I love Angelina Jolie (So does more than half* of the world’s population; * - yes she has some female fans as well).
Well, like an Angelina fan I watched Wanted.
I do not know what to say. Action Fantasy. Action Pornography.
High Octane “over the top” Car moves.Flying Assasins.Bending Bullets.Inter-Continental Ballistic Snipers.
This movie has it ALL. And I can’t describe it.
For all those who make fun of / like Rajni movies, this is the movie they have been waiting for. This is going to make a (dis)believer out of you. I think Newton is turning in his grave right now.
Teaser:
Spoiler
Must watch: Angelina’s last scene
P.S: no no, It was not good, but you must watch at least once. Lighten up, please do not watch for the story, acting, OST or anything else. Just tune off. This is sexy A(ngelina, errr scratch that)ction!
Monday, November 24, 2008
KA-05 DL:12440/87
It was a morning like all others. I was running late for work. So I walked briskly down the street from where my house. It is a small street. There is a Shiva temple at one end of it, surrounded by a small marketplace, which is continuously teeming with people getting along with their day.
I needed to find an Auto rickshaw (and autowallah) ready to take me on as a fare. I have to say, I am building some serious reputation with these guys. They know I take a ride to the same place every day. They also know that I am quite a stickler for these guys overcharging me. Yet, everyday they try to rip me off. Rigged meters. One and half fare. Change problems. It would be fair to say my love-hate relationship with them goes a little way back. Love you ask? Well, I need them to get around.
“Boss, JP Nagar?”
“No Boss”
He (autowallah) is a regular, he will not accept me as a fare.
Unfazed (like I am usually), I move on. I see one more auto standing.
“JP Nagar, 4 th Phase?”
Slight nod of the head.
I get in, and slip the new HBR issue out of my backpack.
[Since the traffic moves so slow in Bangalore, I have decided to make use of the gift of the time, everyday]
I have barely read few lines,
“I don’t normally take in North Indians for a fare. They are quite miserly and fight a lot”
1. The above sentence is a verbatim quote.
2. Consequentially, you can see it was spoken in English.
3. I was just accused of being a miserly North Indian (Woody Allen Jew jokes anyone?)
Well, apparently I was taken in because I was recognized from an earlier trip, 9 months ago! (Memory on steroids?)
The driver was a MR. Ranganath (as per the DL information)
What followed was a most interesting conversation. I was surprised primarily by his fluent English. And then by his awareness of things around him. Sample this:
“Kumaraswamy is a farmer, at least SM Krishna, is an Oxford graduate, India needs educated representatives for the democracy to fulfill its purpose”
[At this point I kept the HBR back in the bag]
“Bangalore has almost 30 lakh vehicles, Delhi has 50. But Bangalore will implode.”
“Why are Indian politicos creating communal rifts?”
He also offered me insight into how auto meters are rigged.
[Did you know: you can make the meter go fast, just by using a smaller tire (~smaller circumference), or by deflating it a bit (reducing air pressure)]
Imagine my surprise when he told me that he has a son working in IBM as a Software engineer, his wife works in a bank, and he himself used to work in ITIL ltd. He took VRS (Voluntary Retirement Scheme)
We talked some-more, and soon it was time for me to go.
“50.00”
His meter was absolutely correct!
As I handed him the money, he asked me which “company I work for and if my job was at stake due to currently prevailing economic turmoil”.
[punch me in the face someone]
I walked up to my office. Happy. Amused.
It was a morning like all others. And yet it was not.
I needed to find an Auto rickshaw (and autowallah) ready to take me on as a fare. I have to say, I am building some serious reputation with these guys. They know I take a ride to the same place every day. They also know that I am quite a stickler for these guys overcharging me. Yet, everyday they try to rip me off. Rigged meters. One and half fare. Change problems. It would be fair to say my love-hate relationship with them goes a little way back. Love you ask? Well, I need them to get around.
“Boss, JP Nagar?”
“No Boss”
He (autowallah) is a regular, he will not accept me as a fare.
Unfazed (like I am usually), I move on. I see one more auto standing.
“JP Nagar, 4 th Phase?”
Slight nod of the head.
I get in, and slip the new HBR issue out of my backpack.
[Since the traffic moves so slow in Bangalore, I have decided to make use of the gift of the time, everyday]
I have barely read few lines,
“I don’t normally take in North Indians for a fare. They are quite miserly and fight a lot”
1. The above sentence is a verbatim quote.
2. Consequentially, you can see it was spoken in English.
3. I was just accused of being a miserly North Indian (Woody Allen Jew jokes anyone?)
Well, apparently I was taken in because I was recognized from an earlier trip, 9 months ago! (Memory on steroids?)
The driver was a MR. Ranganath (as per the DL information)
What followed was a most interesting conversation. I was surprised primarily by his fluent English. And then by his awareness of things around him. Sample this:
“Kumaraswamy is a farmer, at least SM Krishna, is an Oxford graduate, India needs educated representatives for the democracy to fulfill its purpose”
[At this point I kept the HBR back in the bag]
“Bangalore has almost 30 lakh vehicles, Delhi has 50. But Bangalore will implode.”
“Why are Indian politicos creating communal rifts?”
He also offered me insight into how auto meters are rigged.
[Did you know: you can make the meter go fast, just by using a smaller tire (~smaller circumference), or by deflating it a bit (reducing air pressure)]
Imagine my surprise when he told me that he has a son working in IBM as a Software engineer, his wife works in a bank, and he himself used to work in ITIL ltd. He took VRS (Voluntary Retirement Scheme)
We talked some-more, and soon it was time for me to go.
“50.00”
His meter was absolutely correct!
As I handed him the money, he asked me which “company I work for and if my job was at stake due to currently prevailing economic turmoil”.
[punch me in the face someone]
I walked up to my office. Happy. Amused.
It was a morning like all others. And yet it was not.
Monday, November 03, 2008
Biased Indian State
E: This is a biased state sheltering terrorists. Look what they are doing to churches in Mangalore.
B: You can’t equate terrorism to this.
E: And why not?
I sat (not so quietly) as the argument got heated up and touched several new fronts, digressed and finally died down over a sumptuous brunch.
* B and E are dating. And yes you guessed it, B is a ‘Hindu’ and E is a…. well yes, ‘Christian’.
----------------------------------------------------------------------------------------------------
B: Man, that guy looks like a T******** (on seeing a man driving a car wearing a Arab Keffiyah head gear)
----------------------------------------------------------------------------------------------------
A: Why is this happening? I am scared for my family. This is so unfair to the rest of us.
