
Blowing the Whistle on the Mortgage Bubble - xivSolutions
http://www.pbs.org/wgbh/pages/frontline/business-economy-financial-crisis/untouchables/blowing-the-whistle-on-the-mortgage-bubble/
======
patio11
Worth it just for the email in the middle by a Citi underwriter.

[http://cybercemetery.unt.edu/archive/fcic/20110310201200/htt...](http://cybercemetery.unt.edu/archive/fcic/20110310201200/http://c0181567.cdn1.cloudfiles.rackspacecloud.com/2007-11-03_Citi_Email_from_Dick_Bowen_to_Robert_Rubin_and_David_Bushnell_Re_concerns_financial_issues.pdf)

I don't agree with every stylistic choice, but that's some of the best
professional writing in the fling-a-firecracker-outside-of-your-silo
circumstance that I've ever seen. ("I do not believe our company has
recognized the material financial losses inevitably associated with the above
Citi liability." is accountant-speak for "THE WORLD IS ON FIRE!")

~~~
wcgortel
I sent a similar email to the CEO of my bank in 2007 -- there was a product I
was involved in that (it was clear) was not understood by our sales force or
by our investors. I'll spare the details, but I was called into his office and
reminded that the "e" in email stands for "evidence."

~~~
nicholasjarnold
I cannot express how angry reading comments like this makes me. Clearly many
of these guys at the top (bank CEO's, fund managers, ect.) were systematically
defrauding everyone in order to turn a larger profit. Call me naive, but isn't
this shit (the massive fraud perpetrated on us by banks) supposed to result in
hefty jail sentences?

~~~
wcgortel
I mean, you're justified in a way. I don't think it's fraud though. Consumers
are equally complicit.

What I mean by that is that as the buyer of a product, you usually would go
out and read the reviews, kick the tires, etcetera. At this time, many buyers
of investments didn't do that at all.

Our sales guys didn't understand the product for sure, but if they had a
customer who asked the right question they would have arranged a conference
call with me or a colleague, no issue. That happened like, one time.

I think the concern that my firm had at this time was principally related to
the likelihood that emails like this would hit the public domain at some
point.

Edit: shameless plug. My stealth mode thing should change this a little bit
(for certain investors).

~~~
vec
As a client, it is perfectly reasonable for me to say to a sales rep "I want
X% average return, I'm willing to accept Y amount of risk to get it, and I
don't care particularly much about how you give it to me", so long as X and Y
are reasonable. My understanding is that the financial institutions were
accurately describing the average rate of return but drastically under-
representing the risk of these instruments to their clients.

Calling consumers 'complicit' for failing to understand a company's offerings
significantly better than their own salespeople is at the very least
insulting.

~~~
wcgortel
I would agree with you that it's reasonable to expect that to be a
conversation that would result in your desired outcome. There are a few
technical things at issue.

Again, I agree this is broken. My only point is that saying things are "fraud"
is harder than I think you expect.

The problem is that saying "I want X% return with Y risk, show me suitable
investments" introduces two problems. The first is that risk is not easily
quantifiable[1] and also that there are likely many things that are plausibly
suitable for that requirement.

If you are dealing with a salesperson, they are required only to present stuff
that has a reasonable likelihood of meeting your goals.

If they're working with someone who is a fiduciary, that fiduciary is required
to do the extra analysis, but many people are not lucky enough to work with
folks who are held to that higher standard.

In my view, every consumer when transacting with every salesperson should use
their own judgment to make sure that the products they are being sold are
sensible and suitable for them.

Failing to do that -- to just walk into a store and buy what the salesperson
(not your personal shopper or your sister or someone who actually cares) says
is best -- is just a bad idea.

I hope that adds some clarity as to where I'm coming from.

[1]Quanta exist, but are not comprehensively descriptive. Any metric will not
comprehensively describe risk, especially because there are behavioral factors
(your own changing attitude towards risk over time) that need to be
incorporated into a thoughtful assessment.

~~~
MaysonL
It was fraud, executed at the highest level, with an associated Gresham's law
corollary: honesty was driven out of the market as CEOs who failed to follow
the "liars loans" trend didn't survive. As I said upthread, go read William K.
Black's Wikipedia page, follow a few of the links (his appearance on Bill
Moyers was good).

