No politics intended Sandra, it is what it is. I felt that most on the list
would find it interesting (if they didn't already know) the real cause of our
current mess, not only a small segment in housing but quants, that exacerbated
an already bad situation. Informed people are empowered people.
John
On May 26, 2013, at 2:53 PM, Sandra Schreiber wrote:
> I don't think it's such a good idea to talk politics on this
> list....obviously there are differences of opinion.... Sandy
> On May 26, 2013, at 1:37 PM, Nora Probasco wrote:
>
> John, thank you again for the expanded info. Now I understand what brought
> about the housing bust. Sadly, we don't seem to have "leaders" in our country
> to do what needs to be done. Obama has brought "Chicago style" politics to
> Washington which has nearly destroyed the infrastructure there. Though not a
> Mac subject, I am glad you shared it nonetheless.
>
> Nora
>
> On Sunday, May 26, 2013, John Robinson wrote:
> Nora,
>
> It's a cord of many threads, we had a major problem in this country with the
> politicians saying that we needed to move everyone into home ownership even
> if they couldn't afford it. If that was the only part of the meltdown we
> would have had some pain but not what the world ended up going through (think
> the Savings and Loan Crisis of the late 80's and early 90's). The S&L crisis
> caused pain in localized areas, the government had to step in and help but it
> was NOTHING like what happened in 2008 & 2009.
>
> The difference were the CDO's, CDS's and Speed bots. (every one of these
> completed by Quants)
>
> The CDO's were the combining of thousands of home loans into a package with
> so many "tranches" that each offering ("tranch") in the unit represented so
> many loans in the AAA class then additional loans were included with ratings
> all the way down to the Subprime to complete the security that would be sold
> to the public, state municipality retirement funds, mutual funds, etc.
>
> This allowed Moody's, Standard & Poor's, and Fitch rating agencies to bless
> the offering with a rating almost as pure as a Federal Fund T bill. In
> reality the rating agencies had NO idea what was in this mess, the quants
> were figuring it all out.
>
> Then the industry began offering CDS's or an insurance policy on these CDO
> instruments, these could be purchased for around 1% of the value of the
> obligation, dirt cheap.
>
> Some folks began studying what these CDO's really were & realized there was a
> monumental problem, they began purchasing CDS's by the trainload. This game
> went on for several years but when the Subprime began to crack it was finally
> realized by all that it was a rouse and then the quants programs using the
> speed bot trading (millions of shares traded in nanoseconds) and we had a
> meltdown overnight.
>
> There was a horrific contagion problem, Goldman Sachs alone had over a
> MILLION counter-party transactions. When Buffett bought General Re there
> were a quarter million counter-party transactions which he unwound
> immediately. The same with Merrill, Morgan Stanley, Lehman, AGI, Bear
> Stearns, Royal Bank Of Scotland, Deutsche Bank, and on and on and on this
> went around the globe.
>
> When it began to unwind the possibilities of what would happen if these CDS
> transactions could not be honored were unimaginable, The government had to
> step in to prop up the system, few of us realize just how close we came to a
> true financial holocaust. The shotgun marriages were just that, the
> Treasury, under Hank Paulson, TOLD the firms what had to be done, the only
> major mistake was the letting Lehman go down, that was more of a shock to the
> system than Paulson, Bernanke or Tim Geithner (Tim at that time was head of
> the New York Fed & involved every step of the way in the 30 or 72 hr.
> marathons with no sleep) had any idea would affect the markets so severely.
>
> I personally feel that Paulson had it in for Richard Fuld (the head of
> Lehman) as Paulson had previously been the head of Goldman and I think there
> was bad blood between the two, maybe not, but the government saved everybody
> of any importance by buying the toxic assets or arranging marriages and
> handing out money like candy...... EXCEPT Lehman.
>
> Anyway, it was the perfect storm all created by guys known as quants that
> thought they had it all figured out, each step, every segment was their
> brainchild and the world was their oyster.
>
> I know there are as many political solutions to this as there are people but
> I for one would not have wanted to see what life would be like now and for
> for decades to come if this wasn't underpinned by the powers......now we have
> another problem that no quant will be able to solve, it will be solved by
> utilizing the energy solutions we have within our country....this will get us
> out of the humongous debt we have if we can only get our leaders to see the
> small light still giving us hope.
>
> I know, this isn't exactly MAC stuff but Harry ask a great question and it
> really involves a large answer if you understand how important Quantitative
> Analysts (Quants) have become in our everyday lives.
>
> John
>
>
>
> On May 26, 2013, at 11:02 AM, Nora Probasco wrote:
>
>> Thanks for the summation, John! Let's hope the circuit breakers work!
>>
>> Nora
>>
>> On Saturday, May 25, 2013, John Robinson wrote:
>> Some of the most brilliant mathematical folks on the planet, similar to Lee.
>>
>> They are often referred to as the guys that helped bring the meltdown to our
>> financial system. Today as I worked in the yard I finished one book and
>> began (for the second time) a book about "The Quants"....by Scott Patterson.
>> I find it intriguing, utterly fascinating and bewildering as well that
>> there are people this smart.....but wrong about their models that they felt
>> were so impervious.....they can't quantify the human element and that was
>> their downfall, once it began it was a feeding frenzy that fed upon one
>> computer model after another.
>>
>> Since then they have put in circuit breakers to hopefully give the machines
>> a wink that the route is over and it's time to move the other direction.
>> It seems to have really helped and maybe the whiz kids have also changed the
>> way their programs work....we won't know until the next time.
>>
>> John
>>
>>
>> On May 24, 2013, at 4:52 PM, Harry Jacobson-Beyer wrote:
>>
>>> What are quants.
>>> On May 24, 2013, at 11:59 AM, Jonathan Fletcher <[email protected]>
>>> wrote:
>>>
>>>> On May 24, 2013, at 11:33 AM, Lee Larson <[email protected]> wrote:
>>>>
>>>>> Rand has a database. I wonder with whom he shares it.
>>>>
>>>>
>>>> Politics has become all about databases. Surely you remember all the
>>>> stories about how the quants won Obama the last election?
>>>>
>>>> You'll never again even be able to file as a candidate for an office
>>>> without an underground bunker full of database mathemeticians calling the
>>>> shots.
>>>>
>>>> j.
>>>>
>>>>
>>>>
>>>> --
>>>> Jonathan Fletcher
>>>> FileMaker 9/10/11/12 Certified Developer
>>>>
>>>> Fletcher Data Consulting
>>>> [email protected]
>>>> http://www.fletcherdata.com
>>>> 502-509-7137
>>>>
>>>> Kentuckiana's FileMaker Developers Group
>>>> Next meeting: Tuesday, May 28th, noon to 3:30-ish (Special guest!)
>>>> http://www.kyfmp.com
>>>>
>>>>
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>>>
>>>
>>> _____________________
>
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> Sandra Gray Schreiber, AAA
> Schreiber Silver
> Schreiber Appraisal Associates
> 50 River Hill Road
> Louisville, Ky 40207
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>
>
>
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