(He is a dear ‘Muslim’ friend of mine for the last 8 years, He called in, disturbed, after he read somewhere in Yahoo forums where someone wrote, if the terror strikes go on, “Godhra to hona hi hain”)
-------------------------------------------------------------------------------------------------------
It’s a topic very close to my heart. And something I feel strongly about at several levels. We live in an increasingly fragmented society. The bias towards certain people/sections of the society is almost inherent and subconscious. As you stand judging people according to the facial hair growth and skull caps, it will almost take you by surprise. Why should you judge?
Today, the Indian state is a mere shadow of its former secular self. I always used to think that India had done a remarkable job surviving given its inherent diversity and the problems that come up with it. This belief was based on the fact that India is surrounded with nation sates which are on the verge of imploding because of civil unrest (Sri Lanka, Pakistan, Nepal, Maynamar, Bangladesh etc.). This thought also had its roots in the fact that while certain subsections of the Indian society might be prejudiced, Indian Netaji(s) were at large was secular due to fear of being labeled communal by the extremely large cross section of society. In this age of vote bank politics, you can’t afford to lose votes. Sadly that argument has turned on its head, and communal politics is bringing in more voters than ever before. Today our society is a more fragmented and fractured than ever before.
Why? Recently publicly available facts show that the police are extremely quick on identifying “masterminds” and suspects they just happen to ‘encounter’. Attacks on the Christian Churches are extremely shameful, and what makes it worse is there is no public apology from the State or any convincing action taken to stem these shameful acts. It all is fairly reminiscent of the state sponsored carnage in Godhra. Although, the Nanavati Commission, gave a clean chit to Mr. Modi, the entire episode reeks of state sponsored communal riots.
Am I being cynical? No. The State has displayed its bias time and again by letting Bajrang Dal run amok with its moral police agenda. This right wing outfit is an offshoot of RSS, and believes that our State is soft and reluctant to come down hard on “terrorists” and “anti-national” elements.
Swapan Dasgupta, a journalist and BJP ideologue,
Huh? Really? Are we extremely myopic in our view of Bajrang Dal activities? I don’t remember much media coverage on a certain blast in Kanpur, in which 2 Bajrang Dal sevaks blew themselves up while making grenades? Or a certain terrorist network of Hindu extremists in Maharashtra planning to target mosques while pretending to be Muslims?
Media is definitely responsible and has been callous in its portrayal of the story thus far. There is extremely unbalanced coverage. And that is why an increasingly large section of the society feels alienated and views state as biased. Media should play a leading role to bring politicians who harbor outfits like Bajrang Dal / SIMI to book. Also people in power who disseminate information based on their personal prejudices should instantly be asked to step down.
Do not get me wrong. I am not supporting anyone here. While I am equally against all terrorist strikes in which innocent civilians suffer. But this post is not about that. I am increasingly disturbed by the perception which calls for all terrorists being labeled as Muslims. All Muslims are not terrorists. A terrorist has NO religious leaning. It’s more of an extremist outlook which is not perpetuated by any religion. And that is why, I will not shy away of equating Bajrang Dal as a terrorist outfit. Yes, planting bombs does not probably measure up to riots is what you will say. India has suffered long and hard at the hands of these outfits and their guerrilla tactics. But what we certainly do not need is communal unrest within the country. If left unchecked we could seriously implode under the weight of our religious biases. Regardless of how things play out (fingers crossed), India’s secular credentials have definitely taken a serious hit!
P.S : A special thanks to Madame Pixiedust, for the numerous enlightening discussions on the subject matter. They definitely helped. : )
B: You can’t equate terrorism to this.
E: And why not?
I sat (not so quietly) as the argument got heated up and touched several new fronts, digressed and finally died down over a sumptuous brunch.
* B and E are dating. And yes you guessed it, B is a ‘Hindu’ and E is a…. well yes, ‘Christian’.
----------------------------------------------------------------------------------------------------
B: Man, that guy looks like a T******** (on seeing a man driving a car wearing a Arab Keffiyah head gear)
----------------------------------------------------------------------------------------------------
A: Why is this happening? I am scared for my family. This is so unfair to the rest of us.
(He is a dear ‘Muslim’ friend of mine for the last 8 years, He called in, disturbed, after he read somewhere in Yahoo forums where someone wrote, if the terror strikes go on, “Godhra to hona hi hain”)
-------------------------------------------------------------------------------------------------------
It’s a topic very close to my heart. And something I feel strongly about at several levels. We live in an increasingly fragmented society. The bias towards certain people/sections of the society is almost inherent and subconscious. As you stand judging people according to the facial hair growth and skull caps, it will almost take you by surprise. Why should you judge?
Today, the Indian state is a mere shadow of its former secular self. I always used to think that India had done a remarkable job surviving given its inherent diversity and the problems that come up with it. This belief was based on the fact that India is surrounded with nation sates which are on the verge of imploding because of civil unrest (Sri Lanka, Pakistan, Nepal, Maynamar, Bangladesh etc.). This thought also had its roots in the fact that while certain subsections of the Indian society might be prejudiced, Indian Netaji(s) were at large was secular due to fear of being labeled communal by the extremely large cross section of society. In this age of vote bank politics, you can’t afford to lose votes. Sadly that argument has turned on its head, and communal politics is bringing in more voters than ever before. Today our society is a more fragmented and fractured than ever before.
Why? Recently publicly available facts show that the police are extremely quick on identifying “masterminds” and suspects they just happen to ‘encounter’. Attacks on the Christian Churches are extremely shameful, and what makes it worse is there is no public apology from the State or any convincing action taken to stem these shameful acts. It all is fairly reminiscent of the state sponsored carnage in Godhra. Although, the Nanavati Commission, gave a clean chit to Mr. Modi, the entire episode reeks of state sponsored communal riots.
Am I being cynical? No. The State has displayed its bias time and again by letting Bajrang Dal run amok with its moral police agenda. This right wing outfit is an offshoot of RSS, and believes that our State is soft and reluctant to come down hard on “terrorists” and “anti-national” elements.
Swapan Dasgupta, a journalist and BJP ideologue,
Rioters cannot be equated to terrorists ….. The Indian State is not a neutral state and has multiple levels of biases; it is also not an efficient state and a source of harassment for all its citizens, regardless of caste and creed.
