Oh, and welcome to the session. This is Professor Farhad in which we would look at the financial crisis of 2008. This topic is typically covered in essentials of investments or in essentials of finance course. You cannot learn finance without learning about the financial crisis of 2008. As always, I would like to remind you to connect with me on LinkedIn. If you haven't done so, YouTube is where you would need to subscribe. I have over 1,700 plus accounting, auditing, finance, tax, as well as Excel tutorial. If you like my lectures, please like them, share them, put them in playlist. If they benefit you, they might benefit other people, connect with me on Instagram. On my website, farhadlectures.com, you will find additional resources if you're trying to supplement your accounting education and or study for your CPA or CFA exam. So it's very important to look from a historical point of view, how does the housing market work in the US? So back in the old days of the US of A, if you wanted to buy a house, you would go to your neighborhood bank or credit union and you would lend money and the home will be used as a collateral. Simply put, your local bank will hold your home as a long-term asset against that loan. So they'll have a portfolio of homes and they will give you the money and they will hold the loan for 30 years. So basically the concept was the originate, you originate and you hold. It was really a boring business with limited capacity. What do I mean by limited capacity? Well, the bank, let's assume the bank will have a collateral of five million. They can only lend you money of five million. That's all what they have. So at some point the bank might run out of capacity because that's all what they have. And the other idea was it's your local bank, whoever lend the new money or whoever you're borrowing from, you're gonna see them, they're part of your community. That's important. They're gonna look you in the eye and you're gonna see why this concept is important when we talk about the new system. So back then in some states, for example, they had rules where the bank can only lend around 50 miles. They can only lend people in their 50 mile radius because they want to know their community and their community wanted to know them. Now in the 70s, what happened is we started to introduce a new concept. Two new companies entered this industry, Fannie Mae, which is the Federal National Mortgage Association and Freddie Mac, the Federal Home Loan Mortgage Corporation. What did they started to do? They started to buy large quantity of mortgage loan from originators and bundling them into pools that could be traded like any other financial asset. So rather than the bank originate and hold the loan, here comes these two corporations, they will take the loan off your hand and they will give you money where you can go back and lend that money again to more homeowners. So that's the idea. So these pools were essentially claims on the underlying mortgage. And what happened is what they do, they will take those home loans and they will sell them to investors in form of mortgage-backed securities. And I'm gonna explain this in a moment in the next slide in a form of a picture. And the process is called securitization. So what they did, they took your loan and they securitized it and they sold it to an investor. Don't worry, I'm gonna explain this in the next moment. Those loans were low risk mortgages. So the bank did a good job reviewing your loan, making sure you qualify for the loan. And the max loan to value was 100,000. So if your home was worth 100,000, the max they would give you is 80,000. Why? Because they want to have a buffer zone of 20,000 in case something happened to your value. And seldom people qualify for the 80%, that's the maximum. So if you don't have really good credit and good income, they may only give you 75 or 70% of your home value. But simply put, they will not exceed 80% and you have to have a good credit. You have to have, they only give it to people who would income, that for example, you've been working for two years, you have a stable job, so on and so forth. So that's a good idea. If you really think about it, what they did is they increased the capacity to the bank. So the bank can land more because what they did, they took the loan off your hand. And this is what it looks like. So let's take a look at it from a picture perspective. This is the old system. The old system is kind of boring.  And this is the old system. That's it. That's what happened. And the bank would hold the mortgage for 30 years and you make payment to the bank. Now let's assume the bank just for the sake of illustration, they make loans, different loans worth of $10 million. So they issued loans, they funded loans worth of $10 million. Now remember, the bank will have to get their money from depositors because the bank don't have unlimited amount of money. They have to get the money from depositors. That's for, that's their limit. Let's assume that's the case. Here comes this new concept. Well, what the bank can do with this loan rather than holding this 10 million worth of loans, the bank can sell the loan. Hold on a second. Who's gonna buy the loan from you? Remember, Freddie Mac or Fannie Mae or some other third party. So a third party will buy those loans from you. Why would they buy the loans from you? We're gonna see why in a moment. So they will buy the loans from you and how are they gonna buy the loans? Where are they gonna get the money from? They're gonna take these loans and package them into mortgage-backed securities. Basically, they're gonna package them into bonds, mortgage-backed securities or mortgage-backed bonds. And what they do is they will sell those bonds. And who's gonna buy those bonds? Guess what? Someone will buy those bonds, investors. So notice, you got your money from the bank. The bank sold your loan to a third party and that third party packaged your loan in a mortgage-backed security. And guess what? Now, when you pay, and let's assume the average interest rate on these loans, the average interest rate is, let's assume 10%, 10%. So guess what? Now, when you make your payment to the bank, you're not really making your payment to the bank, you're making your payment to this investor who you don't know who they are. Basically, all