------
Irregardless
My reaction while reading most of this was _"Why didn't any of you try harder
to let someone know? Why didn't you email everyone? Why didn't you call all
the people you emailed? Wasn't there ANYONE important who would listen!?"_

After reading the whole thing, I was a little shocked to realize the answer is
"No, there was no one important who would listen." The accountant who
essentially documented the impending collapse of Citigroup in less than 2
pages was interviewed by the SEC and then never heard from them again. Then
there's this guy:

> The congressional responses were, “Thank you for your letter, and thank you
> for your interest.” And, “We’ll look into this,” basically.

> I also wrote letters to just about every television journalist, and network
> journalist that I could get my hands on. Sent as e-mail with attachments and
> never received any response. [I wrote to] CNN and Fox News. ABC News, NBC
> News, CBS. My daughter was working at that time with one of the network
> affiliates in Phoenix, and she knew how upset I was about this whole thing.
> So she put me in contact with their consumer reporter, who does the consumer
> complaints and that sort of thing. He came out to my house and interviewed
> me for about 45 minutes. And I gave him documentation, and tried to as best
> I could to explain the situation to someone that was basically ignorant of
> the mortgage industry. Never heard another word. …

> During the mortgage meltdown, [Fox News host] Bill O’Reilly was having a
> temper tantrum on his show where he was going off about, “Why didn’t I hear
> about this? Why didn’t somebody tell me about all this that was going on?”
> And I almost threw my shoe through the television set. Ask my wife — I was
> screaming and yelling, “I did try to let you know.” ‘Cause he had been one
> of the ones that I had sent e-mails and attachments with all of this stuff.
> …

What the hell are these people supposed to do? Start posting their warnings
all over the internet and hope it goes viral? What are the chances that would
work vs. the chances they'd all be dismissed as conspiracy theorist crackpots?

It's easy to think _"If I were in any of their positions, I would've gotten
the entire country's attention"_ , but it seems people at every level are
determined to be ignorant as long as it's profitable.

~~~
liber8
It's not that a special _somebody_ wouldn't have listened. This wasn't as big
an information problem as most people make it out to be. As this, and many
other articles explain, bankers and underwriters knew bank fraud was
widespread. The general public, who took out the loans, knew they were
defrauding banks. Wall Street knew the rating agencies were full of shit. But
everybody was making a killing as long as real property kept appreciating, so
nobody cared. They all thought they'd be out before the pop.

Lots of people saw this coming. Peter Schiff, among other Austrians, were
ringing alarm bells for _years_. That's part of the problem. People think,
"How big a problem can it really be if you're on year number four of telling
us what a problem this will be? Surely if it was as bad as you say, it would
have happened already/we wouldn't be making all this money." If you read
Michael Lewis' The Big Short, you'll get a nice profile of five or six guys
who not only saw this coming, but actually timed it perfectly and made
fortunes.

You can't solve problems like these by convincing one "important" person of
anything, even if its the truth.

~~~
sillysaurus
As someone who is completely ignorant of investment strategies, would anyone
explain how to make a fortune off of an impending financial collapse (when you
predict the timing perfectly)? That sounds very interesting.

~~~
liber8
There are many ways to do this, but the simplest explanation is: you enter an
agreement to borrow an asset and agree to give that asset back at a certain
date in the future. You then immediately sell the asset. Then, on the date
certain, you buy that asset back and give it back to the lender. This is
called "shorting" and is very easy to do with fungible assets like publicly
traded stocks, bonds, or even collateralized debt obligations. It's so easy
and common that _you_ could open up a brokerage account and the broker will
actually lend you money to do this.

The problem is timing. Many, many people saw this collapse coming, and most of
them got hosed by betting on it. In the above example, say that you borrowed
and sold 10,000 shares of Genworth Financial stock on January 1, 2007 because
you knew they were sitting on a pile of bad mortgages and the stock price
would tank when the music stopped. If you agreed to give that stock back on
July 1, 2007, you would have lost money, because the stock went _up_. If you
had just made this bet a few months later, as a few people did, you would have
made a killing.

~~~
ultraswank
Or the big boogy man from the crisis, credit default swaps. They're complex
financial basically insurance that you can take out on any asset, even one you
don't own. Many institutions saw the chance of these securitized mortgage
assets failing as so remote that they'd sell credit default swaps for
fractions of a penny on the dollar on their coverage. They were cheaper and
more predictable then shorts and when the crisis hit if you held them you made
a killing. Of course a lot of that killing came on the back of the U.S.
taxpayer. The number of credit default swaps that they sold were what almost
killed AIG, so the government stepped up and covered almost $14 billion of
their losses.

