and 80's. I waited expectantly for government to shrink, for the magic of the invisible hand to create jobs and prosperity for all. Somewhere in the 90's I began to realize that the Republicans- and most of the conservative movement- were full of shit. The Republicans voted enthusiastically for higher and higher spending, each and every year, and ignored the deficit, giving it only pale lip service, and I watched as the American middle class withered and stagnated, while all the prosperity was delivered to the upper 2%. No Republican President ever proposed a balanced budget or vetoed a defict; No Republican Congress ever assembled a balanced budget, or voted down a deficit. Dick Cheney said correctly that "Reagan proved that deficits don't matter." So the conservative movement is now taking a pledge, just like a drunk who swears that this time, they will be sober and restrained, this time it will be different, we swear, honest injun. Except it isn't; all the cuts that the GOP has proposed amount to a tiny sliver of government spending; after decades of talk and blather about "fiscal responsibility" no GOP or conservative figure has put together a coherent budget proposal. All they can do is repeat the magic words like a mantra, hoping to hypnotize people into thinking they will somehow accomplish what they have failed to accomplish for a generation. Sorry- after 30 years of wild spending binges, "fiscally conservative Republican" is a punchline, not a label.

lockedaway -> RE: More Teabagger Craziness (10/2/2010 11:21:48 AM)
"I was an enthusiastic campaign volunteer for Ronald Reagan, both terms. I was a campus Republican, and avid reader of National Review all through the 70's and 80's. I waited expectantly for government to shrink, for the magic of the invisible hand to create jobs and prosperity for all. Somewhere in the 90's I began to realize that the Republicans- and most of the conservative movement- were full of shit. The Republicans voted enthusiastically for higher and higher spending, each and every year, and ignored the deficit, giving it only pale lip service, and I watched as the American middle class withered and stagnated, while all the prosperity was delivered to the upper 2%. No Republican President ever proposed a balanced budget or vetoed a defict; No Republican Congress ever assembled a balanced budget, or voted down a deficit. Dick Cheney said correctly that "Reagan proved that deficits don't matter." So the conservative movement is now taking a pledge, just like a drunk who swears that this time, they will be sober and restrained, this time it will be different, we swear, honest injun. Except it isn't; all the cuts that the GOP has proposed amount to a tiny sliver of government spending; after decades of talk and blather about "fiscal responsibility" no GOP or conservative figure has put together a coherent budget proposal. All they can do is repeat the magic words like a mantra, hoping to hypnotize people into thinking they will somehow accomplish what they have failed to accomplish for a generation. Sorry- after 30 years of wild spending binges, "fiscally conservative Republican" is a punchline, not a label." This whole post is a bad joke, right? A dishonest, bad joke, isn't it. You were never a republican, sport. And you were certainly never a conservative. If you were, you wouldn't ignore the rampant spending and the abject failure of the Johnson Administration. His "Great Society" failed miserably and emasculated an entire race of people for several generations. You would not ignore that one of the greatest financial criseses that happened in our nation's history happened because of Jimmy "dipshit" Carter. You are talking about Republican spending? Are you on DRUGS??????? The CBO put our deficit at 700 Billion when George W. Bush left office. Obama has quadrupled it! Do you deny any of this? You waited for some magic hands to create jobs? What the f**k are you talking about? Do you know how jobs are created??? Jobs are created because entrepreuneurs have an idea, they put it into practice and they are entitled to keep the lion's share of their earnings and they use that money to grow their business and hire more people. DO YOU DENY THAT? Let me tell you something, a poor man never gave me a job. That isn't the government's job, pal!!! The government's job is to take as little as possible, spend every dollar as though they are spending their own personal funds and to STAY THE FUCK OUT OF THE WAY. You, Sir, want a nanny state. "Oh...boo hoo, boo hoo, boo hoo...I waited for government to shrink but it didn't so I became one of the party that stands for increased government and endless beauracracy. " That is, basically, what you wrote. Tell me...did it even make sense when you wrote it????????????? If that is how you truly feel, then I mistook you for a bright man. Human nature is that human beings feather their own nests. Government will not shrink unless extremely conservative people elect the most conservative candidates and then watch them like hawks. Watch them, blog about them, go to town hall meetings, vote in every election and every primary. That.....Animus Rex.....is how you shrink government, shrinnk taxes and create jobs. But you know that. No...something more sinister is afoot here. Perhaps you benefit from some government contract or you are actually on the dole and do not have an archietectural firm. I don't know. But the things you say are so contracdictory and so against the weight of history that I can only believe you have a bigger dog in the fight than you let on. This century has seen failed presidencies. The first was Woodrow Wilson. After him it was LBJ. After him it was Jimmy Carter. The next failed presidency will be Obama's. It is already being labeled as a faile presidency. You can Google all of this too. See: http://www.americanthinker.com/2009/08/another_failed_presidency.html Remember what I said about being a patriot, Animus? The definition of patriotism is the love of the ideals on which your country was founded. I don't think you love those ideals. That, of course, is your business. But that is also the prism that everyone should view your political posts through.