what those investors did, somehow they have a piece of paper saying they have a claim on your home, although you don't know who they are. They could be in Germany, they could be in France and a lot of investors were actually Deutsche Bank, which is a German bank, but a lot of our mortgage-backed crap securities. But the point is, you're not dealing with your original originator. So what happened is, the risk is simply transferred from the bank to some investor, to some investor who bought the bond. Now, since investors, they're not all have the same risk. So you have different type of investors. For example, you might have safe investors, like senior citizens. Senior citizen, they wanna really invest and save investments, or pension funds. Let's talk about pension funds. Pension funds, they're very careful. Pension funds, they can only, they can only invest in certain securities. For example, they have to have AAA securities. What does it mean, AAA? Each bond, the bond are rated. So when you buy a bond, when you invest in a bond, they have AAA, AA, AAA, BB, so on and so forth. For example, the pension fund can, for example, they could have a rules, they can only buy AAA or AA bond. For example, other, for example, hedge funds, or some other trading, trading, trading parties, they don't care, they can take more risk, okay? So some people, they, they're willing to, you know, they're willing to buy AAAB bond.  So what happened is this, the average interest rate on these, on these bonds is 10%. So what they did is, to make this, this is more interesting, those third parties, the financial intermediaries, they took those bonds and they broke them down into tranches called collateralize that obligation. So what they did, remember, this is a pool of loan. This is not one loan for 10 million. Some of the loans were at 12%, some of the loans were at 8% of different risks, so on and so forth. So what they did, the financial industry is very creative. They took those loan and they broke them down into several tranches. To make it simple, we're gonna break them down into two tranches, senior 70%, junior 30%. So what they did, they took the loans and they say, well, if you are risky, why don't you buy the first tranche? So nothing will happen to your bond unless the 30%, the junior bond default. And for the risky investors said, why don't you buy the 30% part of the bond? Why? Because you were willing to take more risk, they'll pay you 10%. So the pension fund will be happy getting 6%, paying 6%, receiving 6%, and the risky bond, the people with the risky, with the junior tranche, they will get the 10% or whatever rate it is. So somehow they make it more interesting. And by doing so, and guess what they did? By doing so, they kind of, in quote, not in quote, they fooled the credit rating agencies. How? They told the credit rating agencies or the credit rating agencies started to kind of theorize. It's like, what are the chances of 30% of the bond of these loans go default? Well, there's really a small chance. Therefore, guess what? The CDO must be a AAA. And investors rely on the rating agencies. Once the rating agency says, this is a AAA bond, that's the job of the rating agencies. That's why we have rating agencies because you don't have the time to go into these banks and examine the loan yourself. You rely on someone else. So what they did, they packaged them. They packaged them as they are AAA. Why? Because really, if you are a senior, kind of if I curve the grade in the class, the grade looks good, but underneath the grade, the students did not do well, but I curve the grade. So in a sense, they curve the rating in that sense. So what happened is this. So looking at this picture overall, what happened is once the securitization model took hold, so once this model basically, you buy from third, you buy the loans and you packaged it. Okay, now you have a new opportunity for new firms to do what? To take subprime loans, loans that are not credit worthy. So they are not good loans and they securitize them. Those are high default risk loans. In other words, the people who took those loans out, there's a good chance they made the fault. But as long as you can fool the credit agency into packaging those loans and making them look good, some investor will buy them, okay? So the difference between the original idea in the 1970s where you can package those loans and sell them as bonds, it was a good idea. It was a noble idea. Why? Because you create more capacity for the bank. You free up the fund for the bank. So one important difference between the government agency path through and those so-called private label path through was that the investor and the private label would bear the risk that the homeowner might default on their loan. Why? Because they're not backed by the government, okay?  So what happened is this, if you are the originator, if you are a bank or a shadow bank, you did not really care who did you give your money to? Why? Because you can take those loans and sell them to someone else. So the investor eventually will ultimately bear the risk. The person, remember I told you that this person right here really bearing the risk. So at this point you remove the, you remove any incentive from bankers to make sure they're giving loan to people who qualify for the loan. Because when the bank gives a loan, they make money on a origination fee. They make money on appraising your home. There's a lot of fees that they charge you. All what the bank want is to qualify for the loan, charge you the fees, give you the money, turn around and sell that loan. They don't care. They make your profit already. Then take that money and lend it again to another person who doesn't matter whether they qualify for the loan or not. So these investors had no direct contact with the borrowers. Think about Deutsche Bank and could not perform detailed underwriting concerning the loan quality. And that's not what you do. When you buy a bond, you rely on the rating agency. So that's what happened. So instead they rely on the boarders credit score who steadily came to replace the conventional underwriting. So let me tell you my story about this. I graduated in 1999 from college and I had a finance degree. So listen to my story and I'll tell you what happened. My first job after college was a loan officer with a company called City Financial. This is a secret, don't tell anyone because I'm not proud of it. I'm not proud of working with City Financial. But the point is part of my job, I was a loan officer. My title was management trainee, but my real title was a loan officer. So we used to give two type of loan, personal loan and home loans, basically mortgages.  