Money for nothin'

....Now that aint workin thats the way you do it
Lemme tell ya them guys aint dumb...



I am invested in the stock market. I believe stocks provide the best rewards - but hey it's tough to convince anyone these days (well actually today 2/24/09 was a good day) that the market will return to some upward direction. I do not have financial training other than some general economic classes and life experiences.

But I do read.

This recent book by James Grant, titled "Mr. Market Miscalculates, the bubble years and beyond," caught my eye. The book is a collection of James Grant's newsletters during the dot com bubble and the housing crisis. It's a "best of" type collection.

Just reading the housing crisis chapter reveals some answers to how this mess was created. Here's some titles from the book:

• Chapter 6 Mortgage Science Projects
• Find the Risk
• Inside the Mortgage Machine
• Wheezing CDO Machine

Here's a quote from the book (from the March 9, 2007 newsletter):

"First came the mortgage, then the mortgage-backed security and finally - what's this about America in decline? - the collateralized debt obligation....
Pure and simple, CDOs are stacks of debts..."

He tells us that in 2006 $769 billion of CDOs were created. Wall Street created mortgage mills to feed the production of CDOs.

The book gave me a better understanding of these CDOs but it's NOT important to completely understand them because even the bankers didn't. They just knew they could sell them like drugs to Europe and Asia.

Money for nothin'

hmm, I wonder if the bankers got their "chicks for free?"