Huh? Really? Are we extremely myopic in our view of Bajrang Dal activities? I don’t remember much media coverage on a certain blast in Kanpur, in which 2 Bajrang Dal sevaks blew themselves up while making grenades? Or a certain terrorist network of Hindu extremists in Maharashtra planning to target mosques while pretending to be Muslims?
Media is definitely responsible and has been callous in its portrayal of the story thus far. There is extremely unbalanced coverage. And that is why an increasingly large section of the society feels alienated and views state as biased. Media should play a leading role to bring politicians who harbor outfits like Bajrang Dal / SIMI to book. Also people in power who disseminate information based on their personal prejudices should instantly be asked to step down.
Do not get me wrong. I am not supporting anyone here. While I am equally against all terrorist strikes in which innocent civilians suffer. But this post is not about that. I am increasingly disturbed by the perception which calls for all terrorists being labeled as Muslims. All Muslims are not terrorists. A terrorist has NO religious leaning. It’s more of an extremist outlook which is not perpetuated by any religion. And that is why, I will not shy away of equating Bajrang Dal as a terrorist outfit. Yes, planting bombs does not probably measure up to riots is what you will say. India has suffered long and hard at the hands of these outfits and their guerrilla tactics. But what we certainly do not need is communal unrest within the country. If left unchecked we could seriously implode under the weight of our religious biases. Regardless of how things play out (fingers crossed), India’s secular credentials have definitely taken a serious hit!
P.S : A special thanks to Madame Pixiedust, for the numerous enlightening discussions on the subject matter. They definitely helped. : )
Monday, October 13, 2008
Bang Bang Bangalore and some randomness!
It’s been a tiring week. My flat mate is headed to London, courtesy his company for a long duration! We are all happy, wait! That means we have to do the whole house hunting bit all over again! And we did some house hunting.
• Bangalore property rates are completely insulated from subprime crises which is affecting everything world over! Or so it seems with the astronomical amounts some of these guys are quoting.
• You are better off being a vegetarian, cause that increases your chances by 25%
• Being a “hindu” (yes you read that right), adds up for another 5%.
I woke up this Saturday to find some Kannada movie being shot on the roof of my house (not kidding!) Apparently, the producer is childhood chum of my landlord! Let me know if you guys want premiere tickets!
I could not catch the Dramanon play this week (Yeah, work again..!), but I have been hearing good things. And it was yet another whirlwind, humbling week at the stock markets! So for all those who burnt their fingers, hold on for a bit. And for those who think that it’s the right time to enter, do not bottom fish (yet)! If you are a seasoned guy in it for long-term, go for sound fundamentals and business value proposition!
* Yes, by now you must have noticed a new layout. Do not ask! Let me know what you think though(Does it load up right, readable??). I would like to work on the fonts and the Background colors..! Hmm… gah ! I try hard to bring simplicity to my life, but it deserts me! :(
** Update 1: This layout may not work in all display resolutions, Working on a fix. :)
BEST VIEWED IN: 1440 * 990
• Bangalore property rates are completely insulated from subprime crises which is affecting everything world over! Or so it seems with the astronomical amounts some of these guys are quoting.
• You are better off being a vegetarian, cause that increases your chances by 25%
• Being a “hindu” (yes you read that right), adds up for another 5%.
I woke up this Saturday to find some Kannada movie being shot on the roof of my house (not kidding!) Apparently, the producer is childhood chum of my landlord! Let me know if you guys want premiere tickets!
I could not catch the Dramanon play this week (Yeah, work again..!), but I have been hearing good things. And it was yet another whirlwind, humbling week at the stock markets! So for all those who burnt their fingers, hold on for a bit. And for those who think that it’s the right time to enter, do not bottom fish (yet)! If you are a seasoned guy in it for long-term, go for sound fundamentals and business value proposition!
* Yes, by now you must have noticed a new layout. Do not ask! Let me know what you think though(Does it load up right, readable??). I would like to work on the fonts and the Background colors..! Hmm… gah ! I try hard to bring simplicity to my life, but it deserts me! :(
** Update 1: This layout may not work in all display resolutions, Working on a fix. :)
BEST VIEWED IN: 1440 * 990
Tuesday, September 30, 2008
Singapore F1 Grand Prix 2008
"must.attempt.to.understand.male.fascination"
This what one of my friends muttered when I was trying in vain to explain to her why F1 was more than a teosterone driven activity, which involved pressing the gas pedal really hard. To any F1 fan, it’s about speed, aggression, skill, engineering, split second pit stops. True metamorphosis of the man and the machine!
The topic of conversation was the upcoming Singapore grand prix, which not only marked the 800th F1 race, but also the first F1 night race. And what a race it was. Though I am a bit disappointed with Massa not being able overtake Hamilton in championship race. But, it ensured that the last three races are going to be tactical wars, with Ferrari pulling out all stops and we can hope to see some great races!
Suprise Suprise! Force India came home with a podium finish, muchos thanks to Giancarlo Fisichella. Mr. Mallya, would be a very drunk and happy man that night. It is quite an achievement surely.
But, this post is not about the race, it’s about the track. And the track was a beauty, not only was it a street circuit, it was a night race. And it lived up to all the expectations that I had from it. For more updates please visit Big Picture.
Massa Pit Stop fiasco :(
A View from the top
Giancarlo Fisichella flying through a bend during practice.
Overview of the illuminated track along the Singapore skyline and Marina Bay Street
This what one of my friends muttered when I was trying in vain to explain to her why F1 was more than a teosterone driven activity, which involved pressing the gas pedal really hard. To any F1 fan, it’s about speed, aggression, skill, engineering, split second pit stops. True metamorphosis of the man and the machine!
The topic of conversation was the upcoming Singapore grand prix, which not only marked the 800th F1 race, but also the first F1 night race. And what a race it was. Though I am a bit disappointed with Massa not being able overtake Hamilton in championship race. But, it ensured that the last three races are going to be tactical wars, with Ferrari pulling out all stops and we can hope to see some great races!
Suprise Suprise! Force India came home with a podium finish, muchos thanks to Giancarlo Fisichella. Mr. Mallya, would be a very drunk and happy man that night. It is quite an achievement surely.
But, this post is not about the race, it’s about the track. And the track was a beauty, not only was it a street circuit, it was a night race. And it lived up to all the expectations that I had from it. For more updates please visit Big Picture.
Massa Pit Stop fiasco :(
A View from the top
Giancarlo Fisichella flying through a bend during practice.