So here what happened, who goes to City Financial? People that goes to City Financial, they cannot get a loan at the bank. Basically, if you cannot get a loan at the bank, you'll come to City Financial. Back then, if you are looking to get a first mortgage, I still remember this. If you wanna get a first mortgage, you have an excellent credit. You have an excellent credit. You have a good job, okay? And we're talking about the first mortgage. We used to charge you, I still remember the sheet. 12.99% on a first mortgage. So why 12.99? Because the federal rate was around 6%. So the interest rate was high, but our rate was even higher. So this is if you have a perfect score. Nowadays, you can get a loan for nothing, for 4, 5, 6% max. And that first mortgage could go up to 18% on your home. So that's not the whole thing. And we're supposed to be a discount broker. Therefore, it will take us time to process your loan. It used to take a month. So if you wanted to get a mortgage, if you wanted to get a mortgage or get a second mortgage on your home, basically a second loan on your home, it would have taken you one month worth of time.  So it would have took a month, literally a month to tell you, okay, get us the paperwork. We're gonna review all this paperwork and we'll let you know in a month, whether you qualify or not. And we were a discount broker, so we're supposed to move fast and it used to take us a month to do this process. Okay? So fast forward, 2005. 2005. In 2005, I decided to get married. I left this job and I decided to get married. I was planning to get married sometime in December by the end of the year. So here's what I did. I had a home. I wanted to take some money out of my home. So I wanted to borrow some money from my home to fix my home, because I'm getting married. So what I did, I said, okay, like mid-September or late September, I still remember, so we're talking September. So I said, you know what? Since it's gonna take a month or so to get money from my house, let me go in now and just in case I had some paperwork and start the process in September. So I'm thinking by the end of November, I will have the money. I will have a month to fix the home upgrade. I remember I wanted to upgrade the windows, do some major changes. By the time I'm married, the home is fixed. So I still remember sometime in September. I don't remember the date. I walked into Wells Fargo. The bank is Wells Fargo, it's a traditional bank. This is what I bank with. So I went in, I remember I went in because I was coming from work. I almost made it, it was around five o'clock. So I catch the person that still there said, would you mind helping me? I remember the lady said, okay, what do you need? I said, I'm looking to get money out of my house. I have some equity in my house. And I remember, I give you the value, it doesn't matter. I was looking to get around $20,000 from my house. I had an equity worth of 20,000. So she said, okay, so I gave her my license. She had my account information. And she's like, okay, she asked me how much? I said, well, around 20,000. I was not hoping to get 20,000. I said, if I get 20,000, I'm gonna ask for 20,000. And I told her, all I'm asking today is what type of paperwork do you need so we can start the process? She said, okay, no problem. So she just, I remember she just took two minutes. She typed something on the computer. She went inside another room and I heard a printer. And I know that that printer is, it's printing a check. Why? Because I used to be in this industry, we used to print the check at my work, like, you know, when I used to be at city financial. So like two minutes later, the lady came out with a check, with an actual check of $20,000. And she handed to me, she's like, that's your check. I was like, hold on a second. You didn't even ask for my W2. You didn't ask for my tax return. And I didn't tell her that I was like, is this a real check? Or is that kind of like, you know, those like ad checks where, you know, come back later and, you know, we say, no, that's your actual check. If you want to deposit this check today, you will have an additional 20,000 in your bank account. So the point is by 2005, it started around 2002, 2003. Now, no one knows everybody, the Republican playing the Democrat and the Democrat blame the Republican, that they ask the banks to lower the standard for borrowing, okay? In other words, make it easy for people to get a loan. And this is why I get a second mortgage in like literally in like five minutes. I walked out of the bank with 20,000. I thought that's gonna take me a month and ever. And I asked her, is like, could you tell me how did you came to the conclusion that I had, how did you trust like I had 20,000 in my equity? She said, oh, I went online and I saw, when we just did what's called a comp appraisal, comparison appraisal. And we find out that the homes that were sold next to your home were at the same value and we based it on that. So it was really easy. Back then, when I was at work, you had to have an appraisal. We had to have someone scheduled someone. It will take 10 days to schedule someone to go to look at your house. So the point is in 2001, 2002, all those strict standard, they were going down. And as a result, we had more, what's called subprime loans. It's not only subprime loans. We had all sorts of crazy loan, loans that are called low documentation where you did not need any documentation for the loan, no documentation or low documentation. So they did not have to verify anything. For example, I believe I was credit worthy because I have a good credit. They had high loan to value. They started to give you 100% of your home value. So if your home is worth 100,000, they would give you up to 100,000. So they'll give you up to 100% of your home. And for example, city financial, what I used to work, they would give one, they used to give, when I was working there, they used to give 110%. So they would