------
ck2
I hope pbs eventually covers the zero prosecution for HSBC bank money
laundering.

Only penalty was a month's worth of profit. Not one person will serve a day in
prison.

But hey, don't unlock your phone, it's a felony. Or download and free journal
articles.

~~~
watty
The sensationalism isn't helping. It's perfectly legal to download free
articles.

~~~
delinka
You're absolutely correct: it's perfectly legal to download free articles. But
this is why I made my "semantics matter" argument a few days ago: He said
"download and free," free being a verb and intending to mean "set them free."

Yes, there appears to be an allusion to Aaron's particular case. However, one
could certainly see where a particular journal publisher holds the copyright
on many excellent articles made available online for a fee having to protect
their copyright from some unscrupulous academician using their paid acces to
liberate those writings. And how, given the predilection of prosecutors to
scare would-be defendants, automating that task might see the threat of
criminal charges.

To actually respond to your comment, it may be legal to download free articles
(and it's probably legal to download articles for which you've paid), but is
it legal to distribute someone else's copyrighted work without their
permission? Price doesn't matter.

------
cs702
The senior banking executives who ignored the early warnings were making tons
of money. The mid-level bankers assembling and selling mortgage securities,
who also ignored all warnings, were making tons of money too. The ratings
agencies and lawyers giving their stamp of approval to these crazy securities,
who also ignored all warnings, were making tons of money as well. The mortgage
brokers and originators who were making irresponsible loans to home buyers
with sketchy credit histories were making plenty of money, and they too
ignored the warnings. The home buyers who successfully flipped properties in a
matter of months or even weeks were also making money, and also ignored the
warnings. The homeowners who borrowed more and more against their home's
seemingly ever-rising value were flush with newfound cash, and felt like
financial geniuses.

To a close approximation, no one wanted to hear the warnings.

To find culprits, most Americans need only look in the mirror.

~~~
SkyMarshal
_> To find culprits, most Americans need only look in the mirror._

Without looking up the statistics, I doubt it was 'most' Americans, aka 50%+.
You heard a lot about 'flipping', but I don't think the majority of the
country was engaged in that, even if you include the financial enablers. It
had an outsized effect on the entire economy for sure, though.

~~~
JackFr
No most people weren't flipping, but cash-out refinancings were fairly common.

------
jstalin
Our system is strictly based on confidence at this point. Fiat currency,
fractional reserve banking, massive leverage, and more systemic debt than the
world has ever seen all rely on the fact that big banks are essentially
untouchable. We'll never see prosecutions of big banks or their principles. It
would break the entire system.

~~~
josefresco
This is an important point, and one that I personally believe explains why we
didn't see prosecutions at the highest level. Geithner was instrumental in
guiding Obama away from this heavy handed approach, as he recognized (I think
quite accurately) that confidence was really the only _thing_ keeping the
system from crashing completely.

If Obama had given execs the kind of treatment Larry Summers and the other
half of his team wanted (heads on sticks to put it lightly) it would have
rocked the investment world and brought much more pain to our economy than
many could bear. The American people would have seen justice, but most likely
at a substantial cost to the American way of life with ripple (tsunami?)
effects seen and felt around the world.

~~~
Shivetya
Understand that what Presidents say in public is very different from what they
do in private.

Why anyone would expect Obama to carry through such threats when his staff has
mostly been from these very same groups is beyond me. If anything its more
like, you guys are going on pikes unless you play ball, here let me connect
you to my campaign finance coordinator. Geitner protected his buddies. The
real collapse would have been the money available to the various campaigns
that eat it up directly or indirectly.