Overview of the illuminated track along the Singapore skyline and Marina Bay Street
Sunday, September 28, 2008
Blood on the Wall St.
Nostradamus and Co. certainly did not warn us of this coming. I might be paranoid comparing this to things like the Holocaust, but financial crises resemble wars in some aspects, they are both based on miscalculations and result in massive losses. But my head is still recovering from the way I have seen some of the biggest names in the financial biz, razed to the ground. It is fairly reminiscent of the LTCM fallout and the great bubble burst. And now I have a story to tell my grand kids (I remember in my time…..). And what a story it is. Before we go any further, there’s a Fools step by step guide to financial ruin (read previous post)
Sub-Prime fallout is passé ! or is it?
With no realistic idea of the how much more pain is left in the system, the market is headed for a tailspin. Skeptics have questioned the $700 Billion proposed bailout. Why? It’s the taxpayer’s money here, we are talking about. They clearly do not want to see that being used to bailout financial companies, who are clearly paying for their greed. Why not use this money to bail out the common man, who can’t pay up his mortgages? I wonder how the presidential candidates react to this. While this will definitely increase the deficit and inflation, what remains to be seen is if it opens floodgates to more companies filing for bankruptcy? And the Fed has already pumped in a lot of money to increase the liquidity in the market. But nothing seems to have helped the markets recover. Clearly it’s not a quick fix solution to the economy.
Another concern here is if the bailout is Okayed, it is pretty much the sole discretion of the treasury secretary, as to who gets rescued. These decisions will remain immune to any legal judgment. This has sparked fears of political lobbying for a piece of the pie, which may not be the best thing right now for America.
Over the last 2-3 weeks, we have seen the demise of some of the biggest names as we know them: Lehman, Bear Stearns. Fed Intervention in Freddie Mac & Fannie Mae, WAMU shotgun sale to JP Morgan Chase, BOA acquisition of Merrill Lynch, Warren Buffet’s $5 Billion bet on Goldman, AIG bailout keeping in mind “national interests”. And heads have rolled. Famed CEO of CitiGroup, ‘stepped down’ earlier this year. Wachovia I hear is looking for potential suitors as well.
I-Banker acquaintance of mine (yes I do have one!), “Nobody knows who it is next, too bad the bailout came late for Lehman. The work is ok. People know things have gotten oversold, but it’s too risky to take a contrarian call at this juncture...”
While the bailout may be a just a temporary shot in the arm, the doomsday sentiment is what is dragging the market downwards. What gives me nightmares is the un-regulated insurance market. If AIG and Co. go under, then it will open doors to Hell, as most of those securitized bonds are over insured and in some cases insured many times over using the same or a different insurance player. I think that’s one of the reasons the Fed, seized WaMu, and sold it to JP Morgan Chase, as they did not want FDIC to be paying out.
Indian Connection:
And no one has been spared. How these bankers work is by creating an element of leverage (Futures & Options). By this speculative trading, we can see due to the massive volumes, a false buying level emerges. When stocks start rising, the common man is lured in hopes of making a quick buck. When the banks have made their money, they pull out, taking the common investor down. And the cycle repeats. It was very well explained by someone “You invest $100, watch it grow to $110 -- you made a 10% profit. But you borrow $100, watch it grow to $110, and return $105 to your lender -- you made a 100% profit.”
Note: I did not use the term investing for the common man, as that is a longer term play and more profitable.
Seems perfect? No. If there are extensive investments in these kinds of financial instruments, then things start getting overvalued. And trading at future valuations and not fundamentals is a very risky ploy. The risk should be known and understood properly. With the India shining story being played out, Indian markets were on a roll, no one saw this coming. I remember very well how somebody told me seven months back, that Indian markets can’t come down. That whatever may be theoretically possible, it’s not applicable. We should have watched out for this when we saw things yen-carry trade happen mid last year. But no, we didn’t. With the markets inflated to 21000 levels everyone was happy. No one was complaining. And why will anybody? People are making money right. And then the collapse. It’s a lesson to those people who think India is immune to happenings in the world economies. Specially, its dependence on US has hit us n face so hard, that’s its almost crippling. With big banks pulling out our markets are down to 13000 levels, a more than 35% fall from the highs.
Dollar has crept up. Much joy for the IT companies who were facing a weak dollar? No. Because with the financial sector facing budget constraints, their customer base is going to take a hit and so are their profits. Many jobs will be lost.
Personal perspective: My future education in US became nearly 25 % more expensive because of the dollar rising. Crap.
Who is to blame?
While we might need some accountability to effect a reform, unless we have thorough understanding of the crux of the problem, I am afraid we are not going to get far. Wall St. and the Bankers should take the fall? Why? Some say the problem is the competitive landscape, annual bonuses and the incentive system which drives people to lose sight of the fundamental principles and allow them to become more vulnerable to the impending fallout. You can’t run a business without putting a carrot at the end of the stick. That’s how everything works. In this case, it’s a juicier carrot. Also, we tend to ignore how the Wall Street came became so powerful in the first place. It is because they have key information and insight into market dynamics that the common man does not. (Remember Wall Street, the movie?) That’s why they bail out much before everyone else. It might be in their interest, not having a transparent system. But it’s certainly not malicious. However, it tends to give them a false sense of security and belief in the infallible mechanism using which they make money. Clearly they are proven wrong. Every time. There are too many financial instruments and clearly no one can map a perfect model of how the markets should behave. It goes against the basic fundamental unpredictability of the markets.
While they are certainly culpable, I would like to play devil’s advocate here. The greed has percolated down to the common man. I think that the common man would not be complaining if there was no sub-prime. He would not be aware. He would have happily sung his way to the bank, eager to get his piece of the pie. While not everyone wants to make a quick buck, most of us do. I do feel sorry for the people who were genuinely looking for investing options, hard luck!. So we should read the fine print more carefully and clearly understand the risk so that they can manage it. Putting all your eggs in the same basket was never a smart idea. There are banks for Fixed Deposits, who did perfectly well during this crisis. You have to take risk according to your risk appetite. And that’s the number one rule in the game. Yes, there will be skeptics and cynics, who will feel that how is the common man supposed to understand the opaque functioning of the street. He is not. He is supposed to look for safer bets. I am not proposing that trading should be an elitist activity. However, safeguarding the capital is of utmost priority for the common man as that’s his life savings. And that’s why this happens. We need to have people more aware about all their financial investing options. That’s the key to sound financial health. If someone chooses to place a risky bet, he should have worked out the pitfalls.
