Matt Taibbi is an incredibly articulate journalist whose ability to capture in words the essence of the fraud and corruption at the heart of the financial crisis is unsurpassed.
Here is a brief excerpt from his lastest essay:
Mike Bloomberg's Marie Antoinette Moment By Matt Taibbi, Rolling Stone Magazine 04 November 11
"The typical money-machine cycle of subprime lending took place without any real government involvement. Bank A (let's say it's Goldman, Sachs) lends criminal enterprise B (let's say it's Countrywide) a billion dollars. Countrywide then goes out and creates a billion dollars of shoddy home loans, committing any and all kinds of fraud along the way in an effort to produce as many loans as quickly as possible, very often putting people who shouldn't have gotten homes into homes, faking their income levels, their credit scores, etc.
"Goldman then buys back those loans from Countrywide, places them in an offshore trust, and chops them up into securities. Here they use fancy math to turn a billion dollars of subprime junk into different types of securities, some of them AAA-rated, some of them junk-rated, etc. They then go out on the open market and sell those securities to various big customers – pension funds, foreign trade unions, hedge funds, and so on.
"The whole game was based on one new innovation: the derivative instruments like CDOs that allowed them to take junk-rated home loans and turn them into AAA-rated instruments...."
READ THE ENTIRE ESSAY HERE: