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Thread: A small group of people made billions of $$$ on mortgage bust

  1. #1
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    Default A small group of people made billions of $$$ on mortgage bust

    Apparently, if you borrowed shares of mortgage investments and sold them, then waited for shares to decline in values and bought them back at a lower price and returned them you could pocket billions of $$$, which is exactly what is called "shorting" and a group of billionaires did just that.

    Can you imagine the monstrocity of betting that the mortgage market will collapse, people will lose homes, and you will become rich. Arghhhh....

    Here is the story:

    http://www.nytimes.com/2008/04/16/bu...hp&oref=slogin

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    Super Moderator Zapp Brannigan's Avatar
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    Default Re: A small group of people made billions of $$$ on mortgage bust

    People did the same thing before the Depression...actually, I think that's how Joe Kennedy (Father of JFK) made most of his money. Just the way the market works. Slimy? Sure, a little. But it's not like they caused the Great Depression or the mortgage bubble to burst.
    Jacob Schlottke---Gone too soon, and the world is a little less bright because of it. RIP, brother.

    One, two, Evans is coming for you...

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    World Champ ODH's Avatar
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    Default Re: A small group of people made billions of $$$ on mortgage bust

    I always heard Joe Kennedy made his fortune bootlegging during prohibition.

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    Default Re: A small group of people made billions of $$$ on mortgage bust

    I believe many fortunes have been made in America on speculation. John Bogle, author of the Battle for the Soul of Capitalism argued in a TV interview that the speculators (with specific reference to hedge fund managers) contribute nothing to the economy.

    [ame="http://www.amazon.com/Battle-Soul-Capitalism-John-Bogle/dp/0300119712/ref=reader_req_dp"]Amazon.com: The Battle for the Soul of Capitalism: John C. Bogle: Books[/ame]

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    Default Re: A small group of people made billions of $$$ on mortgage bust

    Most of the time you also need wealth to build wealth in this kind of speculation because you can't borrow shares as far as I understand without putting something as a collateral in case you lose.

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    Default Re: A small group of people made billions of $$$ on mortgage bust

    Quote Originally Posted by Big View Post
    Most of the time you also need wealth to build wealth in this kind of speculation because you can't borrow shares as far as I understand without putting something as a collateral in case you lose.
    You'll get a margin-call if there is a short-squeeze, and you can lose a lot of money. Depending on the size of your short, and how quickly the stock is going up, your portfolio can be sucked away in a brief period of time.

    But, to answer your question, your collateral can be a line of credit.

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    Default Re: A small group of people made billions of $$$ on mortgage bust

    Can an average Joe get $$$billions in credit?

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    Default Re: A small group of people made billions of $$$ on mortgage bust

    Quote Originally Posted by Big View Post
    Can an average Joe get $$$billions in credit?
    No. A guy with an income of $50K a year isn't going to be able to make this kind of move.

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    Olympic Champ r.payton@att.net's Avatar
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    Default Re: A small group of people made billions of $$$ on mortgage bust

    Joseph Kennedy Sr. once stated that ''America had been ruled by perhaps 50 families -and that is a high estimate .

    I was once asked by a student what our economy was based upon and I immediately replied 'the gold standard '' which was a wrong answer since Nixon officially took us off the GS in the early seventies-The U.S. hasn't been on the GS since FDR confiscated all the gold held by the public -I have searched and searched yet the best answer I can come up with is -whatever the Federal Reserve Bank says .

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