We did miss the early warning signs. Yen Carry on trading is one such example. Its fault of the regulatory body and the government, because of their oversight the scale of the mess is unimaginable. They are a bunch of incompetent fools. Everyone has suffered. And everyone is to blame.
Panic Selling was never a good thing, and I personally feel that in the Indian context things might be slightly better and we can go for value plays now, if you want. But with withdrawal of all the FII money, it will be a while before we see the highs of the yesteryear. So, yes I will go with the oversold sentiment for India, but only if you have the stomach to hold on for what is going to be a roller coaster ride, before we slowly climb to the highs again. On the global scale, with 4 out of the big 5 IB gone, and merger with banks which have lesser leverage available to them, we should emerge with a cleaner financial system. But for now, there is more pain in the system, before we start building Wall St. again.
Today we stand at an inflection point in our lives, where how (and if) the American Financial System recovers from this crippling blow, is going to determine a lot of how the world economy plays out in the coming year(s).
Sub-Prime fallout is passé ! or is it?
With no realistic idea of the how much more pain is left in the system, the market is headed for a tailspin. Skeptics have questioned the $700 Billion proposed bailout. Why? It’s the taxpayer’s money here, we are talking about. They clearly do not want to see that being used to bailout financial companies, who are clearly paying for their greed. Why not use this money to bail out the common man, who can’t pay up his mortgages? I wonder how the presidential candidates react to this. While this will definitely increase the deficit and inflation, what remains to be seen is if it opens floodgates to more companies filing for bankruptcy? And the Fed has already pumped in a lot of money to increase the liquidity in the market. But nothing seems to have helped the markets recover. Clearly it’s not a quick fix solution to the economy.
Another concern here is if the bailout is Okayed, it is pretty much the sole discretion of the treasury secretary, as to who gets rescued. These decisions will remain immune to any legal judgment. This has sparked fears of political lobbying for a piece of the pie, which may not be the best thing right now for America.
Over the last 2-3 weeks, we have seen the demise of some of the biggest names as we know them: Lehman, Bear Stearns. Fed Intervention in Freddie Mac & Fannie Mae, WAMU shotgun sale to JP Morgan Chase, BOA acquisition of Merrill Lynch, Warren Buffet’s $5 Billion bet on Goldman, AIG bailout keeping in mind “national interests”. And heads have rolled. Famed CEO of CitiGroup, ‘stepped down’ earlier this year. Wachovia I hear is looking for potential suitors as well.
I-Banker acquaintance of mine (yes I do have one!), “Nobody knows who it is next, too bad the bailout came late for Lehman. The work is ok. People know things have gotten oversold, but it’s too risky to take a contrarian call at this juncture...”
While the bailout may be a just a temporary shot in the arm, the doomsday sentiment is what is dragging the market downwards. What gives me nightmares is the un-regulated insurance market. If AIG and Co. go under, then it will open doors to Hell, as most of those securitized bonds are over insured and in some cases insured many times over using the same or a different insurance player. I think that’s one of the reasons the Fed, seized WaMu, and sold it to JP Morgan Chase, as they did not want FDIC to be paying out.
Indian Connection:
And no one has been spared. How these bankers work is by creating an element of leverage (Futures & Options). By this speculative trading, we can see due to the massive volumes, a false buying level emerges. When stocks start rising, the common man is lured in hopes of making a quick buck. When the banks have made their money, they pull out, taking the common investor down. And the cycle repeats. It was very well explained by someone “You invest $100, watch it grow to $110 -- you made a 10% profit. But you borrow $100, watch it grow to $110, and return $105 to your lender -- you made a 100% profit.”
Note: I did not use the term investing for the common man, as that is a longer term play and more profitable.
Seems perfect? No. If there are extensive investments in these kinds of financial instruments, then things start getting overvalued. And trading at future valuations and not fundamentals is a very risky ploy. The risk should be known and understood properly. With the India shining story being played out, Indian markets were on a roll, no one saw this coming. I remember very well how somebody told me seven months back, that Indian markets can’t come down. That whatever may be theoretically possible, it’s not applicable. We should have watched out for this when we saw things yen-carry trade happen mid last year. But no, we didn’t. With the markets inflated to 21000 levels everyone was happy. No one was complaining. And why will anybody? People are making money right. And then the collapse. It’s a lesson to those people who think India is immune to happenings in the world economies. Specially, its dependence on US has hit us n face so hard, that’s its almost crippling. With big banks pulling out our markets are down to 13000 levels, a more than 35% fall from the highs.
Dollar has crept up. Much joy for the IT companies who were facing a weak dollar? No. Because with the financial sector facing budget constraints, their customer base is going to take a hit and so are their profits. Many jobs will be lost.
Personal perspective: My future education in US became nearly 25 % more expensive because of the dollar rising. Crap.
Who is to blame?
While we might need some accountability to effect a reform, unless we have thorough understanding of the crux of the problem, I am afraid we are not going to get far. Wall St. and the Bankers should take the fall? Why? Some say the problem is the competitive landscape, annual bonuses and the incentive system which drives people to lose sight of the fundamental principles and allow them to become more vulnerable to the impending fallout. You can’t run a business without putting a carrot at the end of the stick. That’s how everything works. In this case, it’s a juicier carrot. Also, we tend to ignore how the Wall Street came became so powerful in the first place. It is because they have key information and insight into market dynamics that the common man does not. (Remember Wall Street, the movie?) That’s why they bail out much before everyone else. It might be in their interest, not having a transparent system. But it’s certainly not malicious. However, it tends to give them a false sense of security and belief in the infallible mechanism using which they make money. Clearly they are proven wrong. Every time. There are too many financial instruments and clearly no one can map a perfect model of how the markets should behave. It goes against the basic fundamental unpredictability of the markets.
While they are certainly culpable, I would like to play devil’s advocate here. The greed has percolated down to the common man. I think that the common man would not be complaining if there was no sub-prime. He would not be aware. He would have happily sung his way to the bank, eager to get his piece of the pie. While not everyone wants to make a quick buck, most of us do. I do feel sorry for the people who were genuinely looking for investing options, hard luck!. So we should read the fine print more carefully and clearly understand the risk so that they can manage it. Putting all your eggs in the same basket was never a smart idea. There are banks for Fixed Deposits, who did perfectly well during this crisis. You have to take risk according to your risk appetite. And that’s the number one rule in the game. Yes, there will be skeptics and cynics, who will feel that how is the common man supposed to understand the opaque functioning of the street. He is not. He is supposed to look for safer bets. I am not proposing that trading should be an elitist activity. However, safeguarding the capital is of utmost priority for the common man as that’s his life savings. And that’s why this happens. We need to have people more aware about all their financial investing options. That’s the key to sound financial health. If someone chooses to place a risky bet, he should have worked out the pitfalls.