Owner59 -> RE: More Teabagger Craziness (10/2/2010 5:33:08 PM)
Commerce serves society. It`s not the other way around. It`s the middle class that drives the economy,creates demand,produces the goods and consumes them.Most of the US`s economic activity is consumer spending. The middle class is what creates jobs. Without the blue collar working and middle class,"entrepreneurs" would be in a big circle-jerk.

rulemylife -> RE: More Teabagger Craziness (10/2/2010 8:11:34 PM)
quote: ORIGINAL: Owner59 Commerce serves society. It`s not the other way around. It`s the middle class that drives the economy,creates demand,produces the goods and consumes them.Most of the US`s economic activity is consumer spending. The middle class is what creates jobs. Without the blue collar working and middle class,"entrepreneurs" would be in a big circle-jerk. Hey sport, he is giving you the truth pal. Are you on drugs? I sort of wish I was at this point. I think the lockedaway screen name answers a lot of questions.

rulemylife -> RE: More Teabagger Craziness (10/2/2010 8:39:42 PM)
quote: ORIGINAL: willbeurdaddy quote: ORIGINAL: rulemylife quote: ORIGINAL: lockedaway Anyway...I don't know what "Teabagger Craziness" is. The Tea Party movement seeks lower taxation, smaller federal government, increased state sovereignty, secure borders and energy independence. If that is "craziness", I am a stark raving loon. Remember the definition of patriotism; "Patriotism is the love of the IDEALS on which your country is founded." Carl Paladino, Christine O'Donnell, Sarah Palin, Michele Bachmann, Glenn Beck, etc.. If you want crazy people as the face of your patriotic movement then yes, you are a stark raving loon, just like this group of whack jobs. Pelosi, Reid, Schumer and Frank are the bull goose loonies comparied to those 4. Beck isnt a politician. Then what was Beck doing on the steps of the Lincoln Memorial with a bunch of teabaggers applauding his every word? The problem with Republicans is you can't tell the difference anymore between who is a politician and who is an entertainer. Mike Huckabee and Sarah Palin have their own shows on Fox. Newt Gingrich and Karl Rove are on Fox opinion segments constantly. Rush Limbaugh is hailed by the head of the RNC as a leading conservative voice and is given so much undeserved respect that he appears as the keynote speaker at the CPAC conference. Any criticism of him by a Republican politician results in that Republican groveling for his forgiveness.

DomKen -> RE: More Teabagger Craziness (10/3/2010 3:26:15 AM)
quote: ORIGINAL: lockedaway "This is a silly lie. If those mortgages made under the CRA were the ones being defaulted then we should have had an ongoing default crisis for the last 33 years. Obviously we have not had massive foreclosures going on for 33 years. What really happened was in the early part of this decade the deregulation of the banking industry encouraged companies to get into the sub prime mortgage business and those lenders pursued increasingly bad loans as a way to expand their businesses." This is what you said, right, DomKen????? My first response is "wow..." Ok...look...the reason why you haven't had a continuing mortgage crises since the 70's is because the Glass Steagal Act had not been repealled. Did you even read my post? C'mon...tell me. You can't have an educated discussion unless you read what the other guy says. We weren't bundling anonymous packages of mortgages until Glass Steagal was repealled. Do you understand that? Now look...really...I am giving you erstwhile advice. Google the New York Times article on the mortgage meltdown. You consider yourself a bright guy...right? You need to reeeeaaad it. Ken, if the facts show that I am 100% accurate. How does that change your views? Are you still going to be a raving liberal or are you going to start REALLY examining what conservatism means? In a word, my friend, conservatism is "common fucking sense". Don't spend money you don't have. Don't tolerate other people breaching the social contract by willfully and purposefully not supporting themselves. Right? Can you agree with me on those two very simple precepts? Mortgage backed securities do predate the repeal of Glass Steagel. Glass Steagal had nothing to do with whether or not a mortgage could be securitized. Secutitization of mortgages has long been the standard method for a bank to retain liquidity while still having substantial mortgage holdings. Without the ability to bundle the mortgages into bonds and then sell them on the open market the bank would be restricted to making loans no larger than cash on hand. So no, you are not 100% accurate. As an aside please cease using larger fonts and learn to use the quote function.

