7. More money, more money… Source: NYT ( http://www.nytimes.com/2007/03/11/business/11mortgage.html?partner=permalink&exprod=permalink) and S&P Press Release (http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_082653.pdf)
8. “ Who turns down money?” said the home buyer/owner From http://www.istockphoto.com/
9. “ Hey, they can refi in a few years, and ARMs give me a better commission, besides I’m not carrying it.” said the Mortgage Broker From http://www.istockphoto.com/
10. “ Hmmm, I think I have an idea!” s aid the Investment Banker Hmm, didn’t they try that here? http://en.wikipedia.org/wiki/Long_term_capital_management We could reduce risk, by spreading it all around. Complexity is good! From http://www.istockphoto.com
11. Slice ‘em up http://flickr.com/photos/cayusa/2173546553/
13. and build a giant house of cards… out of housing http://flickr.com/photos/tjflex/1347490869/in/photostream/
14. Does anyone like the SOB who bets against the shooter in craps? “ Any number of speculators, who do not own the original security, can place side bets on whether that security defaults.” WaPo http://tinyurl.com/3kotw9 From http://www.istockphoto.com
15. This isn’t heading anywhere good Source : Bureau of Economic Analysis via Sequoia Capital (http://tinyurl.com/3ttyng)
16. But I can’t pay the mortgage! Data from WaPo http://tinyurl.com/3kotw9 and FRB “ Normal” level All Mortgages Sub Prime Mortgages
17. Securitization brings multiple creditors with multiple “approaches” to renegotiating loans Hey, I’m in an ‘A’ rate tranche, I don’t have to make a deal I’ll take the risk! I got this cruddy MBS didn’t I? I have no idea what to do, or why I bought this lousy bond in the first place Talk to my lawyer! baaah We want our money! From http://www.istockphoto.com/
18. The loans become “road kill” http://flickr.com/photos/suzanneandsimon/1829577294/
19. The Mortgage Backed Securities became cow patties http://flickr.com/photos/jganderson/2387722255/
20. And the derivatives that were supposed to insure the whole thing are radioactive http://en.wikipedia.org/wiki/Image:Nagasakibomb.jpg