We did miss the early warning signs. Yen Carry on trading is one such example. Its fault of the regulatory body and the government, because of their oversight the scale of the mess is unimaginable. They are a bunch of incompetent fools. Everyone has suffered. And everyone is to blame.
Panic Selling was never a good thing, and I personally feel that in the Indian context things might be slightly better and we can go for value plays now, if you want. But with withdrawal of all the FII money, it will be a while before we see the highs of the yesteryear. So, yes I will go with the oversold sentiment for India, but only if you have the stomach to hold on for what is going to be a roller coaster ride, before we slowly climb to the highs again. On the global scale, with 4 out of the big 5 IB gone, and merger with banks which have lesser leverage available to them, we should emerge with a cleaner financial system. But for now, there is more pain in the system, before we start building Wall St. again.
Today we stand at an inflection point in our lives, where how (and if) the American Financial System recovers from this crippling blow, is going to determine a lot of how the world economy plays out in the coming year(s).
A step by step guide to Financial Ruin..
A friend of mine, forwarded me this, so I thought I will share.
FAQ about the U.S. Financial Crisis
If you don’t understand the financial crisis on Wall Street, don’t fret. No one does, least of all the experts. What we do know is that it is an unholy mess, which is about to get worse. Here’s my quick FAQ for those who don’t wish to wade through dense treatises on collateralized debt obligations, asset backed commercial papers, and blah-blah-blah. It’s hardly comprehensive, but it can serve as a starting point for engaging with the issues surrounding the greatest financial debacle since the Great Depression. Let me know if any of this doesn't make sense.
Do the roots of this crisis lie in the housing bubble?
The roots are all over the place (in the absence of regulation and oversight, for instance), but for the sake of simplicity, let’s say yes. After 2001, the Fed kept its interest rates low in order to increase liquidity and encourage spending. Financial institutions offered easy credit to those who wanted to borrow money to buy a house. Many who did not qualify for loans at regular market rates – the subprime borrowers – were persuaded to take out mortgages despite the fact that their income level, ability to make a down payment, and credit history made them high-risk debtors.
Why did so many borrowers take out mortgages?
As the number of buyers increased, the values of homes started going up. And as the values of homes started going up, the number of buyers increased. Everyone wanted to jump on the gravy train. In 2005 and 2006, 40% of homes sold in the U.S. were purchased as either investment or vacation homes. Financial institutions offered subprime borrowers “teaser rates” which were scheduled to go up after a period of time (these were the so-called ARMs – adjustable rate mortgages). Existing homeowners assumed that the value of their principal asset – their home – had increased (when they noticed, for example, what their neighbors’ home was selling for) and refinanced their mortgages, spending the borrowed money.
Why did the financial institutions lend so much money to these “subprime” borrowers? Weren’t they worried about defaults?
Not really. For one, most mortgage brokers do not lend money of their own; they merely collect commissions. Besides, the system is geared towards increasing revenues and profits in the short run. Bonuses are linked to current performance. But more importantly, many of these institutions were not planning to take much of a risk. Because of a lax regulatory system, these loans were allowed to be “securitized”. In other words, the rights to these mortgage payments along with the accompanying credit risks were sold to third-parties.
So the risk passed on to the third parties then?
In some cases, yes. But for the most part, these third parties cut up these securities, mixed them up, repackaged them, and sold them down the line in the form of Mortgage Backed Securities (MBS) or Collateralized Debt Obligations (CDO). There was little, if any, regulatory oversight. At each step, the parties in this chain collected profits, and believed they were handing off the risk.
What was the role of AIG?
AIG offered insurance to those who bought MBSs and CDOs in exchange for a fee. Credit rating agencies such as Moody’s and Standard and Poor’s gave a high grade to these securities, thus reducing the amount of collateral that AIG was required to post in order to demonstrate that it had the ability to make payments in case there were defaults.
I am not sure I understand.
Assume that you bought $1 million worth of securities. You are worried that the assets behind these securities are not a sure bet. So you hedge by buying $1 million insurance from AIG. If there is a default on the payment, AIG pays you your $1 million. These are the so-called “credit-default swaps”. Pay attention to that term. We will hear a lot about it in the near future. There is currently a $62 trillion (yes, that’s a trillion) market for these swaps which is absolutely unregulated.
How much is a trillion anyway? Apart from being a really large sum of money?
As figures keep getting tossed around, one begins to suffer from number fatigue. How does one make sense of these large values? Here’s one way to imagine a trillion dollars. Let’s say you have a magic machine that spits out a $100 bill every second, all day and all night long. In the first minute, you’d have $6,000. In the first hour, $360,000. In the first 24-hour day, you will possess more than $8.6 million. A year later, you’ll have a little more than $3.15 billion. In other words, it will take you and your machine more than 317 years to produce a trillion dollars.
So, back to our story. Wasn’t everyone making money?
Until a certain point in time. But as usually happens with a bubble, the quid came calling for the quo. Subprime borrowers defaulted on their loans when the higher ARM rates kicked in. Foreclosures increased, putting a pressure on the now heavily inflated home prices. Excess inventory created by builders and speculators during the boom started to mount. As prices began to deflate, owners found it increasingly difficult to refinance their homes. The MBSs were not so attractive any more.
So institutions that owned MBSs were in trouble?
Exactly. Bear Sterns was the first to crash. The Feds had to step in and facilitate its “sale” to JP Morgan at the cost of $29 billion to the taxpayers.
And why did AIG stumble?
Credit rating agencies woke up to the fact that they had assigned AAA ratings to relatively worthless securities, so they downgraded the credit of AIG, requiring it to post additional collateral. Since AIG didn’t have the billions it would have taken to do this, it had to be rescued if it was to be prevented from declaring bankruptcy.
Why would that have been such a terrible thing?
If AIG went under, all those who had hedged their bets would have suddenly found themselves in a heap of trouble. They would have most likely gone belly-up too.
So AIG was too important to allow it to fail?
That is the narrative being bandied about. But the bailout wasn’t about AIG. It was done in order to save its “counterparties”, the ones who had bought insurance.
