Who Won and Lost in the Bubble

It has been over a decade since the Greenspan Fed went full throttle, while other policy makers subsequently went hog wild. Maybe it is time to examine the net results.

There were few big winners. Ironically, none of the big winners were directly related to physical real estate investments. The big winnings came not only from the use of derivatives, but the ability to leverage these derivatives. Unfortunately, these exotic products were only available to the privileged few, to individuals such as John Paulson, who can get Goldman Sachs to customize a package just for them. Not only did they win big, Bernanke came in and honored all the bets with counter parties who obviously had no ability to pay.

Next were the group of executives. The Sanders of Golden West World Savings sold perfectly at the top. Angelo Mozilo, who rode Countrywide too long, still walked away with a fortune. Even Franklin Raines received an 8 digit payoff for running Fannie into the ground and sticking taxpayers with a conservatorship. Home builder executives never missed a beat, thanks to endless rounds of government intervention on their behalf.

Wall Street also made a fortune, securitizing junk and selling it as AAA-rated paper. It made fees on top of fees and commissions on top of commissions. Not one of these criminals is in jail.

via Silver For The People – The Blog.