Washington is the one percent, they own Wall Street more than Wall Street owns
them. They excuse themselves from insider trading, tax issues, and the like.
How are the executives at Fannie and Freddie any different from those at other
lending groups? Simple, they have/had better political connections.

~~~
jonpeda
FYI, Geithner has never been employed by anything vaguely resembling a private
bank. He was a consultant for 3 years after school, before joining government.

------
logn
"I think we’ve developed in our society an idea that any time we see a
problem, we can create a law that’s going to prevent that problem from
happening in the future. We don’t need new laws. We need to enforce the laws
that have been on the books before." -Tom Leonard (Mortgage underwriter)

That's the duty of the Executive branch.

"we have a responsibility in the person of our President; he cannot act
improperly, and hide either his negligence or inattention; [...] far from
being above the laws, he is amenable to them in his private character as a
citizen, and in his public character by impeachment." -James Wilson (a
Founding Father of the US)

"Not but that crimes of a strictly legal character fall within the scope of
the power [of impeachment]; but that it has a more enlarged operation, and
reaches, what are aptly termed political offenses, growing out of personal
misconduct or gross neglect, or usurpation, or habitual disregard of the
public interests, various in their character, and so indefinable in their
actual involutions, that it is almost impossible to provide systematically for
them by positive law." -Joseph Story (Supreme Court Justice, 1811-1845)

------
tsunamifury
It was never a secret. Everyone knew values were out of whack on housing and
people were taking out mortgages to high. But the sound of a few tiny whistle
blowers is nothing compared to the collective will of the American people to
buy bigger and better homes or make a quick buck.

This was a lesson we needed to learn as a nation, not one we just need to
blame on bankers. Many people participated in the fraud, many banks were
complicit with the fraud. That means we should be locking up home buyers right
along with the bankers. In fact many of the people interviewed here as
whistle-blowers went on being complicit with fraud. None (except the one
executive) quit their jobs or even protested in a significant fashion. They
all just kept doing work they knew was wrong.

Disclosure: Im an ex-Journalist and an ex-Banker.

------
pathy
As someone on Twitter said: "Justice Dept said they'd never speak to
@FrontlinePBS again after this Wall Street doc. So naturally it's a must-
watch" via <https://twitter.com/trevortimm/status/294337455321133056>

I found the programme to be very interesting and raise important points but as
always, it IS very hard to prove criminal actions in cases like these and
while some might be greedy they might not actually be criminal.

That said; it seems that some knew about these unsavory dealings and hopefully
they will face justice.

------
jcven
The best whistle blowing before the bubble popped had to be Peter Schiff
telling a huge crowd of mortgage bankers they were about to lose their jobs in
Nov 2006:

<http://www.youtube.com/watch?v=jj8rMwdQf6k>

~~~
xutopia
Peter Schiff fascinates me. He's had many right predictions and he's been
making money off of these, all while telling the world exactly how he'll do
it.

~~~
amalag
I don't think his investments are making much money. He bet on decoupling
while the rest of the world looked to USA as the safe haven. He was right on
some things, but didn't make a lot of money like some did in the crash. Like
the hedge fund manager who bet on large mortgage defaults.

------
bjhoops1
The entire expose is worth reading:
<http://www.pbs.org/wgbh/pages/frontline/untouchables/>

The most outrageous part in my mind was where Assistant AG Lanny Breuer (who
just resigned) gave a speech in which he talked about how he loses sleep at
night over concerns about what bringing a lawsuit against a big Wall Street
corporation could do.

Imagine if you applied that argument to prosecuting drug cartels! "Just think
of all the poor footmen and couriers who might lose their jobs if we prosecute
their ringleader"

------
gtrubetskoy
This documentary implies that applicants were submitting fraudulant
applications, which is not true. Most people (including the Frontline
producers, apparently) still do not understand who was defrauding whom here.

If you apply for a loan and misrepresent your financial situation, this is not
fraud (which is a crime) it's a lie, and lying is NOT a crime. You can say
you're a teacher making a million a year and what's supposed to happen is the
application should be denied (and may be your credit score might suffer).

It is the responsibility of the bank, not the applicant, to make sure that the
applicant can repay the loan. Issuing a loan to someone who you know is
misrepresenting one's financial situation is fraud and a crime. When such a
loan is issued, it is the bank defrauding the applicant (not the other way
around). It's essentially loan sharking or extortion, which is a felony. In
doing so the bank is also failing in its fiduciary responsibility to the
depositors, which is a (separate) crime as well.