willbeurdaddy -> RE: More Teabagger Craziness (10/3/2010 11:27:00 AM)
quote: ORIGINAL: DomKen quote: ORIGINAL: lockedaway "This is a silly lie. If those mortgages made under the CRA were the ones being defaulted then we should have had an ongoing default crisis for the last 33 years. Obviously we have not had massive foreclosures going on for 33 years. What really happened was in the early part of this decade the deregulation of the banking industry encouraged companies to get into the sub prime mortgage business and those lenders pursued increasingly bad loans as a way to expand their businesses." This is what you said, right, DomKen????? My first response is "wow..." Ok...look...the reason why you haven't had a continuing mortgage crises since the 70's is because the Glass Steagal Act had not been repealled. Did you even read my post? C'mon...tell me. You can't have an educated discussion unless you read what the other guy says. We weren't bundling anonymous packages of mortgages until Glass Steagal was repealled. Do you understand that? Now look...really...I am giving you erstwhile advice. Google the New York Times article on the mortgage meltdown. You consider yourself a bright guy...right? You need to reeeeaaad it. Ken, if the facts show that I am 100% accurate. How does that change your views? Are you still going to be a raving liberal or are you going to start REALLY examining what conservatism means? In a word, my friend, conservatism is "common fucking sense". Don't spend money you don't have. Don't tolerate other people breaching the social contract by willfully and purposefully not supporting themselves. Right? Can you agree with me on those two very simple precepts? Mortgage backed securities do predate the repeal of Glass Steagel. Glass Steagal had nothing to do with whether or not a mortgage could be securitized. Secutitization of mortgages has long been the standard method for a bank to retain liquidity while still having substantial mortgage holdings. Without the ability to bundle the mortgages into bonds and then sell them on the open market the bank would be restricted to making loans no larger than cash on hand. So no, you are not 100% accurate. As an aside please cease using larger fonts and learn to use the quote function. the difference pre and post repeal of Glass Steagall is that the MBS pre were akin to covered calls...they were primarily government issued insurance policies issued to banks to cover their own lending. They were direct (first level) obligations. Also the ownership of those securities were subject to commerical bank reserve requirements. Post GS repeal the packaging changed because they were now in the purview of investment banks. They became 2d, 3rd and even 4th level obligations, and the market became private investors, not just commercial banks. The annual issuance of CMOs more than doubled in less than 4 years after repeal.

lockedaway -> RE: More Teabagger Craziness (10/3/2010 11:39:16 AM)
Hey ken...you don't like my posts or my fonts, don't read them. Simple enough. I don't need to be 100% right. I'm right enough to lay your silly, liberal notions threadbare. Wise up, Sir. And, for the record, Willbeurdaddy SCHOOLED you on the effect of the repeal of the Glass Steagall Act on the mortgage market. The problem, Ken, not only with you but with most liberals, is that you cannot be bothered with the facts. The historical record has no place in your partisan, little world. The FACTS are that the Clinton Administration got us into the subprime mortgage meltdown. Period...done...end of story. You want to have some silly loyalty to Clinton or liberalism or the Democratic party? Feel free. But it makes no sense. You know, you should read Mark Levin's book "Liberty and Tyranny" it would be a great con-law education for you. But...you should also read David Limbaugh's book "Crimes Against Liberty". That would be a great education for you also.