give you more money for your value, but you'll have to pay high interest rate. And there's the Ninja loan. Ninja, no income, no job application would give you a loan. Either you have no income or no job. Then they'd have what's called adjustable rate mortgage. And those adjustable rate mortgage, they were known by ARM, ARM loan. ARM loan, basically what they do is, they would, you would start at 2%, then your interest rate will go up to, it would reset in three years at 8% plus the treasury bill rate. So it would be around 10%. So you'll start at 2%, but you're in your payment because it's 2%, your payment is low. Then suddenly in two years, your payment will be, will get higher. And this is really what really collapsed everything, those adjustable rate mortgage. And what happened is this? So they used to call them teaser rates. So they will offer you a low interest rate early on, then eventually they will, then you'll have a payment. You will start with a payment of $400 and suddenly your payment becomes like 1200. So this is what happened. So they will have the treasury bill rate plus 3% or some sort of a formula. What happened is this? When these adjustable mortgage started in 2001, 2002, again, we're not gonna get into politics, no one when that started, people did not care. Why? Not people did not care. What they told people is look, you're gonna buy your home for 100,000 today and your payment is around $500 based on the current low mortgage, low interest rate. Guess what? Come back a year from now, come back a year from now, your home value will be around 140,000 and home values were going up in those years. And what we do is we refinance. Refinance means what? It means we're gonna take your old loan, scratch your old loan out, give you a new loan with a new teaser rate and move that payment two years down the road. Let's assume you took a loan in 2002 and 2003, you would refinance it. Then in 2004, you would say, hold on a second and everybody was qualifying for a home, so home prices were going up.  You will do the same thing for 2005. And people were borrowing around their homes. So the home values were going up, but the loan against those home values were going up as well. So that kept happening. And by 2004, the ability to refinance to save a loan began to diminish. Why? Because what happened is, more and more people were refinancing and if you could not refinance, if you don't qualify for refinance, what you do is you will try to sell your home. So by 2004, 2005, people started to feel that things are slowing down. By 2006, the majority of subprime borrowers purchased homes borrowed entirely by the purchase price. At this point in 2006, if you have a subprime mortgage, if your home is worth 300,000, your loans were worth 300,000 as well. So basically you had no equity because homes can go up forever. Now you can no longer go back to the bank and extend the loan because you already used up all your equity. So although your value went up, also your loan went up. At this point, you ran out. Okay, refinancing was not possible. So what do you do when refinancing is not possible? And at this point, what happened is oil prices went up. In 2006, 2007, the barrel of oil reached over $100. And guess what? When oil goes up, people's expenses go up. Your mortgage is going up. Your mortgage payment is going up. You can no longer afford to pay. What do you do first when you cannot pay for your home? You all try to sell it. And guess what happened when everyone in the country tried to put their home on sale? The prices immediately drop. The prices of the homes immediately drop. So the prices of your home immediately drop. So if you had a loan of 300,000, now your home, your loan is 300,000. Now your home is worth 210,000 or even less or even 180. Why? Because everybody else is trying to sell their home because your home went up because everybody else was buying. Now your home went down and you were borrowing against that value. Everybody else is selling and your home value went down. So when home prices began falling, these highly leveraged loan were quickly under water. Under water means you have more loan than value. So what do you have? When you have more loan than value and you cannot pay, you cannot pay, you simply walk out. People literally walk out of their homes and they left the abandoned their home. So home prices peaked in 2006. Homeowner could not refinance because they used up all the equity that they could have. And mortgage rate began to surge. Mortgage rate default. So basically people started to default, started to fall behind on their bills. Let's go back to this picture. So here's what happened. When these investors, these investors, they were buying bonds from 2002, 2003, 2004 booms. When 2005, 2006, the homeowners, they could not pay the bank or they could not pay them specifically because the payment was going to them because the bank transferred the bond to a third party. So these people started to lose money and they started to lose billions of dollars. So these people are losing money. Home value is going down. The economy starting to slow down. So this is what actually happened. This is what actually happened. And as a result, a lot of third-party intermediaries, what they did is they had those mortgage-backed securities. They were not, really, it's like they drank their own poison. So if you created those mortgage-backed securities and you cannot sell them, it's a toxic asset. They become toxic asset on their books. So it's not like they were trying to fool people. They believe the system is working because investors were eating those bonds up. Somebody was buying them. But when nobody was buying them, then you have those investments on your books and they're shitty investment because you thought the homeowners are going to pay to make the payment, but the homeowners are no longer making the payment. So part of the problem is, because the question is, why were people buying those risky subprime mortgage? The reason is because they relied on Fitch, S&P, and Moody's. Those are the credit rating agencies. So, securitization, the way they restructured those loans, the way they made them look good, people were buying them, okay? So what they did, they have a new risk-shifting tools enable investment banks to carve out triple-A rated securities from original junk loans. Remember those branches that they did? They make it look good. They make it look relatively good, relatively safe, and they stamped on it triple-A. Now we're going to see, there's another reason why they did it, but we're going to talk about this. So CDOs were among the most important in eventually damaging of this innovation. So when they did those CDOs with the trenches, they make it look good. They make the bond look good. So CDO were designed to concentrate the credit risk of a bundled loan on one class of investors. So what they did is, although you had crappy loans within the package, they only looked at the good loans, okay? So leaving other investors in the pool not protected from that risk, okay? So the idea was to prioritize the claim, repayment by dividing the pool into senior versus junior slices called trenches. As I showed you, so the senior trenches had first claim on the repayments.   