The mysterious Dr. Li, the man who brought the American economy to it's knees

Sounds more like he's a scapegoat to take some of the steam off the real criminals, and possibly hurt relations with China if they decide he was a spy. I don't think a company like JPMorgan would adopt an entire mortgage system without doing proper research. Kind of big oops that is costing the public tons of money while bailing out the ones who #&$^ed up in the first place.

Originally posted by kozmo
Just a few things... First, this guy hyas been discussed here in the past. DO a search, the threads exist. Number two, he is very much alive and well living in Beijing working as a financial anylyst, I believe.

Yep. His job here was done. He went home, and China is moving to Phase II.

Number 3, apply some logic... Why would China want our system collapsed? So that their nearly trillion dollars in bond holdings are worth crap? Or so their industry collapses because they have lost their largest trading partner? This just doesn't ft.

Of course China doesn't want us toppled. They want us subverted, and funneling money back into them. Create this crisis, and then loan the US the money to get out of it.

Sounds like a Mafia operation to me. Right up China's alley.

More likely, the guy was hired and was given more credit than was deserved. It wasn't his fault that the system collapsed. It was the fault of the greedy bankers that thought it was a good idea to securitize crappy debt and sell it as AAA rated! End of story.

A conspiracy that large has more than 1 player. His role was to get enough confidence to perform such an action. It may have been purely a crime of opportunity...who knows.

This story by itself is nothing major. But look at the big picture. There are wayyyyyy to many "coincidences" to brush off, unless one is an ostrich.

Originally posted by bigfatfurrytexan
reply to post by MysterE

 

This is outstanding. Out-Effing-Standing. Good work.

I don't want to be an "I told you so", but I did (not the OP, but everyone in general). In 2007, before the financial collapse, i authored a thread (China Using "Soft Entry" Tactics To Subvert The US?). It recieved all of 2 flags and 2 replies from user GWHint.

Here we are 3 years later, and it seems as though it proves true.

China has repeatedly performed hostile actions against the US. Poisonous food, animal food, milk, toys, candy....they are trying to subvert us softly, so as to not destroy the strength that we have. They want to take us over from within, like a parasite.

Be very leary and very suspicious.

Well, it was great whilst it lasted!

I have agreed with everything I have ever read of yours since I first started on here from what I remember, except this! Ah who cares, your still top in my books.

IMO, this is another tactic to vilify Russia ad China. We've had a slurry of it against Russia in the past few years, a little on China but not so much. I had my suspicions that we would be seeing more on China.

Personally, I think this all has to do with the Shanghai Co-operation Organization. In the same way the cold war was propagated by whispers and rumors of Russia's intentions, allowing the US the arm up, this tactic is again being employed.

I haven't been able to help notice that in the past 10 years especially, NATO has cut a swath through the middle east heading towards China. They have Georgia for West Russia, but the far East of Russia and China have been especially tricky. Georgia's been playing its part on cue for a while now. They may settle for Afghanistan but personally I think they're heading for Pakistan.

Information on the SCO (It's Wiki but hey, WTH):

en.wikipedia.org...

Probably wrong, who knows.

EMM

reply to post by ElectroMagnetic Multivers


I can't win them all, huh?

I get the feeling that Russia is complicit in all of this. And it all goes through the Nazi's.

But who knows. There are so many possible realities, you know?

reply to post by MysterE


My only question is this, JPMorgan is ONE financial institution so I'd like to know if they spread this idea to the other financial institutions? I mean if Li was really working for only JP Morgan as you said then how could the same exact thing have happened to just about every single big lender? Fishy indeed and this story was extremely interesting to say the least, thanks for bringing it up, I look forward to your response.

reply to post by MysterE


I didn't mean any disrespect to anyone. I was just pointing out that we have exhausted the Mr. David Li discussion on ATS. Apparently my brevity was confused with being crass - my apologies.

As far as my request to employ logic - well, it would NOT be anything akin to logical to assume that China would employ a strategy to destroy our economy. Bringing down the US or the dollar would only break China and run a serious risk of internal dissent. Believe me when I tell you that the FIRST thing the Chi-comms worry about is retaining control and MUCH further down the list comes destroying the US.

reply to post by kozmo


Agreed we go down and China has to basically dig a grave for themselves. America is the leading buyer of goods from China, as you clearly know. So if we go bye bye so does the chinese economy... Well unless the Middle East is gonna buy 5 billion forks a week.

[edit on 2-4-2010 by NoJoker13]

reply to post by kozmo


Also response number 2: I didn't find your first post offensive at all... well at least not crass as you described it.

Why do people get so pissed when you tell the truth?

classic sun tzu: the art of war maneuver. im sure the chinese communist party profited massively from this. the chinese are beating you silly and they haven't even fired a shot yet.

[edit on 2-4-2010 by randomname]

This is another BS post. None of these banks expected these loans to perform. They were just selling the paper to overseas investors as fast as they could write it. I own a real estate company and it was common knowledge that most of these would end up in default. There was a stated income program that was referred to in the lending industry as a "liar's loan." Everybody was making money and nobody cared.

I'm sure his calculation was correct based on past historical data. If prices stayed in line with inflation (like they did in the past), his rates would have likely been correct.

The trouble was the housing market changed dramatically. It went from being something people used to an investment.

There were plenty of people who were warning of a bubble in 2003. Japan had a housing bubble so this was a risk well known to banks.

So I'm sure the people at the top knew his rates would no longer be valid.

reply to post by kozmo


Maybe everyone was to blame?
US, China, the banks and wallstreet?

