An Explanation of Zombulation
As a attorney who spent a bit of time dealing with insurance companies, Alstry knows a thing or two about how the game works. Insurance companies generally limit their liability to the replacement value of what they are insuring...and prohibit stacking coverage to simply the replacement value even if you obtain coverage from more than one insurer. Otherwise, some savvy insureds might insure their property for many more times than its worth and we would have an epidemic of property being destroyed.
The opposite is true as well if the insurance companies could write insurance policies for premiums many more times than the property was worth, and simply limit their liability to replacement value...every time a property was destroyed they would simply pocket the premiums received over the replacement value by buying out the property.
Colleraterized Debt Obligations are simply insurance on debt....except there is no limit on how much can be written. As a result, bankers started writing as much debt as they could regardless of the borrowers ability to repay simply so they could collect massive premiums writing the insurance, or CDOs. As a result, our nation's families, schools, businesses, hospitals, cities, counties, and states were infected with tens of trillions of dollars of debt in recent years.
By loaning money to anyone with a pulse, the value of everything skyrocketed and we are all paying much higher property taxes as a result...even though most incomes remained flat or are now falling. In addition, it created a bunch of temporary jobs that no longer exist. Due to the temporary boom, government expanded to a level that we can no longer sustain.
The boom occured simply because the bankers didn't give a damn whether they could ever be paid back....and we all suffered as a consequence. The Fed knew exactly what was going on as they encouraged the behavior. As a matter of fact they knew exactly what was going to happen when they raised interest rates 17 times, tightened credit, and made it much harder to declare bankruptcy.
The Fed knew many would be unable to meet their debt obligations and the millions of temporary jobs would evaporate. Unfortunately, the Fed forgot to ease the burden of the existing debt causing massive defaults. Instead of punishing its bankers for destroying our economy, the Fed rewarded them with $9 trillion dollars of taxpayer money.
In addition, the bankers kept loaning money to money losing business so long as they could write CDOs against the debt. Those businesses that didn't qualify, most of the private businesses in America, they were cut off from credit and began shutting down. If you were a business getting credit, it didn't matter whether you made money or not, you had an unlimited lifeline from your friendly neighborhood Wall Street banker no matter how poorly you ran your operation.
Just look at the public homebuilders, they have been selling homes for a loss for the past three years and most of them are still in business. Thousands of private homebuilders have shut down because they simply can't continue operating at a loss indefinitely.
The joke is Wall Street convinced our penion funds to make the loans to these money losing companies. Now our pension are infected with trillions in debt that will never be paid back when Wall Street backs away from funding the debt.
At this point, the end is getting nearer as now America can no longer feed its population without borrowing money from the Wall Street banks and Primary Dealers that own the Federal Rerseve. The joke is these banks really don't have the money they are "lending" to us, in fact, the only reason they can lend is that we are funding them with taxpayer money.
In other words, the citizens of the United States are funding the bastards that are going to end up shutting our nation down. None of this is hard to see.....if you simply open your eyes.