NO MORE CDO's Start NOW!!! (STOP NOW!)

Michael Douglas in Oliver Stone's 1987 flick "Wall Street".

An interesting aside about this here, stating

If Oliver Stone did a sequel to "Wall Street," his classic 1987 film, Michael Douglas' Gordon Gekko character would be out of prison and heading a covert "psych-ops" team masterminding Wall Street's secret war against America's 95 million investors.

OK. We're in the Second Depression. There. I've said it AGAIN.

What can get us out of it?

Lots of things.

This post will discuss ONE thing.

CDO's and WHY they must be OUTLAWED and abandoned IMMEDIATELY.

For those new to this blog, I believe that we have ONLY seen 25% of the financial crisis in the United States. I feel quite strongly that the other 75% will drop on the economy as the CDO's that were made from CONSUMER DEBT (car loans, credit cards, Student Loans, etc) bomb as more and more people start to default and/or file for bankruptcy.

sub-note: I think that the ill-conceived revision of the bankruptcy laws, (advocated for decades by the FINANCIAL institutions) will be UN-DONE within five years, after the government sees how much DAMAGE it will have done to consumers in this country...AND that as a result, bankruptcy judges WILL be able to rewrite ALL debt (or remove it ALL!) (but it serves the financial industry RIGHT!)

Reasons we need to outlaw Collateralized debt obligations are as follows:

1. In the old days, when the Bailey Building & Loan Association made a loan, they DIDN'T try and sell it. They KEPT the loan ON their books, and the neighbor who had the loan or mortgage payed them DIRECTLY. They didn't have to have ANOTHER company SERVICE the loan.
2. CDO's in today's market have absolutely NO value. They cannot be traded, they are currenly what we call "toxic debt" (See great article from TWO years ago HERE!)
3. SELLING the mortgage (debt) does NOT make more money available for the bank. This is not real life. In real life, (today) NO Loans are being made, because banks are now what I call "chicken-S*it
4. CDO's are toxic. Attempting to take the risk from a loan, and apportion it to 100 different investors is nice. However, too little too late. I repeat, CDO's are toxic, and will NEVER be a worthwhile asset to ANY financial institution EVER again. I will also predict that ANY bank that ever purchases CDOs from ANY institution will need to have the brains of its board of directors scanned for metal from bullet fragments.
5. The days of "Greed Season" are over for Wall Street. Wall Street Bonuses got inflated because some 'genius' figured out how to "SCAM" the market, creating (for his company, and himself {his bonus}) a WIN-WIN scenario, where the ONLY loser (today) is US, the taxpayer.
6. The most important reason to ban CDO's? We now OWN the banks. We now need to EXERT FINANCIAL CONTROLS that will bring the market place BACK to a safer time, like when the Bailey Building & Loan Association made loans to their community.

We must ensure that the BANKS are RE-REGULATED. the Glass-Stengal repeal of 1999 and other similar "SLIME" last minute financial regulations MUST be undone.

We MUST FORCE these "mega"banks to DIVEST. CITI-bank can NO LONGER be the behemoth that it is. Much of these mega-banks WERE created right after the Glass-Stengal repeal, and must be UNDONE.

It' the only way to make the second depression we're in last for LESS time, and recover the economy...