~~~
twoodfin
_If you apply for a loan and misrepresent your financial situation, this is
not fraud (which is a crime) it's a lie, and lying is NOT a crime._

Lying is absolutely a crime if it's considered perjury, and many (all?) loan
applications require you to certify the accuracy of statements under penalty
of perjury.

~~~
gtrubetskoy
Taken out of the context of a loan, you're right.

But borrowing is a special case. Because if the responsibility were entirely
on the borrower, then it would be advantageous to the bank that you lie on the
application. Then they could take all your material possessions as soon as you
fail to make a payment and send you to prison to boot. (Which is not far from
what happened with the mortgage crisis.)

This is how loan sharking works, and why it is illegal.

If someone issues you a loan that you cannot repay, it is the issuer's loss,
it's as simple as that. If the issuer knew you couldn't repay it, it's not
just their loss, but they're also committing a crime.

~~~
JackFr
You are either trolling or grossly misinformed about a number of things.

Your belief is that by intentionally misrepresenting yourself to a bank and
obtaining a loan you otherwise would not have been able to obtain, that is,
willfully and knowingly entering into a contract in bad faith -- you are the
victim of a crime. That is ludicrous at its face.

If someone issues you a loan in good faith, and you cannot repay, it is indeed
their loss. They have not committed crime however.

In the case of a personal loan if you fail to repay, the bank can go to court
and get a judgement against you. With that judgement they might be able to
make a claim on such assets as to make themselves whole. They cannot "take all
of your material possessions" let alone send you to prison. This is very far
from what happened...

In the case of a mortgage, the can foreclose on the property, liquidate it and
use the proceeds to make themselves whole. Note that anything collected in
excess of the loan must be passed back to the borrower. (This rarely happens,
because if the property were worth more than the loan, the borrower would just
sell or refinance.) After a foreclosure and sale, if the bank is still not
whole, in many states they may not come after the borrower for the balance
(this is called "no-recourse") in other states they can ("recourse"). In the
industry so called "subprime" loans were often referred to a "home equity",
because there was an acknowledgement that these were borrowers were greater
risk, but the loan was guaranteed by the value of the home, and as long as
home prices did not drop significantly they were of little risk.

It is almost never advantageous for the bank for the not to repay a loan, as
the most the bank can do is be made whole by recovery, and almost never is.

Finally that is not how loan sharking works.

~~~
gtrubetskoy
_If someone issues you a loan in good faith, and you cannot repay, it is
indeed their loss. They have not committed crime however._

What I said is that it is a crime if at the time of issuance the lender has
reasons to believe you cannot repay the loan. That _is_ a crime, and that _is_
a form of extortion (or loan sharking).

~~~
JackFr
No.

People who misrepresented themselves engaged in fraud. There is no requirement
for the bank to assume bad faith on the part of the lender.

If a bank made a loan to someone who could not repay it, they are likely to
take a loss. The fraud, where it happened, was when the bank sold this loan.
At that point, the idea of 'willful blindness' and 'prudent man' came into
play, when banks materially misrepresented the loans they were selling as
having been prudently underwritten. But the victim was the buyer of the loan,
not the borrower.

------
Create
<http://video.pbs.org/video/2327953844>

[http://www.rollingstone.com/politics/blogs/taibblog/outrageo...](http://www.rollingstone.com/politics/blogs/taibblog/outrageous-
hsbc-settlement-proves-the-drug-war-is-a-joke-20121213)

~~~
Nrsolis
Matt Taibbi isn't what I would call the most distinguished journalist to be
getting your info from. He's a bit sensationalist for my taste. For that
matter, he seems to enjoy picking a position to write from before he really
has all the facts.

~~~
Create
_Still, some prosecutors proposed that Attorney General Eric H. Holder Jr.
meet with Treasury Secretary Timothy F. Geithner, people briefed on the matter
said. The meeting never took place._

 _After months of discussions, prosecutors decided against a criminal
indictment, but only after securing record penalties and wide-ranging
sanctions._

[http://dealbook.nytimes.com/2012/12/10/hsbc-said-to-
near-1-9...](http://dealbook.nytimes.com/2012/12/10/hsbc-said-to-
near-1-9-billion-settlement-over-money-laundering/?ref=business)

 _"This process has highlighted some unacceptable shortcomings that HSBC
deeply regrets," said Levey in written testimony. "While our old model served
us well historically, it does not work in an interconnected world where
transactions cross borders instantaneously and where weaknesses in one
jurisdiction can be quickly exported to others."_

 _WASHINGTON – Global banking giant HSBC and its U.S. affiliate exposed the
U.S. financial system to a wide array of money laundering, drug trafficking,
and terrorist financing risks due to poor anti-money laundering (AML)
controls, a Senate Permanent Subcommittee on Investigations probe has found._