But overall the bond is AAA because we had some AAA loans in there. Also, so why would the credit agencies dramatically underestimate the credit risk? So did they do it on purpose? Did they do it because they did not understand the risk? One reason is default probabilities had been estimated using historical data from under-representative period characterized by housing boom and uncommonly prosperous economy. So they were comparing the 90s default rate to the 2000 and the two were not comparable. And we're gonna see this. So the rating agencies extrapolated historical default experience to a new sort of borrower pool, one without down payment. And they were comparing the old loan underwriting where you had to have a down payment of 20%. And that's the other thing. The new loans, you did not have a down payment. Usually the loan, you have to have a put a down payment down. The new loans, those fancy loan, you did not even have to put down payment. So you'll walk in, you'll buy your home without no down payment, low interest rate, no income, no job verification, nothing. So we're comparing those loans to people that put down payment, they had documents, they had income, compelling apples to oranges. So they came up with that conclusion by comparing traditional underwriting to the new underwriting rules. And past the fault experience was largely irrelevant given these profound changes in the market. So they did not take into account the new underwriting rules. Also, there was excessive optimism about the power of cross-regional diversification to minimize risk. So what they did is, and that's another thing that the third parties did, to fold the credit agencies what they did, they bundled loans from different geographical area. For example, they took five homes from New York, five homes from California, five homes from Chicago. And they told the credit agencies, look, those homes are in different geographical area. Therefore, we are diversifying the bond. Therefore, it should be AAA bond or AA bond. And the credit agencies went for it. Why? Because they wanted the fees. The credit agencies, some people think they did it for the fees. So that's another reason why they did it. And that's why it's a bit and ethical to say the least. Also, what came into the picture later on in this tobacco is something called the credit default swaps or CDC. What is the CDC? It's in essence an insurance contract against the fault of one or more borrowers. So what happened is, to make this looks more interesting, they said, okay, you buy this bond, we can sell you what's called credit default swaps. In case something happened to that bond, you collect your money. So it's like an insurance. The purchaser of the swap pays an annual premium like an insurance premium for the protection from the credit risk. So this is, if you have the bond and you wanna protect yourself, you can do it. But I'm gonna tell you what's gonna, what happened with this credit default swaps. So the credit default swaps became an alternative method of credit enhancement. So to make the bond looks good, you said, well, I don't have to worry about the second even buy insurance against it. So it allow investors to buy subprime loans and ensure their investments if they want to. But this is not what really happened. This is not what really happened. So some swap insurers ramp up their exposure to credit risk to unsupportable level without sufficient capital to back those obligations. The first thing that happened is some companies went crazy of selling insurance. And what happened when you sell? When you sell insurance, when you sell insurance, you are responsible for making the payment on these insurance. So that's an issue. That's a problem, why? Because if things go bad, you have to make payment. Let's assume you insure 2,000 cars. Well, that's good.  But if 500 of these cars went into accident all at once, you're gonna be in trouble. Okay, that's not what you do. You insured 2,000 cars, you think maybe 20 cars will get into an accident. But if 500 go into an accident, then it's become a big trouble. And what happened with those credit default swaps, and this is very, very interesting and this is where this movie or the big short comes into place, few individuals, and I suggest you watch the movie. What they did is they purchased those credit default swaps. So these people did not own the bond. So what they did is they told bankers, they did told people like AIG, large insurance company like AIG sold more than 400 billion of CDC contract on subprime mortgages. So what they did is they sold the insurance and these guys purchased the insurance without having the bond. So all what they said is, it's like buying an insurance on your neighbor's homes. On your neighbor's homes.  So these guys, they said, you know what? This subprime, it's gonna collapse. Let's benefit from this and let's buy those CDC. That's what they did. They bought the CDCs and when the whole system collapsed, these guys collected a lot of money. I strongly suggest either watch the big short or you read the book. I read the book and I watched it. I read the book several times. I watched the movie four or five times already, if not 10 times. Okay, so that's what I suggest you do. So if you're interested, start with the big short. So also by 2007, the financial system as a whole, the banking system were starting to show several troubling features. Many large banks and quasi banks and financial institution, they called them shadow banking. They were apparently, what they were doing is financing their short-term borrowing, financing with short-term borrowing, their long-term illiquid assets.  