Who were these counterparties?
We are not sure. But most of them (around three-quarters) were probably European banks.
Why wasn’t Lehman bailed out?
We don’t know. Perhaps it was the luck of the draw. It came second in line (after Bear Sterns) and maybe the government wanted to play it tough. Or perhaps its counterparties were not important enough to rescue.
What was the story with Freddie and Fannie?
Mae ‘n Mac owned or guaranteed many of the MBSs and several mortgages that were subsequently bought by foreign banks (China was a big player), who assumed that these government sponsored enterprises (GSEs) would not be allowed to fail. Since foreign funding (those trade surpluses China has with the U.S.) are essential to making up budget (and trade) deficits, the government had to step in and rescue the GSEs, lest foreign capital wander off elsewhere.
Now what?
The U.S. government is planning to bail out the financial institutions whose reckless greed produced the mess in the first place.
What if it doesn’t?
Financial institutions devastated by this crisis have very little capital to lend. Without the credit that they provide, the economy will suffer. How much is unclear, but the impact is likely to be quite severe.
What does the administration want?
The Treasury secretary is asking for unfettered access to $700 billion in order to buy any asset from any institution at any price he thinks is right. Further, the Secretary says that his decisions will be “non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” The government plans to buy up the MBSs at a price it determines (critics worry that lobbyists of the financial institutions will play a role in this), thus freeing the institutions to infuse credit into the markets.
Who will foot the bill?
Ordinary citizens – the taxpayers – who will see a skyrocketing deficit, and most likely, shrinking investments in public goods, dwindling retirement accounts, and greater inflation.
Is there any alternative?
If it doesn’t want to think outside the box (and it is clear that it doesn’t), the least the government should do, in my opinion, is to demand an ownership stake in the companies it bails out. That way, if they recover, the bailout money can be returned to the treasury. The current plan only rewards those who drove the economy into the ground, and who made a lot of money during the good times.
So one final question. Was the crisis primarily caused by irresponsible borrowers who took on loans that they did not have the ability to repay?
No. It’s true that defaults on mortgage payments, especially in the subprime segment triggered this crisis-in-waiting. It is also true that borrowers, both prime and subprime, failed to read the fine print, took out larger loans than they could afford to repay, and got carried away by the thought of buying property that was supposed to keep increasing in value. But the subprime loans were pushed by an unscrupulous industry, which preyed on a population that did not have the wherewithal to figure out the swindle before it was too late. A lot of educated, middle-class Americans lost out too, but the subprime crisis represents the greatest transfer of wealth from the poor to the rich in recent times, and the greatest loss of wealth for communities of color in the post Civil War period. *
* Here is an explanation from the author: Subprime lending – a fancy term for giving high-interest loans to the poor – was turned from a tiny niche in 1990 into a huge 20% slice of the market by 2006. It would take too long to list the ways in which these loans were predatory, but here are some of them. Seventy percent of these loans came with a pre-payment penalty; in other words, you were stuck with them even when you realized that you’d been duped. You couldn’t pay them off, refinace the loan, or pay on an accelerated basis. The loans were sold with teaser rates that were designed to “balloon” after 2 or 3 years and written in ways that made them appear cheaper than they turned out to be (by hiding taxes, insurance, and delaying interest payments). Worst of all, there was a deliberate effort to target buyers in poor communities through hard-selling and false advertising. Though they are being depicted as irresponsible and reckless, the subprime borrowers were – for the most part – victims of an elaborate scam.
The burden of this crisis is already being disproportionately borne by those who were disadvantaged to begin with. Consider the following. In a population that is 66.4% white and 13.4% black, 54.7% of high-cost loans were given to blacks and 17.2% to whites. These numbers partly reflect the fact that black communities tend to be poorer than white communities. But there is also plenty of evidence to show that black families that could have qualified for a prime loan were steered towards and bamboozled into taking loans at subprime rates. See the report “State of the Dream” put out by United for a Fair Economy for more details.
FAQ about the U.S. Financial Crisis
If you don’t understand the financial crisis on Wall Street, don’t fret. No one does, least of all the experts. What we do know is that it is an unholy mess, which is about to get worse. Here’s my quick FAQ for those who don’t wish to wade through dense treatises on collateralized debt obligations, asset backed commercial papers, and blah-blah-blah. It’s hardly comprehensive, but it can serve as a starting point for engaging with the issues surrounding the greatest financial debacle since the Great Depression. Let me know if any of this doesn't make sense.
Do the roots of this crisis lie in the housing bubble?
The roots are all over the place (in the absence of regulation and oversight, for instance), but for the sake of simplicity, let’s say yes. After 2001, the Fed kept its interest rates low in order to increase liquidity and encourage spending. Financial institutions offered easy credit to those who wanted to borrow money to buy a house. Many who did not qualify for loans at regular market rates – the subprime borrowers – were persuaded to take out mortgages despite the fact that their income level, ability to make a down payment, and credit history made them high-risk debtors.
Why did so many borrowers take out mortgages?
As the number of buyers increased, the values of homes started going up. And as the values of homes started going up, the number of buyers increased. Everyone wanted to jump on the gravy train. In 2005 and 2006, 40% of homes sold in the U.S. were purchased as either investment or vacation homes. Financial institutions offered subprime borrowers “teaser rates” which were scheduled to go up after a period of time (these were the so-called ARMs – adjustable rate mortgages). Existing homeowners assumed that the value of their principal asset – their home – had increased (when they noticed, for example, what their neighbors’ home was selling for) and refinanced their mortgages, spending the borrowed money.
Why did the financial institutions lend so much money to these “subprime” borrowers? Weren’t they worried about defaults?
Not really. For one, most mortgage brokers do not lend money of their own; they merely collect commissions. Besides, the system is geared towards increasing revenues and profits in the short run. Bonuses are linked to current performance. But more importantly, many of these institutions were not planning to take much of a risk. Because of a lax regulatory system, these loans were allowed to be “securitized”. In other words, the rights to these mortgage payments along with the accompanying credit risks were sold to third-parties.
So the risk passed on to the third parties then?
In some cases, yes. But for the most part, these third parties cut up these securities, mixed them up, repackaged them, and sold them down the line in the form of Mortgage Backed Securities (MBS) or Collateralized Debt Obligations (CDO). There was little, if any, regulatory oversight. At each step, the parties in this chain collected profits, and believed they were handing off the risk.
What was the role of AIG?
