itappearsthat [he/him]

  • 119 Posts
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Joined 4 months ago
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Cake day: February 23rd, 2024

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  • I think this is probably true. It is a very common tactic in dysfunctional organizations (that I’ve even employed myself a few times). When someone is being incredibly obstinate and heading down a path you know leads to disaster, sometimes all you can do is switch to a cheerleader encouraging them to rush headlong off the nearest cliff. Then nobody can ignore the crash and there is the opportunity to build something better from the wreckage.






  • The US federal funds rate. Basically the interest rate at which big banks can borrow money from the federal reserve. When the interest rate is low you can think of this as meaning money is cheap; there is a lot of it sloshing around to various less-profitable ventures (and, often, scams) because there are only so many ventures to go around and all the good ones are fully funded. This means companies hire more and are more experimental in their aims. When the interest rate is high, like it is now (relatively speaking), companies cannot get money as easily and so tend to clamp down their spending and direct it toward low risk things they are fairly sure will pay them back.




  • Why do you think so? He mentions tipping the scale to help people afford cars and houses, so we can infer he means people getting preferential rates for loans. That doesn’t require any brain-genius financeering, big banks have the easiest jobs in the world - borrow from the fed at X%, lend to people for mortgages at X+Y%, pocket Y% as profit. You don’t even have to go to school for that. The function of his profession is to cook up bazinga-brained financial products and then also cook up math to value them. The crisis they’re in is occurring because one half of that task was done and the other half was not. Charitably. One could also say the valuation was intentionally incorrect so banks could package up garbage loans to sell them at good-as-cash AAA rates as a way to raid institutional investor coffers. Which they did, very successfully. Unfortunately some of the banks also got high on their own supply and began valuing these products as AAA internally as well.

    If I were being overly cynical I would say this rant is a repackaging of the narrative blaming low-income borrowers for taking the loans banks were offering them as the reason for the great financial crisis. That’s the “tipping the scales” he is referring to, transmuting their giant financial scam into some kind of charity work for the poor. Those poor people all got fucked when their rates adjusted and they could no longer afford their mortgages. They lost their houses and were forced to sell at the bottom of the market.