Marchetti's APUSH: November 2018

Friday, November 30, 2018

Second Research Paper moved to Wednesday

Hello ladies and gentlemen,

I have a weekend treat for you all. I am moving the due date for the Second Research Paper to Wednesday of next week (that's December 5). Hope you like this!

Enjoy your weekend!

Mr. Marchetti

Image result for apush essay memes

November 30 - Chapter 17 Quiz and Lecture #14

Hello ladies and gentlemen,

Welcome and happy Friday to you all! Today in class we will be taking our Chapter 17 Quiz and we will also be lecturing on the topic of the Gilded Age. The Gilded Age was a very interesting but very complex period of political and social corruption in this nation, but also a great period of expansion. So....yea we are going to try to make sense of all that! Below you will find our agenda, homework, and resources for the day.

Objectives:

Demonstrate content knowledge about the U.S. economy of the late 1800s from the perspective of both the laborers and the owners of corporations
Analyze the political, economic, and social changes that occurred during America's Gilded Age

Agenda:

Chapter 17 Quiz
Lecture #14

Homework:

Chapter 18 Quiz Monday
2nd Research Paper due December 3 Monday Night!

Accelerated Students do NOT do this

Outside Reading Project due December 7 Friday Night!

That's all for the day folks! I hope that you learned something new and interesting! Take care and have a wonderful weekend!

Live long and prosper,

Mr. Marchetti

11-30-2018 PPT

Wednesday, November 28, 2018

November 28 - Bury My Heart at Wounded Knee

Hello ladies and gentlemen,

Welcome and great to see you all! Today in class we will be watching and discussing a topic that is near and dear to my heart, the events surrounding the Native American experience in the late 19th century. This is an important film and we will be chunking out the clips to watch segments that illustrate various details about that experience and we will be discussing as we go. I hope that you all find this as interesting and important as I do. Below you will find our agenda, homework, and resources for the day.

Objectives:

View and discuss the plight of the American Indians and the U.S. policy towards this group during the late 1800s

Agenda:

View Bury My Heart at Wounded Knee

Homework:

Chapter 17 Quiz Friday (Adjusted)
2nd Research Paper due December 3

Accelerated Students do NOT do this

Outside Reading Project due December 7

That's all for the day folks! I hope that you can enjoy the rest of it after the video! Take care and have a great evening!

Live long and prosper,

Mr. Marchetti

11-28-2018 PPT

BURY MY HEART AT WOUNDED KNEE FULL MOVIE from Indigenous RPTV on Vimeo.

Monday, November 26, 2018

November 26 - FJT Frontier Thesis

Hello ladies and gentlemen,

Welcome and great to see you beautiful people! I hope that you all had a wonderful Thanksgiving weekend! Today in class we will be discussing an important American historian of the late 19th century, Frederick Jackson Turner. Specifically we will be taking a look at his Frontier Thesis. This should be a fun time! Below you will find our agenda, homework, and resources for the day.

Objectives:

Analyze Turner's Frontier Thesis through review of guided questioning and group discussion

Agenda:

Warm-Up #1
Discussion/Activity: Frederick Jackson Turner

Closure #1

Homework:

Bury My Heart at Wounded Knee Permission Slip

Return only if you CANNOT watch the film

Chapter 17 Quiz Friday (Adjusted)
2nd Research Paper due December 3

Accelerated Students do NOT do this

Outside Reading Project due December 7

That's all for the day folks! I hope that you are all doing well and have a great day! Take care!

Live long and prosper,

Mr. Marchetti

11-26-2018 PPT

Wednesday, November 21, 2018

November 21 - Chapter 16 Quiz

Hello ladies and gentlemen,

Welcome and great to see you wonderful people! Today in class we have a minimum day (sort of) and we are only going to be doing our Chapter 16 Quiz. I hope that you are all ready to go and looking forward to the Thanksgiving break! Below you will find our agenda, homework, and resources for the day.