My opinion is that this guy was sent by the Chinese government and that the banks and wallstreet liked his idea because it was profitable for them, the us government like someone said did and does nothing for white collar crime and just went along. Maybe that’s why the most help was given to banks and china is the largest holder of us debt.

Just some ideas

sounds like a pack of morons to stupid to double check Dr. Li's findings is all.

nothing really here besides moronic tin foil hatters

move along folks.

Originally posted by MysterE
reply to post by kozmo

 

"do a search", "use some logic". Come on kozmo, I'm sure we can discuss this more civalized than that. See my back ad forth with merriman weir, we couldn't be further from agreeing, but I respect his opinion because of his demeanor.

-E-

[edit on 2-4-2010 by MysterE]

And I you, MysterE. There's rarely any real reason to act like keyboard louts, even if people completely disagree on a topic. Besides, whilst we might not disagree on one thing, down the metaphorical road, there might be something we do agree on.

I regularly star people I've disagreed with elsewhere on different threads. I've even starred people I'm disagreeing with within the thread I'm disagreeing with them in. If they make a good point or a point that's expressed well it's still important even if it's a point I'd rather they didn't make for the sake of my own argument.

Originally posted by TortoiseKweek

Originally posted by whoshotJR
reply to post by Jazzyguy

 

Its easy to see who is to blame, grab a mirror or go talk to people. We caused it not the banks. Sure the banks allowed it but people did this that are every day normal people.

I disagree with you. The man on the street DIDN'T know how the banks were doing this. They took advantage of what they saw as a good situation.

I disagree with you.

The avg American consumer has everything to do with this. No other way to look at it really. All due to rampant speculation in housing and having all your worth based on home equity loans which is not "real" money.

Originally posted by MysterE
So what we have here is a Chinese state sponsored man coming on the financial scene right before its collapse and playing a MAJOR role in it. The conspiracy theorist in me says it is more then a coincidence.

The problem, apparently, is that everybody accepted his numbers without making their own calculations.

If you were in a decision making position in a bank would you accept the opinion of someone that presented numbers that were completely different from the what other people said?

The problem is that they saw what they thought was a way of making money and gambled on that, but this time it didn't work.

reply to post by OnceReturned

The actually defaults - which occured simultaniously at the rate described by the author - are an instance of the "unlikely" scenario predicted by Li.

Whew boy, that is a good one.

Unlikely scenario!

Inevitable is more like it. The real estate bubble collapse was an essentially bonafide sure thing. It was all done on the bet that the economy would continue to grow, and that peoples incomes would continue to increase. This has never happened, and probably never will.

Banks were loaning money to people where they could barely make the payments, with a looming balloon payment for which they had extremely small chance of ever paying, with the bet that they could refinance by then because the property value would continue to go up.

It was insanity.

But hey, all this stuff happened in the twenties under that idiot Calvin Coolidge who stated that "The business of America is Business". Where the government ignored massive fraud on Wallstreet the way the GW admin did under the pretense of deregulation and the free market which is simply code terms for allowing white collar crime to run rampant. Look up the Florida real estate ponzi schemes of the 20ties.

reply to post by ArMaP

The problem, apparently, is that everybody accepted his numbers without making their own calculations.

If you were in a decision making position in a bank would you accept the opinion of someone that presented numbers that were completely different from the what other people said?

Especially when accepting these numbers, even though you know instinctively that they can't be right, means you get a really big fat bonus.

It is called cooking the books.

And it has been done over and over and over again.

You put people in charge of a bank with zero to no chance of being held responsible for defrauding the bank, and this is exactly what you get.

Call it the free market and scream about government controlling business, and government interference in business through regulations that were put in place to prevent white collar crime like this, and people are all too happy to go along as long as their credit is good.

Look at the huge bonuses these Wall Street firms have been giving their top executives over the last decade. It is nothing but out and out fraud.

reply to post by GreenBicMan


I think the average American consumer, and large numbers of them are freshly arrived immigrants, were entrapped on these deals.

It is awfully hard to tell you wife that you can't afford a house when all your co-workers are moving into nice big beautiful homes.

That being said, I don't think is fair to bailout these people who made these choices and do nothing for the people who did the right things, and were smart enough to stand back and said, sorry, these deals are ridiculous.

If they are going to bailout the people who made the bad choices, they should have to put out even more money for the people who made the smart decisions.

The mysterious Dr. Li, the man who brought the American economy to it's knees

First of all, Li was not the first nor the only one working on products like these. Thousands of american statisticians, mathematicians and economists were working on similar products at virtually every other large financial institution as well.

So Dr. Li came in with an equation that would tell the odds of morgages defaulting at the same time, but his math was WAY WRONG, devestatingly wrong as a matter of fact.

As for the formulas themselves. Li was most likely never asked to evaluate the formulas in a steep recession with a failing housing market, a failing corporate bonds marked, a corporate repo market in panic, and swaps not being paid. He was most likely asked to evaluate several different 'likely' scenarious of types light, medium and severe recessions using data from other recessions in the last 50 years.

The actual percentage of defaults for the bottom three layers turned out to be 48.73 percent; 56.10 percent; and 66.67 percent.

When you change the conditions for a test and still base the test on previous data, you will ofcourse get the wrong results. Formula might very well have predicted this, had it been presented with the proper data. This is not significant in the least.

The financial consequences were catastrophic, as we all discovered.

Actually, the financial consequences of the subprime crisis in 2007 were rather mild, if you compare it to the bonds crisis or the outright repo panic.

Here is a very good overview of what happened.
online.wsj.com...

Li is just a scapegoat to divert your attention from the unregulated shadowbanking market.