We’ve all seen the signs around Intown Atlanta and Decatur - we all know that lots of houses are not selling. Here’s two things to think about:

1. Personal Responsibility

2. Corporate Greed

Ever heard of a “Special purpose vehicle?”

No, I’m not talking about a paramilitary transport. I’m talking about how the Wall Street salesboys, and a compliant SEC (The Federal Government’s Securities Exchange Commission) neglected the best interests of consumers with a hoodwinking flim flam job. Credit salesboys packaged good loans with bad loans and sold “Special Purpose Vehicles” to “institutions” like small and large pension funds and to municipalities, like small towns in Norway…Here’s how they did it:

The sales pitch is based on the idea that “housing always goes up in value and people can always refinance an adjustable mortgage.”

The products sold are financial market commodities known as collateralized debt obligations (CDOs) which are a type of asset-backed security and structured credit product. I pulled this definition from Wikipedia…”CDO’s are constructed from a portfolio of fixed-income assets. These assets are divided into different “tranches”: senior tranches (rated AAA), mezzanine tranches (AA to BB), and equity tranches (unrated). Losses are applied in reverse order of seniority and so junior tranches offer higher interest rates to compensate for the added default risk. CDO’s serve as an important funding vehicle for fixed-income assets.” Here’s a detailed Wikipedia entry:

Collateralized Debt Obligation

However, when the buyers of these CDO’s called their investment banks and politely asked, “hey, salesboys, where is our monthly interest payment?”

The investment banks said sorry, bad assumption about the health and wellness of the North American consumer - no monthly interest payment for you - and oh, by the way, the insurers can’t cover it.

Thereby, the United States of America has an international credibility problem.

Here’s the completely discombobulated personal responsibility / corporate greed perfect storm, explained in stickfigures. You gotta hand it to the genius with lots of free time who came up with this one…

The Sub Prime Primer, explained in stickfigures…