Objectives:

Demonstrate content knowledge about the American West in the late 1800s

Agenda:

Chapter 16 Quiz

Homework:

Chapter 17 Quiz Wednesday
2nd Research Paper due December 3

Accelerated Students do NOT do this

Outside Reading Project due December 7

That's all for the day folks! I hope that everything has been going well. Take care and enjoy your Thanksgiving Break! We only have a handful of weeks after we return so buckle down and be ready to go! Take care!

Live long and prosper,

Mr. Marchetti

11-21-2018 PPT

Monday, November 19, 2018

November 19 - Unit 5 Exam & Lecture #13

Hello ladies and gentlemen,

Welcome and great to see you beautiful people! Today in class we will be taking our Unit 5 LEQ Exam and then we will be doing our Lecture on the 2nd Industrial Revolution. This is a short week and we are getting closer to the end of the semester so make sure that you stay on task and get your stuff done! Below you will find our agenda, homework, and resources for the day.

Objectives:

Write a timed essay in alignment to the AP rubric on the topics of Civil War and Reconstruction
Analyze the impacts of industrialization on late 19th century American society

Agenda:

Turn in Unit Packet
Unit 5 LEQ Exam
Lecture #13 - the 2nd Industrial Revolution

Homework:

Download and print Unit 6 Assignment Sheet
Chapter 16 Quiz Wednesday
2nd Research Paper due December 3

Accelerated Students do NOT do this

Outside Reading Project due December 7

That's all for the day folks! I look forward to seeing your beautiful faces on Wednesday and then enjoying our Thanksgiving break! Take care and have a great rest of your day!

Live long and prosper,

Mr. Marchetti

11-19-2018 PPT

Friday, November 16, 2018

November 16 - Reconstruction SAC

Hello ladies and gentlemen,

Welcome and great to see you beautiful people! Today in class we will be having a Socratic discussion as a class on the topic of Reconstruction. In particular we will be discussing whether or not African Americans were truly free during the Reconstruction era. I am very excited to hear your thoughts and perspectives for this discussion! Below you will find our agenda, homework, and resources for the day.

Objectives:

Discuss the reconstruction era through the examination of documents and the use of a Structured Academic Conversation

Agenda:

Warm-Up #4
SAC Reconstruction

Read and Discuss Reconstruction Documents
Research Outside Evidence
Socratic Discussion with another table group

SAC Reconstruction Packet

Homework:

Unit 5 LEQ Exam on Monday
Unit 5 Packet Checklist
2nd Research Paper due December 3

Accelerated Students do NOT do this

Outside Reading Project due December 7

That's all for the day folks! I hope that you all learned a lot today! Take care and have a fantastic weekend!

Live long and prosper,

Mr. Marchetti

11-16-2018 PPT

Wednesday, November 14, 2018

13th Extra Credit

Hello ladies and gentlemen,

Just thought I would offer a little extra credit to those of you interested in checking out the Netflix Documentary 13th. This covers the legacy of slavery and race relations in the United States. If you watch the documentary and want extra credit. Type answers to the discussion questions below and turn them in on Wednesday before Thanksgiving. Take care!

Live long and prosper,

Mr. Marchetti

13th Documentary

Discussion Questions

What was your initial reaction after watching 13th?
What are your thoughts on the film's argument that people have been subconsciously conditioned to fear black men at the behest of the media?
What do you think about the present state of the American prison system?
The film argues that there is a direct link between American slavery and the modern American prison system. What is your take on this argument?
Do you see yourself making any personal changes in your life after having watched 13th? If so, what kinds of changes?

November 14 - Lecture #12 and Chapter 15 Quiz

Hello ladies and gentlemen,

Welcome and great to see you beautiful people today! Today in class we will be lecturing on the complicated issue of Reconstruction and then we will be taking our last quiz for the unit, chapter 15. Reconstruction is an important topic for the future of social and racial relations in the United States, as such this is an important one (anyone else starting to feel like everything is important? 😂). I hope that we are able to get it done today! Below you will find our agenda, homework, and resources for the day.