[http://www.hsgac.senate.gov/subcommittees/investigations/med...](http://www.hsgac.senate.gov/subcommittees/investigations/media/hsbc-
exposed-us-finacial-system-to-money-laundering-drug-terrorist-financing-risks)

------
pitt1980
while back I read the Big Short

what I came away with was how durable secrets are

here was this billion dollar opportunity that a bunch of people became
insanely rich exploiting

and it wasn't a secret at all

a bunch of people where doing everything they could to tell people how
overpriced the housing market was, and the opportunity still persisted

it seems like there is so much noise in the world, that signal becomes
indistuinghable

------
mikecane
It's very simple. As long as bonuses are based on the amount of business
booked, fraud of this type will continue. Once they get their bonuses, they
can jump ship and spout, "I don't remember" all they want to investigators.

EDIT for a typo.

------
nikcub
Interesting related podcasts if you want to read more:

[http://www.npr.org/blogs/money/2012/03/16/148751661/the-
frid...](http://www.npr.org/blogs/money/2012/03/16/148751661/the-friday-
podcast-inside-the-mortgage-industry)

[http://www.thisamericanlife.org/radio-
archives/episode/405/t...](http://www.thisamericanlife.org/radio-
archives/episode/405/transcript)

The Frontline episode 'The Warning' is related and also good:

<http://www.pbs.org/wgbh/pages/frontline/warning/>

------
ww520
The people in the high-up knew. A lot of people in all levels knew. People
knew it was a bubble and it cannot last. What people didn't know was how to
pop the bubble gently to have a soft landing. Remember real estate and
mortgage were majority drivers of the economy from 2000 on after the Dotcom
and stock crash. Popping the bubble meant wrecking the economy. People were
really uneasy in deliberately engineering a recession. The longer the wait the
worst the crash.

~~~
duncan_bayne
Nit pick - a bubble bursting doesn't wreck the economy any more than
dismantling an engine for a tune up wrecks that engine. A recession is really
a readjustment of the economy, bringing it in line with reality.

------
spoiledtechie
My mother was on the inside of all this.... She saw it coming about a year in
advance. Knew something was wrong, but couldn't do anything.

------
gtani
[http://dealbook.nytimes.com/2013/01/23/financial-crisis-
laws...](http://dealbook.nytimes.com/2013/01/23/financial-crisis-lawsuit-
suggests-bad-behavior-at-morgan-stanley/?smid=tw-share)

more tragicomedy, with some great work by NYT euphemism writer "suggests bad
behavior"

------
anonymouz
Isn't, for example, prostitution illegal in the US even in Las Vegas? If so, I
can easily imagine that there are at least a bunch of people where job
description and income don't quite match up ("waitress" in Las Vegas with
12,000 USD/month).

------
malandrew
Why isn't the job of underwriter totally automated? I imagine that a good
bayesian classifier should be able to spot likely fraud. Sounds like a good
startup opportunity.

------
martinced
_"industry insiders were ringing the alarm bells"_

Just as today many economists are ringing the alarm bells: the governments
public debt issues (both in U.S., Japan and many countries in the Eurozone)
are going to end up _very_ badly.

Many central banks (including in the U.S.) have basically become bad banks.
Anyone holding medium and long-term public government debt (like many
insurance products) are basically bankrupt because governments are going to
default.

If you think 2008 was bad, wait until the house of cards collapse. It shall
make 1929 look like a cute event.

Some economists are predicting a worlwide GDP drop of as much as 25%.

Of course economists that you see on Fox news and CNN like Krugman (sure, lets
create a one trillion $ coin, it's a good idea: why not then create 16 of
these and be done with our public debt?) either totally lost it or are playing
the game that the state asked them to play: propaganda.

Capitalism cannot work if the cost of printing money is zero (quantitative
easing).

Actually I don't think we're living in a capitalistic world. I think we live
in a socialist world bent on confiscating savings (at the benefit of the
state) using inflation. But the system has its limit.

And who are you going to prosecute and hold responsible once everything
collapses? The states are basically forcing everyone into buying their junk
bonds.

Do you really think anyone would buy government bonds seen the current
situation?

The people responsible for this are very very high up the chain. They're
desperately trying to prevent the house of socialist cards from falling apart.

"The problem of socialism is that at one point you run out of other people's
money". And that's where we're arriving now.

Of course they're going to pretend that it's not the states that created the
state debt but "evil" capitalists. What a joke : (

~~~
deveac
_> "The problem of socialism is that at one point you run out of other
people's money". And that's where we're arriving now._

Ugh. I try my best not to be snarky on here, but here is the wiki explaining
what socialism is:

<http://en.wikipedia.org/wiki/Socialism>

Don't worry, you don't have to read past the first sentence to reveal your
complete and utter misunderstanding of the term.