lockedaway -> RE: More Teabagger Craziness (10/3/2010 11:47:08 AM)
Commerce serves society. "It`s not the other way around. It`s the middle class that drives the economy,creates demand,produces the goods and consumes them.Most of the US`s economic activity is consumer spending. The middle class is what creates jobs. Without the blue collar working and middle class,"entrepreneurs" would be in a big circle-jerk." This is what you said, Owner? Please...don't give me your working-class-hero crap... How pathetic. I bet you have every album Bon Jovi ever put out. Most of the successful people in the world started at the bottom and worked their way up. Like the law clerk that became the most successful trial attorney or the computer geek that became the head of a huge corporation or the welder that formed his own construction company. Don't give me your communist bullshit about commerce "serving" society either. Commerce is a byproduct of society. Societies form and commerce sprouts up. You say something ridiculous like "Without the blue collar working and middle class,"entrepreneurs" would be in a big circle-jerk." Where the fuck do you think the entrepreneurs come from? You must live in some country that has an enormous caste system. People work...they work HARD if they are ambitious. The get smarter as they go along. They amass a small sum of money and turn it into a larger sum and then a larger sum again.

rulemylife -> RE: More Teabagger Craziness (10/3/2010 12:04:33 PM)
quote: ORIGINAL: RacerJim What's good for Obama, "STAY AWAY FROM MY DAUGHTERS", is good for Paladino! Uh.....have you ever seen photos of Obama's daughters? I know I have. I've even seen them on television. Isn't that what the spin is from Paladino's campaign manager to explain his temper tantrum? It was all about the photo and how that would somehow make her the prey of child molesters nationwide.

DomKen -> RE: More Teabagger Craziness (10/3/2010 12:12:42 PM)
quote: ORIGINAL: willbeurdaddy quote: ORIGINAL: DomKen Mortgage backed securities do predate the repeal of Glass Steagel. Glass Steagal had nothing to do with whether or not a mortgage could be securitized. Secutitization of mortgages has long been the standard method for a bank to retain liquidity while still having substantial mortgage holdings. Without the ability to bundle the mortgages into bonds and then sell them on the open market the bank would be restricted to making loans no larger than cash on hand. So no, you are not 100% accurate. As an aside please cease using larger fonts and learn to use the quote function. the difference pre and post repeal of Glass Steagall is that the MBS pre were akin to covered calls...they were primarily government issued insurance policies issued to banks to cover their own lending. They were direct (first level) obligations. Also the ownership of those securities were subject to commerical bank reserve requirements. Post GS repeal the packaging changed because they were now in the purview of investment banks. They became 2d, 3rd and even 4th level obligations, and the market became private investors, not just commercial banks. The annual issuance of CMOs more than doubled in less than 4 years after repeal. I was working in the banking industry back then. Glass Steagall was being circumvented all the time, most depository banks had investment bank subsidiaries with employees working interchangeably for both. Nothing in the repeal of GS allowed a change in the issuance of MBS. The explosion of sub prime ARM's and of the MBS based on them would have happened with or without Glass Steagall.

lockedaway -> RE: More Teabagger Craziness (10/3/2010 12:28:30 PM)
Ken, are you purposefully missing the point? No one is saying that there were no mortgage backed securities prior to the repeal of Glass Steagall. Right? How long was Fannie Mae in business, Ken? Long before the repeal of the Glass Steagall Act...wasn't it? But...prior to the repeal of Glass Steagall, when did you see mortgages being bundled together in anonymous blocks and sold to the general public? I don't remember that happening prior to 1999. Correct me if I'm wrong.

DomKen -> RE: More Teabagger Craziness (10/3/2010 12:41:14 PM)
quote: ORIGINAL: lockedaway Ken, are you purposefully missing the point? No one is saying that there were no mortgage backed securities prior to the repeal of Glass Steagall. Right? How long was Fannie Mae in business, Ken? Long before the repeal of the Glass Steagall Act...wasn't it? But...prior to the repeal of Glass Steagall, when did you see mortgages being bundled together in anonymous blocks and sold to the general public? I don't remember that happening prior to 1999. Correct me if I'm wrong. Maybe you have no idea what a Mortgage Backed Security is? They are anonymous blocks of mortgages bundled together and sold to the public. That's what they were before 1999 and what they are today. Glass Steagall was supposed to keep depository banks, the kind we use for checking accounts etc., seperate from investment banks, the kind that buy and sell stocks and bonds on the markets for their investors. Prior to 1999 the law was already effectively repealed as banks would work around it in any number of ways. CitiCorp, depository bank, merged with Travellers, investment bank, to form CitiGroup prior to the repeal of GS for instance.