Objectives:

Demonstrate content knowledge of the Reconstruction period through MC and SA responses
Analyze federal attempts to reconstruct the South and provide equal rights to African Americans

Agenda:

Lecture #12
Chapter 15 Quiz

Homework:

Unit 5 LEQ Exam on Monday
2nd Research Paper due December 3

Accelerated Students do NOT do this

Outside Reading Project due December 7

That's all for the day folks. I hope that you have enjoyed our discussions and quizzes so far! I know I have 😜! Take care and have a great evening!

Live long and prosper,

Mr. Marchetti

11-14-2018 PPT

Friday, November 9, 2018

November 9 - Chapter 14 Quiz and Introduce Reconstruction

Hello ladies and gentlemen,

Welcome and great to see you all! I hope that you are ready to go for today! We will be taking our Chapter 14 Quiz today, on the Civil War, and then we will be talking about Reconstruction and taking a look at some documents! Fun stuff! Below you will find our agenda, homework, and resources for the day.

Objectives:

Analyze four major components of Reconstruction, using documents, research, and questioning

Agenda:

Chapter 14 Quiz
Reconstruction Analysis Packet

Homework:

2nd Annotated Bibliography due November 9 (TONIGHT BEFORE 11:59pm!)

Accelerated Students do NOT do this

Chapter 15 Quiz on Wednesday
Outside Reading Project due December 7

That's all for the day folks! I am so happy with how we are going so far! Take care and have a great weekend!

Live long and prosper,

Mr. Marchetti

11-9-2018 PPT

Wednesday, November 7, 2018

November 7 - Chapter 14 Quiz and Lecture #11

Hello ladies and gentlemen,

Welcome and great to see you all! I am so excited for our Lecture! Today in class we will start by doing our lecture on the Civil War. This lecture covers various aspects of the war with visual and audio aids. Hope you are as excited as I am! This should be good :) Below you will find our agenda, homework, and resources for the day.

Objectives:

Discuss the major aspects of the Civil War through lecture, questioning, and guided notes

Agenda:

Warm-Up #3
Lecture #11 - The Civil War
Closure #3

Homework:

Chapter 14 Quiz on Friday
2nd Annotated Bibliography due November 9 (FRIDAY!)

Accelerated Students do NOT do this

Chapter 15 Quiz on Wednesday
Outside Reading Project due December 7

That's all for the day folks! I hope that you enjoyed our lecture and learned some new and valuable information. Take care and have a great evening!

Live long and prosper,

Mr. Marchetti

11-7-2018 PPT

Monday, November 5, 2018

November 5 - Unit 5 Quick HIPP and Mapping Westward Expansion

Hello ladies and gentlemen,

Welcome and great to see you beautiful people! Today in class we will be doing our Unit 5 Quick HIPP (remember to save this for the unit packet!). We will then have some time to work on the Mapping Westward Expansion Packet that we passed out but did not work on last week. This is one of my favorite topics and I am super excited to discuss it with you all! Below you will find our agenda, homework, and resources for the day.

Objectives:

Analyze documents using HIPP analysis

Agenda:

Quick HIPP
Mapping Westward Expansion

Homework:

Chapter 14 Quiz Friday
2nd Annotated Bibliography due November 9

Accelerated Students do NOT do this

Outside Reading Project due December 7

That's all for the day folks! I hope that you are all doing well and excited for our Civil War Lecture on Wednesday (I know I am!). Take care and have a wonderful evening!

Live long and prosper,

Mr. Marchetti

11-5-2018 PPT

Friday, November 2, 2018

November 2 - CH 13 Quiz and Lecture #10

Hello ladies and gentlemen,

Welcome and great to see you all! Today in class is the first of our major lessons for Unit 5. We will be taking our Chapter 13 Quiz and then we will be discussing the concept of Manifest Destiny and expansionism that led to the Civil War. The causes of the Civil War are important to understand, so that we can evaluate why such bloodshed occurred between Americans. I am excited to talk about these concepts with you! Below you will find our agenda, homework, and resources for the day.

Objectives:

Identify and Illustrate the westward expansion during the mid-1800s and make connections between expansion and civil war

Agenda:

Warm-Up #2
Lecture #10 - Manifest Destiny and Expansion
Chapter 13 Quiz
Start Mapping Activity
Closure #2

Homework:

Chapter 14 Quiz Wednesday
2nd Annotated Bibliography due November 9

Accelerated Students do NOT do this

Outside Reading Project due December 7

That's all for the day folks! I hope that you all have a great weekend! Take care!