When you borrow money for long-term, your interest rate is higher because whoever is lending you the money, they have to wait longer. Longer means more risk. The compensate the risk, they have to charge you higher interest rate. So banks were relying on short-term borrowings. So what does that mean? If you're relying on short-term borrowing, you have to constantly refinance. So you have to go back and turn over your loan because it's short-term and you have to get a new loan. So what happened if interest rate goes up? Well, you're in trouble because you have to refinance at this higher rate. Or else you have to sell your assets, whatever assets you have. And maybe your assets went down in value. Now you have to sell them in a financial stress situation which their prices will go down. So these institutions also were highly leveraged. So the banking system at that time, highly leveraged means they were relying on that with a little buffer. They had a little bit reserved for losses because they did not think they're gonna suffer those large losses that came up. So even small portfolio losses will drive their net worth negative. So they were not highly capitalized. And this is what the DAB Frank we're gonna see in a moment try to do is to increase the capital reserve for banks on case of losses, they could still withstand. For example, a company like Lehman Brothers were leveraged $30 to $1 at some point. That means for every dollar in equity, they had $30 in debt. So the company was negative net worth. They were relying on debt constantly. Merrill Lynch, 27 to one or 26.9 to one. So all these institution, if anything happens, they were highly leveraged. They were not ready to absorb the losses. And the shoe started to drop. By the fall of 2007, housing prices were declining. Remember, all these people when the market was going up when they were easy, easy, peasy market for home buying, there's a lot of demand on homes. Remember, we talked about the teaser interest rate when those teasers started to reset and the payment went up and the payment went up. All these people then they could not refinance what they did is the exact opposite of what they did when they were buying, they were selling. And what happened when you're selling, you have a lot of supply of homes on the market. And I remember, I still remember really, this is a true story, on my block in my town, I used to live in Eastern Pennsylvania. I still remember and that's why I sold my house. I'm not exaggerating on every block, on every block in the city. There was like four to five homes on sale. I mean, I wish my wife can testify to this. I remember telling my wife, we get to sell out and move out. And this was happening in 2006. And this is exactly when I sold my house. I sold my house fall of 2006. This is when I sold my house. So when all those homes went on the market, houses prices started to decline. So you could not refinance because to refinance you have to have a higher, higher, higher value. And the default rate, the delinquency rate increase and people are not paying their bills anymore. They're not making their payment. As a result, the stock market foresees this ahead of time and started to drop, which would make it worse for people because if oil prices went ups, everything went up in price. If you have any money in the stock market, you feel poorer because the stock market went down. Your mortgage payment went up. It was a perfect store. So many investment banks with large investments in mortgage started to have some serious issues. And really the crisis speak in September, 2008, I still remember that time because I was working as an auditor. I was still working in a CPA firm. I remember September 7th. I still remember that day specifically. The giant, Fannie Mae and Freddie Mac, which they had a large position in those subprime mortgage securities were put into conservatory ship, which is it means the government took them over. And as a result, confidence went down in the housing market. If these two companies, these two large corporations, they need government help. That means we have a real problem. By the second week of September, it was clear that both Lehman and Merrill Lynch were on the verge of bankruptcy.  And at the office, you know, the partner says no more talking about the housing crisis. Actually what the partners did for two weeks, they shut down the internet for us. You only could have internet during lunchtime. And back then you did not have the smart, you know, people did not have those smartphones. Not everybody had a smartphone. So you just, you know, at work you would check the financial news because everybody was consumed with it. And I still remember on my lunchtime, on my lunchtime, I would walk to the Bethlehem Public Library in Bethlehem, Pennsylvania to check to see what's going on, to read the news. So I still remember that those days, and especially that I was working, I work at some point with Merrill Lynch. So I was like, kind of, I was like, what's going on to this company? And by the way, I also bought 200 shares of Lehman right before they went bankrupt. I was taken aback and I lost that back. So on September 14th, Merrill Lynch was sold to Bank of America. So what happened? The government arranged Merrill Lynch to be sold by Bank of America. Now Merrill Lynch is part of Bank of America. The next day Lehman, which is few days earlier, I bought Lehman, I bought 200 shares. Lehman was denied equivalent treatment. They did not, the government decided not to help Lehman, but kind of punish people to say, look, you will pay a price for taking risk because Lehman was taking a lot of risk. Remember, they were highly leveraged. So that's what happened. Two days later, the government, they gave 85 billion to AIG. And I was debating, should I buy AIG or should I buy Lehman? I decided to buy Lehman and I lost, which is not much, like 200 years was like a little bit over a dollar a share. They gave the money to AIG and they didn't really want to, but they had AIG because if AIG went out of business, AIG