Politico Death Spiral Watch
The Real Side of the Economy Is Not Doing So Well

How Did We Get Here?

On Wed, Sep 24, 2008 at 8:34 PM, XXX wrote:

I would love it if you would post a big post mortem on exactly how we got here...

I'm working on one.

Meanwhile, here is a morsel:

Well, because the investors and creditors did not do their due diligence and check that the banks that were the ultimate holders of derivative securities had done their due diligence and checked that the financiers who had created the derivatives had done their due diligence and checked that the purchasers of the securities had done their due diligence and checked that securitizers had done their due diligence and checked that the lenders had done their due diligence and checked that the home buyers had done their due diligence and checked that they could afford their mortgages if house prices stopped going up.

Catastrophic failures of risk management at seven different points along the chain--any one of which would have kept us out of this current mess.

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