Live long and prosper,

Mr. Marchetti

11-2-2018 PPT

Tutorial Schedule

Outside Reading Project (1st Semester)

This is required for ALL students and must be turned in at ANY time prior to December 6. Below you will find the directions and resources to complete this assignment. It is worth 100 points.

Step 1: Choose a Historical Book (Non-fiction) and read a minimum of 100 pages from the text. This book must be on a topic from United States history in the years 1607 to 1899. You should pick a book from the list provided (see below), but may read another book as long as you get it approved by me (the teacher) ahead of time!

Outside Reading Book List

Step 2: After you have read at least 100 pages of your text, complete the Outside Reading Worksheet (see below). Make sure that your project is typed and turned in on or before December 6. Late assignments will NOT be accepted!

Outside Reading Project Worksheet

Submissions go to Google Classroom classroom.google.com

If there are any questions please feel free to email me, or ask me in class. DO NOT forget about this assignment!

Fun Stuff

Hey ladies and gentlemen,

I thought I would start a little list of fun things I wanted to share with you. Needless to say these are fun US History things!

First here is a podcast that is currently in production, examining each of the U.S. presidents in order (starting with Washington). The creator will be doing one president a week up to the presidential election in November!

Presidential

The next is for those of you who are interested in what is going on with the Supreme Court. This podcast follows the work of the Supreme Court and examines in depth the issues faced by the Court today. It is very good and informative!

Amicus

FIVE STEPS TO UNDERSTANDING THE 2008 FINANCIAL CRISIS

I found this on a review for a documentary about the 2008 Financial Crisis and thought it was a great summary of what happened. So I decided to share! Read if you are interested :-)

FIVE STEPS TO UNDERSTANDING THE 2008 FINANCIAL CRISIS

1) The Home Mortgage
It all starts with the venerable home mortgage. This is the most important piece of the puzzle. Think about how the traditional home loan works. You go to buy a house. You apply for a home loan at the local bank. The bank checks your credit. If you seem credit worthy the bank lends you the bulk of the money to buy the house. However, to insure that the bank doesn't risk suffering a loss it does three things: 1) it asks for a down payment. 2) It requires you to insure the house (fire insurance and what not). 3) the bank places a lien on the property, thus making the property act as collateral for the loan.

The down payment insures that there is equity in the home. Equity simply means the house is worth more than the amount owed. This is critical. The bank always needs to be in a position where the property is worth more than what it can be sold for. Ideally, a down payment needs to be sized such that there is sufficient equity to withstand minor fluctuations in the housing market. Positive equity, combined with homeowners insurance has for decades insured that the bank won't suffer a loss on money that is being lent.

2) Securitization
A properly structured home mortgage is a very safe investment, and thus a popular one for banks. The popularity, and sheer number, of mortgages made them attractive to a financial process referred to as "securitization". With securitization, large quantities of mortgages are purchased from the local banks by a financial services company. The loans are grouped together and then re-packaged into a variety of securities (investments) that are then resold to willing buyers. Think of securitization as you would processed foods. An organic vegetable garden in your backyard is analogous to the previously described traditional home loan. A garden produces pure and simple food. A home mortgage from the local bank is pure and simple. But if instead of consuming those vegetables, what if they were instead sold to a food conglomerate, which extracts a portion of the crop, adds some preservatives and cans the vegetables in various configurations and sizes (corn, peas, mixed vegetables, etc.)? That's equivalent to financial securitization. Home loans are processed into a variety of investment vehicles and made available to wide range of consumers.

By the way, although the umbrella term "securitization" is used to describe the aforementioned process, the term "derivative" is often used with regards to activities such as repackaging mortgages. The resulting security (investment) is *derived* from the original home loans in this case (there are many types of derivatives employed in the finance and investment world).