is an insurance company. Then all these people that are insured, now they are at a risk. So it was too big to fail. That term became very common. Too big to fail, that means if they fail, everybody else will be affected, okay? The next day, the treasury revealed, unveiled its proposal to spend 700 billion to purchase toxic mortgage-backed securities. So to solve the problem, the government said, look, we're gonna start to buy those toxic asset. Any toxic asset companies have, banks have, will buy them, will give you cash for them. You have the cash to keep the economy running. Cause what happened is when Lehman went down, and by the way, since that time, with that 700 billion purchase and toxic asset, the government has been dumping money into the economy, especially now with the coronavirus. Now the government almost dumped in six trillion, including help and buying all sorts of bonds. Right now that's what the government is doing. If you're living today, June 11th, 2020, that's what the government is doing, buying bonds right and left. Any type of bonds this way to keep the economy running to give the company's money so they can survive. And this is when it all started before that was unheard of where the Treasury or the Federal Bank, or the Federal Bank does this. So why Lehman was important? Why Lehman, why the fall of Lehman affected the market substantially? Well, because the Lehman, they used to rely on money market. What is money market on the money market, on the money market? What's a money market that's short-term lending? So they used to borrow money on short-term basis using what's called commercial paper. Now to borrow money, you have to borrow money from someone. It's a mutual fund that they have this money market. So what happened when Lehman went bankrupt and everybody knew Lehman was borrowing that money, borrowing commercial papers. Now everybody was careful because they didn't want to give any money to those mutual funds because they did not know which mutual fund gave money to Lehman. So if he gave money to Lehman, you lost your money. And if he gave money to Lehman, I'm not gonna put my money with you because you lost a lot of money.  Therefore what happened, that short-term lending froze because now everybody doesn't trust everybody. That's why the government intervened. I will, don't worry, lend each other and I will guarantee the loans. So this is what happened. But back then, when that happened, it froze the market. When Lehman felt her fear spread that these funds were exposed to losses on their large investments. And the money market fund customer across the country rushed to withdraw their funds. So if he had money in the money market, you went and he told your mutual fund, I want my money back because I don't know what your exposure to Lehman. I don't know what's your exposure to someone other than Lehman for that matter. Therefore I want my money back. Therefore when people take out their money, there's no liquidity in the market. And they started to put their money with the government. That's what happened. And when there's a crisis, you buy treasury bill. So this way, your money is safe with Uncle Sam. Supposedly, let's always hope that that's gonna be always the case. So as a result, the short-term financing market shut down and corporations rely on the short-term borrowing. Large corporations, they use commercial paper on a regular basis to finance their operation. So if that operation is done, then they can get money, they cannot finance themselves. Also the banks, okay, when the commercial market freezes, that also affected Wall Street, that also affected Main Street because large bank also rely on commercial paper to raise short-term funds. When the bank needs money overnight or for a week or for 10 days, they go to the commercial paper market to raise this money. And that commercial paper market shut down. There's no activities because no one is trusting anyone, especially banks. So the banks find it difficult to raise money and this is a real problem. Now, if banks find it difficult, bank will stop giving car dealership, construction companies, retailers, they will start to, they will stop lending them money. And when they stop lending money to these people, when they shut down your line of credit and you rely on your line of credit to pay your employees, you have no money. So what do you do?  What happened when you start to lay off your employees? The unemployment goes up. You have less people, less people working. It means it's getting worse and worse for everyone. So capital staff companies were forced to scale back under operation, laying off people, unemployment throws, and the economy went into a recession. Okay, obviously it didn't take us much. We kept printing money until we got out of that recession. But bear in mind, this was not limited to the US. The, this financial crisis affected the whole world and especially government in Europe, like the German, the Italian, the French, everybody was exposed. But the people who are exposed, the most people that already had that, like somebody like Greece, they had what's called sovereign debt crisis because they were already in debt. And now they are affected, they were affected more because the European Union economy contracted and they rely on tourism. So a country like Greece, they were hit the hardest. So the government that, it's government debt was about 460 billion. And that's what happened when you have that. When you have that, you always expose yourself to risk. Why? Because if you expose yourself to risk and a financial crisis indeed happened, you cannot survive that risk. So that's why you want to have at least that as possible because financial crisis happen on a regular basis. It's a fact of life. It's going to happen. It's, there is no way around it, okay? In 2011, it was the first kind of country to the default. They could not pay 130 billion of their debt despite a series of rescue package from the EU, from the European Central Bank and the IMF, they are still in trouble up to this point, which is we are in 2020. In the US as a result of this financial crisis, we had the DOP-Frank Reform Act. And the reason for this is to mitigate systematic risk specifically in the banking system by imposing stricter rules for bank capital. It means now you have to keep a larger reserve at your bank in case something happened.  