I read Ann Coulter’s article on Human Events online from July 31 of this year. The thrust of her article was how much and to whom Wall Street gave to the Presidential campaign. If you think that the people on Wall Street was republican then think again. Her argument and I agree 100% is that just like the suburbs are turning liberal so is Wall St. It is easy to follow her and my logic. The proof is in the fact that you first have to know that they went to college. The name of the school is immaterial what is material is that most of them are run by and taught by the left of the left. If you are skeptical just think about the fact that Ann Coulter goes to Columbia University and has pies and anarchist attacking her and President Mahmood Ahmadinejed was greeted almost as a hero. That is all the proof you need to believe that the new crop of MBA’s coming from these colleges are being taught garbage. I heard Dave Ramsey being interviewed on Fox Business Channel during the bail out debate. He argued basically the same thing I, and Ann have been talking about.  The argument is that twentysomething’s with MBA’s are in high positions with major investment and banking industries who seem not to understand the tried and true concept of RISK.  Risk is what keeps most competent money managers from leveraging an investment 60-1. Leverage is the amount borrowed to finance a deal.

The best way to describe our current situation is simple. The first part of our current crisis is ACORN, CRA, criminal mortgage bankers, and finally Fannie Mae and Freddie Mac. Association of Community Organization for Reform Now (ACORN) strongarming Savings or Commercial Banks to lend to customers with a debt/equity of +40% to comply with the Community Reinvestment Act (CRA) that was enacted in the 70’s to stop banks from not lending to people in certain areas. Those two were exacerbated by the likes of Countrywide Mortgage and Indy Bank in California. They loaned hundreds of thousands of dollars to borrowers who had what was referred to as NINJA loans (No Income No Job or Assets). The final leg to this little saga was Fannie Mae and Freddie Mac. The result of these four things coming to a head is now the credit crisis.

The second part of our little mess is incompetent Investment Brokers and Bankers. When Fannie Mae and Freddie Mac bought the subprime mortgages they would package them up and sell them to these brilliant investment advisors who just got their MBA’s from Harvard or Yale, or even Columbia business schools. The brilliant advisors and VP’s would except the Collateralized Debt Obligations (CDO) that were based on unworkable mortgages of people who would not be able to pay the mortgage payments after the subprime loan adjusted to a much higher interest rate. The CDO’s were packaged up by these investment bankers into Mortgage Backed Securities (MBS) and sold again to investors both here and abroad.

The third and last part of our little mess is Credit Default Swaps (CDS) that you and I will be on the hook for to the tune of trillions of dollars. A CDS is a hedge on these securities that basically pays the holder if/when these mortgages default.

I am almost sure that most of this would be a small crisis if it were not for the catalyst of $150/brl oil. The housing bubble would not have been as wide spread as it is if some of the borrowers could have made the adjusted payment if they didn’t have to spend $3.00/gal for heating oil and higher electricity cost not to mention paying $4.25/gal for gasoline. The added mess of higher food cost at the grocery stores did not help.

The whole point of recapping our current financial crisis is that if just one person stood up and said this stuff is so risky it would boarder on being criminal. It starts with being educated in the real world of finance, accounting, and/or economics.  I am talking with a little first hand experience as I am just finishing my BA in Accounting. I had to take an Ethics course that I thought was going to be about the ethical issues in business instead it was a course on the ethics of business and wealth redistribution. My religion class was full of factual errors and little nudges like calling Hamas in Palestine a “Movement” not a terrorist organization. The moral of this story is if you have children on their way to college make sure you know what they are learning and if you graduated from one of the universities stop supporting the alumni. The only way to stop un-educating our children is to stop funding them and sending your children.