3) Deregulation
Securitization, in and of itself is not a bad thing. Fresh vegetables can potentially be processed in a manner that retains much of their flavor and nutritional value. For example, organic barley is grown in Oxnard, California and processed into a product called 'Barley Green'. This brings one of the best concentrated super-green foods to consumers who otherwise would not have access to such nutrition. Likewise, mortgages can be repackaged into safe investment vehicles available to those who otherwise could not participate in the mortgage market. But keeping securitized investments safe requires rules (regulations). There are two specific kind of rules (lack of rules, actually) that directly relate to the financial crisis in 2008.

First, in 1999 a very important law controlling the behavior of the financial services sector was repealed. It was the Banking Act of 1933, colloquially known as "Glass-Steagall", named after the two senators who proposed the law. Glass-Steagall was a very simple, 37 page law designed to help prevent another depression. It basically said: The bank cannot make risky investments with depositor's money.

[Some people will recall that in the 1980s the Savings and Loan industry was deregulated in a similar manner. In short order this led to the failure of hundreds of S&Ls.]

The second rule that was repealed was in fact never engaged. Congress tried to regulate the completely unregulated derivatives market. Recall that derivatives are tradable securities derived from real things (home mortgages, other types of secured loans, crops, etc.). In 2000 a movement was underway to regulate the trading of derivatives. Some law makers and people in key government positions fought against such regulation (probably the same people behind the repeal of Glass-Steagall), and Congress failed to pass any legislation on the matter.

So, going into the 2000s, banks now had the right to use customer deposits to engage in most any type of investment they wished, and this included derivatives. In the next section we will see how derivatives went wild, and how the whole securitization of home mortgages went very wrong.

4) Tail wags dog
So far we are talking about [safe] home loans being purchased en mass and repackaged for sale as collateralized (safe) investment vehicles. We also know that the derivatives being created in this process are unregulated, and we know that banks can use customer deposits to purchase these derivatives and resell them to their customers, but we don't yet know what deregulation shenanigans are about to occur.

The specific name given to securitized home loan derivatives is "collateralized debt obligation" or CDO. Don't get intimidated here. A collateralized debt obligation is simply a collection of mortgages! A mortgage is an *obligation* to pay a *debt*, with the *collateral* for the debt being the house and the property it is built on. Collateralized... Debt... Obligation. When you buy a CDO you are buying a portion of one or more home owner's mortgage.

CDOs became EXTREMELY POPULAR! Why? Because they were considered safe investments that produced a reasonable rate of return. CDOs came in many sizes to fit an array of portfolios, and, they were plentiful.

When a derivate of the nature of a CDO is offered for sale to certain market segments, such as retirement funds, the security must be rated by a third party as to its relative safety. Enter the Big Three rating agencies. Just as there are the Big Three credit reporting agencies, there are the Big Three companies that independently evaluate and rate securitized investments (Inside Job tells us the names). These agencies put their reputation on the line every time they rate a security. Many mortgage based CDOs received a rating of AAA, the highest possible investment grade rating. The venerable AAA rating is equivalent to a US Government Treasury Bill, which is considered the safest place in the world to put your money (the Federal government has never directly defaulted on a T-Bill).

As the popularity of the CDO industry grew, income of the ratings agencies skyrocketed because the agencies charge a fee to rate each CDO (nice work if you can get it). The CDO was a windfall for the Big Three credit rating agencies. Thanks to the CDO, mortgage backed securities were suddenly available to a wide array of investors. Institutional investors snapped them up. Demand became so high that there weren't enough home loans to produce the CDOs investors so coveted.

And this is where the trouble begins. Demand exceeded supply. This is where greed raises its ugly head and the slippery slope toward financial meltdown really began. This is where the tail started wagging the dog because loan demand began getting generated on the back end (the financial sector), not on the front end (a family seeking to buy a house). The quickest solution to create more CDOs was two-fold; a) make more home loans, and b) include other types of loans in the securitization process. Oh my. Yes, this is where the sub-prime loan comes in. Lowering lending standards was the quickest way to grow the number of mortgages that could then be re-processed into CDOs. It was easy for the loan originators (the banks that granted the loans) to grant sub-prime loans because they were selling the loans to the financial services industry for a fee, thus taking themselves out of the risk loop.