willbeurdaddy -> RE: More Teabagger Craziness (10/3/2010 4:20:05 PM)
quote: ORIGINAL: DomKen quote: ORIGINAL: lockedaway Ken, are you purposefully missing the point? No one is saying that there were no mortgage backed securities prior to the repeal of Glass Steagall. Right? How long was Fannie Mae in business, Ken? Long before the repeal of the Glass Steagall Act...wasn't it? But...prior to the repeal of Glass Steagall, when did you see mortgages being bundled together in anonymous blocks and sold to the general public? I don't remember that happening prior to 1999. Correct me if I'm wrong. Maybe you have no idea what a Mortgage Backed Security is? They are anonymous blocks of mortgages bundled together and sold to the public. That's what they were before 1999 and what they are today. Glass Steagall was supposed to keep depository banks, the kind we use for checking accounts etc., seperate from investment banks, the kind that buy and sell stocks and bonds on the markets for their investors. Prior to 1999 the law was already effectively repealed as banks would work around it in any number of ways. CitiCorp, depository bank, merged with Travellers, investment bank, to form CitiGroup prior to the repeal of GS for instance. there are actually two broad classes of securities both called MBS's. Direct MBS's that were sold before repeal of GS and bundled secondary and tertiary MBS's (primarily CMO's) that grew exponentially only after repeal of GS. You are (probably intentionally in your usual fashion) confusing them.

DomKen -> RE: More Teabagger Craziness (10/3/2010 4:26:17 PM)
quote: ORIGINAL: willbeurdaddy quote: ORIGINAL: DomKen quote: ORIGINAL: lockedaway Ken, are you purposefully missing the point? No one is saying that there were no mortgage backed securities prior to the repeal of Glass Steagall. Right? How long was Fannie Mae in business, Ken? Long before the repeal of the Glass Steagall Act...wasn't it? But...prior to the repeal of Glass Steagall, when did you see mortgages being bundled together in anonymous blocks and sold to the general public? I don't remember that happening prior to 1999. Correct me if I'm wrong. Maybe you have no idea what a Mortgage Backed Security is? They are anonymous blocks of mortgages bundled together and sold to the public. That's what they were before 1999 and what they are today. Glass Steagall was supposed to keep depository banks, the kind we use for checking accounts etc., seperate from investment banks, the kind that buy and sell stocks and bonds on the markets for their investors. Prior to 1999 the law was already effectively repealed as banks would work around it in any number of ways. CitiCorp, depository bank, merged with Travellers, investment bank, to form CitiGroup prior to the repeal of GS for instance. there are actually two broad classes of securities both called MBS's. Direct MBS's that were sold before repeal of GS and bundled secondary and tertiary MBS's (primarily CMO's) that grew exponentially only after repeal of GS. You are (probably intentionally in your usual fashion) confusing them. CMO's existed before 1999. They were invented in the 80's by Salomon Bros. Why do you continue to make claims that are so far from reality. The repeal of Glass Stegall did one thing and one thing only. It allowed depsoitory banks to dispense with the ongoing charade of having investment bank subsidaries. It had not one tiny thing to do with the real estate bubble except being part of the overall climate of deregulation that led to the crisis.

Owner59 -> RE: More Teabagger Craziness (10/3/2010 5:49:16 PM)
http://www.youtube.com/watch?v=56XXH7ScAM4&feature=related http://www.youtube.com/watch?v=YwpnH_OTZio One honest republican. Credit default swaps and unsecured derivatives. Both things that became unregulated by Phill Gramm after he got rid of the depression-era Glass-Steagall act.So that`s where a hoard of wallstreeters and "entrepreneurs" put their(ie our) money. And what are cons calling for? More fucking deregulation and giving tax breaks to millionaires with borrowed money.

thornhappy -> RE: More Teabagger Craziness (10/3/2010 9:01:49 PM)
quote: ORIGINAL: lockedaway The FACTS are that the Clinton Administration got us into the subprime mortgage meltdown. Uh huh. I guess the Republicans/Bush/etc. just went along for the ride, letting capitalism do its thing. If they really believed this, they could've passed legislation to tighten up regulations. However, that administration in particular was no fan of regulation. A shitload of middle- and upper-class white folks bought those terrible mortgages; just check out California, Arizona, and Las Vegas. No one forced companies to write such crap; what happened was a company would go "Hey, down the street they're offering 5% down. We should too." A month later they'd see 3% down, then 0% down, then second mortgages to make the 20% down payment. Those subprime firms knew exactly what they were getting into. They sent me offers every damn month for home-equity loans in excess of 20,000 bucks when I had about 6000 in equity. That's shear stupidity on their parts. Secondly, no one forced Wall Street investment houses to collateralize loans without understanding their own fricken' models. Then the capped it off by using credit default swaps. That was Wall Street at it's best. The worst was the stupid rating agencies that also didn't understand the investment vehicles that they were rating. Oh yeah, they get paid by the same corporations that they are rating. Some people were able to see what a disaster this whole situation was, they shorted, and made a bunch of money. They were not investment professionals. All they did was take a detailed look at the data. Hey, you can read about collateralized mortgages in Liar's Poker, by Michael Lewis. He worked at Solomon Brothers in the late '80s.