AIG offered insurance to those who bought MBSs and CDOs in exchange for a fee. Credit rating agencies such as Moody’s and Standard and Poor’s gave a high grade to these securities, thus reducing the amount of collateral that AIG was required to post in order to demonstrate that it had the ability to make payments in case there were defaults.
I am not sure I understand.
Assume that you bought $1 million worth of securities. You are worried that the assets behind these securities are not a sure bet. So you hedge by buying $1 million insurance from AIG. If there is a default on the payment, AIG pays you your $1 million. These are the so-called “credit-default swaps”. Pay attention to that term. We will hear a lot about it in the near future. There is currently a $62 trillion (yes, that’s a trillion) market for these swaps which is absolutely unregulated.
How much is a trillion anyway? Apart from being a really large sum of money?
As figures keep getting tossed around, one begins to suffer from number fatigue. How does one make sense of these large values? Here’s one way to imagine a trillion dollars. Let’s say you have a magic machine that spits out a $100 bill every second, all day and all night long. In the first minute, you’d have $6,000. In the first hour, $360,000. In the first 24-hour day, you will possess more than $8.6 million. A year later, you’ll have a little more than $3.15 billion. In other words, it will take you and your machine more than 317 years to produce a trillion dollars.
So, back to our story. Wasn’t everyone making money?
Until a certain point in time. But as usually happens with a bubble, the quid came calling for the quo. Subprime borrowers defaulted on their loans when the higher ARM rates kicked in. Foreclosures increased, putting a pressure on the now heavily inflated home prices. Excess inventory created by builders and speculators during the boom started to mount. As prices began to deflate, owners found it increasingly difficult to refinance their homes. The MBSs were not so attractive any more.
So institutions that owned MBSs were in trouble?
Exactly. Bear Sterns was the first to crash. The Feds had to step in and facilitate its “sale” to JP Morgan at the cost of $29 billion to the taxpayers.
And why did AIG stumble?
Credit rating agencies woke up to the fact that they had assigned AAA ratings to relatively worthless securities, so they downgraded the credit of AIG, requiring it to post additional collateral. Since AIG didn’t have the billions it would have taken to do this, it had to be rescued if it was to be prevented from declaring bankruptcy.
Why would that have been such a terrible thing?
If AIG went under, all those who had hedged their bets would have suddenly found themselves in a heap of trouble. They would have most likely gone belly-up too.
So AIG was too important to allow it to fail?
That is the narrative being bandied about. But the bailout wasn’t about AIG. It was done in order to save its “counterparties”, the ones who had bought insurance.
Who were these counterparties?
We are not sure. But most of them (around three-quarters) were probably European banks.
Why wasn’t Lehman bailed out?
We don’t know. Perhaps it was the luck of the draw. It came second in line (after Bear Sterns) and maybe the government wanted to play it tough. Or perhaps its counterparties were not important enough to rescue.
What was the story with Freddie and Fannie?
Mae ‘n Mac owned or guaranteed many of the MBSs and several mortgages that were subsequently bought by foreign banks (China was a big player), who assumed that these government sponsored enterprises (GSEs) would not be allowed to fail. Since foreign funding (those trade surpluses China has with the U.S.) are essential to making up budget (and trade) deficits, the government had to step in and rescue the GSEs, lest foreign capital wander off elsewhere.
Now what?
The U.S. government is planning to bail out the financial institutions whose reckless greed produced the mess in the first place.
What if it doesn’t?
Financial institutions devastated by this crisis have very little capital to lend. Without the credit that they provide, the economy will suffer. How much is unclear, but the impact is likely to be quite severe.
What does the administration want?
The Treasury secretary is asking for unfettered access to $700 billion in order to buy any asset from any institution at any price he thinks is right. Further, the Secretary says that his decisions will be “non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” The government plans to buy up the MBSs at a price it determines (critics worry that lobbyists of the financial institutions will play a role in this), thus freeing the institutions to infuse credit into the markets.
Who will foot the bill?
Ordinary citizens – the taxpayers – who will see a skyrocketing deficit, and most likely, shrinking investments in public goods, dwindling retirement accounts, and greater inflation.
Is there any alternative?
If it doesn’t want to think outside the box (and it is clear that it doesn’t), the least the government should do, in my opinion, is to demand an ownership stake in the companies it bails out. That way, if they recover, the bailout money can be returned to the treasury. The current plan only rewards those who drove the economy into the ground, and who made a lot of money during the good times.
So one final question. Was the crisis primarily caused by irresponsible borrowers who took on loans that they did not have the ability to repay?
No. It’s true that defaults on mortgage payments, especially in the subprime segment triggered this crisis-in-waiting. It is also true that borrowers, both prime and subprime, failed to read the fine print, took out larger loans than they could afford to repay, and got carried away by the thought of buying property that was supposed to keep increasing in value. But the subprime loans were pushed by an unscrupulous industry, which preyed on a population that did not have the wherewithal to figure out the swindle before it was too late. A lot of educated, middle-class Americans lost out too, but the subprime crisis represents the greatest transfer of wealth from the poor to the rich in recent times, and the greatest loss of wealth for communities of color in the post Civil War period. *
* Here is an explanation from the author: Subprime lending – a fancy term for giving high-interest loans to the poor – was turned from a tiny niche in 1990 into a huge 20% slice of the market by 2006. It would take too long to list the ways in which these loans were predatory, but here are some of them. Seventy percent of these loans came with a pre-payment penalty; in other words, you were stuck with them even when you realized that you’d been duped. You couldn’t pay them off, refinace the loan, or pay on an accelerated basis. The loans were sold with teaser rates that were designed to “balloon” after 2 or 3 years and written in ways that made them appear cheaper than they turned out to be (by hiding taxes, insurance, and delaying interest payments). Worst of all, there was a deliberate effort to target buyers in poor communities through hard-selling and false advertising. Though they are being depicted as irresponsible and reckless, the subprime borrowers were – for the most part – victims of an elaborate scam.
The burden of this crisis is already being disproportionately borne by those who were disadvantaged to begin with. Consider the following. In a population that is 66.4% white and 13.4% black, 54.7% of high-cost loans were given to blacks and 17.2% to whites. These numbers partly reflect the fact that black communities tend to be poorer than white communities. But there is also plenty of evidence to show that black families that could have qualified for a prime loan were steered towards and bamboozled into taking loans at subprime rates. See the report “State of the Dream” put out by United for a Fair Economy for more details.
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