But that was not enough. The investment banks that created CDOs went a step further and started to include other types of loans in the CDOs; car loans, school loans, commercial loans, etc.

Oh my. So the logical question is: What happened to the ratings on these Frankenstein-esk CDOs? Sub-prime loans, by their very nature, are not the highest quality loans and thus do not deserve the highest quality ratings. The answer is the ratings agencies continued to issue AAA ratings for these CDOs. This is corruption, plain and simple. The ratings agencies were making money hand over fist rating these securities. They knew that if they kept issuing AAA ratings the investment banks would keep submitting freshly minted CDOs for rating. It's plain old greed and corruption folks, nothing complicated here. Inside Job shows clips of the heads of the companies testifying before Congress. It's laughable.

5) What's worse than a Frankenstein CDO? Leverage and Credit Default Swaps
At this point in time a lie is in effect. Institutional investors such as state pension funds, county retirement plans, and thousands of other entities seeking a safe place to grow their money are buying AAA derivatives that are in fact far riskier than they appear. The cancer of greed begins to spread further however. Large lending institutions that started to crowd out the proverbial local bank appeared on the scene. The biggest was Countrywide, issuing (as reported in Inside Job) a reported 97 billion dollars in home loans. This new breed of lenders invented additional ways to grow its profits. It lowered lending standards even further. It waved the down payment, relaxed income requirements, and failed to verify the income entered on loan applications... thus creating the liar loan. To add insult to injury the lenders also increased their profits by placing well qualified buyers into sub-prime loans, even if the buyer qualified for a lower interest loan. Sub-prime loans have a higher rate of interest and thus the lender's profits were higher. Is this not essentially stealing?

Bear in mind that the only thing that kept this scheme going was ever rising home prices. As long as the economy maintained enough jobs, as long as interest rates stayed low, this process continued. One side effect of the boom in easy home loans was a boom in demand for those loans, which produced the greatest ramp up in real estate prices in memory. Thus we have the "housing bubble".

But wait. The slippery slope of greed did not stop there. The engine that supplies mortgages to feed the CDO process was fueled further when the lenders and the investment banks started to BORROW MONEY to in-turn lend it out for more home mortgages. And where did a portion of those borrowed funds come from? From depositors accounts. Made possible by the repeal of a law that had kept the financial markets intact for decades since the Great Depression. Borrowing money to fund the granting of additional mortgages was a highly significant event for another reason as well. When you borrow money to make an investment (in this case to lend money to home buyers) you add "leverage".

Leverage was the straw that broke the back of the financial system in 2008, so it's helpful to understand how it works. Financial leverage works like any other form of leverage. A physical lever that you press down, say, one inch, might lift an object on the other end by 1 foot. Conversely, if you let up on that lever by, say, 1/2" the object lowers 6". Leverage works going up as well as coming down. The effect is multiplied in either direction.

In finance, if you have one million dollars to finance mortgages, and then borrow an additional million, you double your income. That's 2:1 leverage. All you have to do is pay a small loan payment once a month to service the loan on that second million dollars. If the income from securitizing the extra million dollars is greater than the interest rate on the loan, you're ahead. Inside Job asserts that investment banks leveraged as high as 33:1. This meant MASSIVE profits in the billions of dollars, but it also meant that the real estate market -which provided the collateral for these loans, had to keep rising, or at least tread water. If property values were to drop, the equity of the loan could become less than the amount owed. This is bad. It could in turn generate a margin call from the entity that lent you the million dollars, requiring you to come up with additional funds to make up for the loss. Also, if for some reason home owners started defaulting on their mortgages -say because they lost their jobs, or because the interest rate on their adjustable loan rose to fast- then you might not be able to even make the minimum payment on the money you borrowed, let alone pay back the principal. You would end up defaulting. It's like dominoes.

Now be sure to multiply all that by 33. With such extreme leverage, even if the homeowners kept up their payments, if the value of the home decreased by say, 25% in a caving real estate market you would still be on the hook for the full amount borrowed, and the losses could add up to more then the entire net worth of your bank. Whoops.