tazzygirl -> RE: More Teabagger Craziness (10/3/2010 9:03:21 PM)
quote: The CBO put our deficit at 700 Billion when George W. Bush left office. Obama has quadrupled it! Do you deny any of this? May want to recheck your figures. The CBO stated on January 7th, 2009, that the 2009 deficit will total 1.2 Trillion... a Budget set by George Bush.

willbeurdaddy -> RE: More Teabagger Craziness (10/3/2010 9:10:46 PM)
quote: ORIGINAL: DomKen quote: ORIGINAL: willbeurdaddy quote: ORIGINAL: DomKen quote: ORIGINAL: lockedaway Ken, are you purposefully missing the point? No one is saying that there were no mortgage backed securities prior to the repeal of Glass Steagall. Right? How long was Fannie Mae in business, Ken? Long before the repeal of the Glass Steagall Act...wasn't it? But...prior to the repeal of Glass Steagall, when did you see mortgages being bundled together in anonymous blocks and sold to the general public? I don't remember that happening prior to 1999. Correct me if I'm wrong. Maybe you have no idea what a Mortgage Backed Security is? They are anonymous blocks of mortgages bundled together and sold to the public. That's what they were before 1999 and what they are today. Glass Steagall was supposed to keep depository banks, the kind we use for checking accounts etc., seperate from investment banks, the kind that buy and sell stocks and bonds on the markets for their investors. Prior to 1999 the law was already effectively repealed as banks would work around it in any number of ways. CitiCorp, depository bank, merged with Travellers, investment bank, to form CitiGroup prior to the repeal of GS for instance. there are actually two broad classes of securities both called MBS's. Direct MBS's that were sold before repeal of GS and bundled secondary and tertiary MBS's (primarily CMO's) that grew exponentially only after repeal of GS. You are (probably intentionally in your usual fashion) confusing them. CMO's existed before 1999. They were invented in the 80's by Salomon Bros. Why do you continue to make claims that are so far from reality. The repeal of Glass Stegall did one thing and one thing only. It allowed depsoitory banks to dispense with the ongoing charade of having investment bank subsidaries. It had not one tiny thing to do with the real estate bubble except being part of the overall climate of deregulation that led to the crisis. Where did I say when they were invented? oh, I didnt. What I did say is that due to the repeal of GS their annual placements more than doubled in less than 4 years. But feel free to continue to lie about what people say to cover your own ineptitude.

DomKen -> RE: More Teabagger Craziness (10/4/2010 3:39:50 AM)
How precisely did the repeal of GS create more CMO's? Please cite the specific regulartory change that allowed this. Or IOW put up or shut up. The repeal of GS did nothing to affect the operations of the institutions that created the real estate bubble. The people selling sub prime ARM's, Household Finance for instance, were in the business of making loans before 1999 and were making the same loans after 1999. What changed had nothing to do with the distinction between depository and investment banks. In reality the problem has at least two major components. First of course is the lenders making these predatory ARM's in the first place. HFC paid a half billion dollar fine for predatory lending practices in late 2002. This created a large number of mortagaes doomed to default when the low intial interest rates adjusted to the higher rates dictated by the prime rate. Second was the bond rating agencies rating the MBS built on these doomed to default ARM's as AAA bonds. This falsely guaranteed a high degree of safety in those bonds which made credit default swaps on those bonds, essentially self issued insurance against default on the bonds, appear as much better investments than they truly were. When enough mortgages in one of the MBS defaulted the entire bond defaulted and the holders of the CDS was suddenly on the hook for the value of the bond. Which, if the bonds had been correctly rated as junk bonds in the first place, would have been far less of a problem but as it is it brought down banks worldwide which hold CDS's as safe income vehicles.

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