The trend, over the years, has been overwhelming in favor of private ownership
of the economic means of production. You're going to need to come up with
another word to decry what ails you policy wise if accuracy, not dogma, is
your goal.

PolySci 101. It ain't that difficult. Do I really need to GTFY on HN?

~~~
davidw
> PolySci 101. It ain't that difficult. Do I really need to GTFY on HN?

Best just to flag all political articles and rid them from the site, as they
pretty much inevitably end up with discussions like this.

~~~
logn
But at the same time we vote up articles complaining that we as engineers
should stop making cat video websites and focus on important problems. We
flock to advice blogs to find good startup ideas that solve people's problems.
This article is food for thought IMO. I'll take a 15 page article detailing
inefficiencies/fraud in banks (of which many of us are employed in IT) over a
3 paragraph blog summarizing an 8 paragraph blog on weak typing.

------
cremnob
This documentary didn't reveal anything that wasn't already known. There
aren't any criminal prosecutions because it's hard to prove that there was
fraud. It then goes on to speculate why Breuer hasn't been able to charge
anyone.

~~~
rauljara
That is largely what Frontline does. They sometimes break original stories,
but a lot of what they do is building on other people's reporting and
compiling the information in a clear and organized fashion. Then they add
interviews for depth and insight. They don't try to be breaking news. They try
to be comprehensive.

I'm a big fan. They aren't perfect (who is), but they take reporting and
informing very seriously, and they dive deep. I've always gotten a lot
whenever I've actually sat down to watch. I really need to watch more.

~~~
snowwrestler
I love to watch Frontline, but as they've reported on areas where I know a bit
more, it's become obvious how often they trade on outrage rather than detailed
information.

For example, in order to really report on why prosecutions did not happen, you
would think they would take some time to explain how federal law defines
certain crimes. But, they never did that at all--instead they ask people for a
sort of gut reaction as to whether something seemed fraudulent. But of course
the word "fraud" has a number of very specific legal definitions in a number
of different laws.

One could argue that that is ok, because the real point is that the language
of the laws themselves allow people to get away with fraud (in a gut-check
sense). But again, to make that point they would have had to get specific
about what the law does and does not say.

So while I found this episode entertaining and interesting as always, I did
not find it illuminating.

edit: forgot a word

~~~
rauljara
My biggest problem with them is that they often feel like prosecutors building
a case. They lay out their arguments and pile on supporting evidence with what
feels like the intent of proving things beyond a reasonable doubt. And I'm
often convinced, but I never really feel like I get the defense attorney's
cross-examination.

That said, it's really obvious how much work and thought goes into these. If
you compare anything of this complexity against perfection, it will always
come up short. But I don't know of another news show that consistently hits
the level of quality that Frontline does.

Honest question: Does anyone have any suggestions for reporting they think is
in the same league? I'd love to check it out.

~~~
snowwrestler
The very best reporting is in print. A good print reporter, given the
resources to investigate and write a story or series of stories, can fit much
more detailed information into a smaller period of time (the time it takes you
to read the story). Big newspapers, and some magazines like The New Yorker or
Economist, still deliver a lot of value to society this way.

TV delivers a ton of information, but most of that information is emotional--
i.e. facial expressions, tone of voice, etc. A voice on TV cannot speak facts
nearly as fast as as you can read them.

------
tomkin
You know what's disgusting? This fucking _bubble_ shit. Let's call a spade a
spade. A bubble is when you're in a la la cloud of utopia. This wasn't that. I
think there was about a zillion people (rough estimate) who knew where this
was all heading.

It's disgusting because we don't get to say Aaron Swartz lived in a "freedom
of information bubble".

Aaron Swartz downloaded some documents – was to be thrown in jail and
eventually died by his own hand, perceivably because of the weight of the
hammer being dropped down on him.

BUT...wreck the entire economy, cause thousands to lose their home, their job,
their careers? NOTHING. What the fuck is going on?