We know of course that the real estate market did indeed contract. But believe it or not, there is one more piece to this puzzle to cover first. And believe it or not, it is arguably the most insidious component of what lead to the collapse. Just to recap, we have safe AAA rated CDOs that have been Frankensteinized by folding in sub-prime and other lower rated loans. Borrowed money, including consumer bank deposits, has been used to make more CDOs. Now enters the "credit default swap", or CDS. This is another easy to explain term. A CDS is essentially an insurance policy on the default of a CDO. Recall that private investors and institutions were buying CDOs - which are just mortgage backed securities- for safety and income. The CDOs paid periodic dividends, and the capitol was returned to the investor when the CDO expired. The investment banks started to get worried about all those CDOs! They were so levered up that the slightest drop in real estate prices, or a rise in interest rates, or a contraction of the economy leading to increased unemployment... would lead to defaults on home mortgages, which in turn would lead to the failure of the CDO they were backing. So the banks took out insurance against this eventuality from yet another institution. They bought credit default swaps from insurance provider AIG (American International Group). With a CDS, the holder of the CDO paid a recurring fee to AIG. AIG in turn promised to make good on the CDO if goes bad (they swapped the risk to another party). What's not to love?

CDS insurance doesn't seem like too bad an idea until you start to see (as explained in Inside Job) that the investment banks were recommending supposedly safe CDOs to their clients while at the same time the banks were effectively betting the CDOs would fail by taking out credit default swaps with AIG. It should be underscored here that a CDS paid out to the INVESTMENT BANK in the event of a default... NOT to the customers buying the CDOs, not to the owners of the deposit accounts, and certainly NOT to the homeowners. Moreover, you didn't even have to own a CDO to buy a CDS for it! Meaning, anyone at all could take out an insurance policy against a CDO. Or multiple CDOs. There was no limit because THERE WAS NO REGULATION. AIG issued multitudes of CDSs. When the real estate market collapsed, AIG was on the hook for the full value of every single CDS taken out on each CDO! Huge-o leverage. This is where the government stepped in to bail out AIG and other institutions on the verge of bankruptcy.

Epilog
So add it up. Lack of regulation gives the nod to the financial services community to behave as they wish. Demand for safe mortgage backed securities in investment portfolios gives rise to relaxed lending standards (spawning the sub-prime loan, the no down payment loan, and the liar loan). The temptation to create more CDOs prompts the inclusion of non-AAA rated loans to the security and bribing the Big Three ratings agencies to rate all CDOs as AAA. The use of leverage multiplies the losses if the economy stumbles or interest rates rise. And finally the creation of a vehicles to insure against the failure of CDOs transfers so much risk to a single entity that it can not possibly pay out when the claims start rolling in. Most troubling is that politicians and holder of Federal Cabinet positions fought hard to make the system so vulnerable. And many of those people are still in office today.

Now you know why these instruments are termed `financial weapons of mass destruction'. Inside Job goes on to explain how very little has been done to address the underlying problem...

Marchetti's APUSH

Class Resources

Pages

Friday, November 30, 2018

Second Research Paper moved to Wednesday

November 30 - Chapter 17 Quiz and Lecture #14

Wednesday, November 28, 2018

November 28 - Bury My Heart at Wounded Knee

Monday, November 26, 2018

November 26 - FJT Frontier Thesis

Wednesday, November 21, 2018

November 21 - Chapter 16 Quiz

Monday, November 19, 2018

November 19 - Unit 5 Exam & Lecture #13

Friday, November 16, 2018

November 16 - Reconstruction SAC

Wednesday, November 14, 2018

13th Extra Credit

November 14 - Lecture #12 and Chapter 15 Quiz

Friday, November 9, 2018

November 9 - Chapter 14 Quiz and Introduce Reconstruction

Wednesday, November 7, 2018

November 7 - Chapter 14 Quiz and Lecture #11

Monday, November 5, 2018

November 5 - Unit 5 Quick HIPP and Mapping Westward Expansion

Friday, November 2, 2018

November 2 - CH 13 Quiz and Lecture #10

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