So if one bank fails, you'll have a domino effect because banks borrow from each other overnight. So if I lend you money, okay, and tomorrow, and tomorrow you failed, I can't get my money back. Then I also borrowed money from someone else. I cannot give them back the money. So there's always a domino effect. So that's why they wanna make sure it's to reduce containment. So they want to make sure banks have plenty of capital and they can withstand any stressful situation. In addition, when banks has more capital, they have less intensive to ramp up risk. So if you have capital, then what happens is you take less risk because even if you take the risk, you are going to absorb the risk. You are going to absorb the losses because you have the capital. So you have to be very careful. Then you are not incentivized to take risk because the FDIC will not help you. You have to pay for your own risk. So basically the attempt to limit the risk activities in which banks do engage. And specifically, they have this new rule called the Volcker rule, named after the former chairman of the Federal Reserve, Paul Volcker, limits the bank ability to trade for its own account and to own or invest in hedge funds or private equity fund, which is riskier investment. So this is the DAB Frank. Also the DAB Frank looked at the credit rating agencies. They remember the credit rating agencies stamping everyone with triple A bond. So the bonds would sell. They created an office to oversees this. Office of the credit rating agencies. So the incentive of the bond rating were also a sore point. A lot of people were complaining that part of the problem is the credit rating agencies. It wasn't only the credit rating agencies was banks, originator, credit rating agencies, accountant, we were responsible. Auditors were responsible. Consultant, everyone was complicit in this because nobody raised a red flag. Nobody said anything because everybody was benefiting. Especially the rating agencies that were selling, literally investigation shows, investigation showed later that they were technically in quotes selling those triple A.  If SMP doesn't give it to you, you go to Moody's.  So that's why that put an incentive pressure on them. Few are happy with the system that the rating agencies paid by the firm that they rate. That's still a problem because what's the alternative? The alternative is every time you need to buy an investment, you have to find your own rating. Those agencies, they rate everything for you, but they are paid by the companies that rates them. So there's a conflict of interest, but we have to live with that. The act create an office of credit rating within the Securities and Exchange Commission to oversees this credit rating agencies. And if you are still listening, we'll go toward the end. This is my house. This is the house that I sold right before the financial crisis happened. And guess what? All the profit that I took out of this house, I put it in the stock market and the stock market tank. So although I made money, I used to live in this apartment, I used to rent this place. So this was one unit, this is unit one, this is unit two, I used to rent this unit and I lived in this one and it paid for itself. I got out of it. I took the profit, put it in the stock market, didn't do very well because the stock market tanked. Anyhow, as always, I would like to remind you to like this recording, share it, put it in playlist. If you are an accounting or finance students, please check out my website for additional resources. If we are still living through this coronavirus, make sure to stay safe, good luck, study hard, whether you're studying for your CPA or CF.


The Chief of Defence Staff General Lucky Rabbo, in an interview with reporters in Abu Dhabi spoke on the efforts of a military in the battle against Boko Haram insurgent. According to him, some of our tactics have changed, but our vision remains the same. He said Niger wants to bring an end to the beginning of all terrorism. He added that we're achieving these in collaboration with stakeholders in national security and defence. Globally, terrorism has evolved in the last two decades. The case is not different than Niger. What we're doing differently is to be ahead of this evolving trend. The armed forces of Niger is more prepared for all scenarios. Unfortunately, it will do us more harm than good if we go public to reveal all we have done or what we are supposed to do to achieve all of this. The good news is that in all scenarios, Nigeria will win the army chief reassured.


So it is just me realizing that these things, the way they are going, it's not taking us anywhere. It's not taking us anywhere. I strongly believe that it can't work. The Alewere Lapo agenda can't work and I've got my own reasons for that. I've got my own reasons why I'm saying the Alewere Lapo agenda cannot work. Yes, it's me who started the Alewere Lapo agenda. Other people want to claim it but come on, you can claim it and whatever but the fact still remains that I started the Alewere Lapo agenda. And I am sorry today I'm coming to you, I'm telling you to say I am not for that idea. I'm not for that agenda of Alewere Lapo. For a number of reasons, mostly it is that it cannot work. I have just changed my mind. It is not inconsistent. It is realizing that this cannot work. If you realize that something cannot work, please. I mean, you are right to change your mind. You are right to change your mind. Some of you, if even in marriage, you can be able to change your mind. What about in politics? Yes, at this agenda, I really believe that it would actually work. I really believe that it would actually work. But I've realized after reflecting so much about a number of issues, I've come to realize that Alewere Lapo will not work. Alewere Lapo agenda will not work. And now, let me give you some of the reasons. I'll take you back. And this, I must emphasize, it is not being malicious to present Ed Galoon. And really I just wanted to look at it as some of the weaknesses that have identified. Some of the weaknesses that have identified which are making Alewere Lapo, something that cannot work.  If you look at Versata, Versata was a well-known person. A very successful politician, if I could put it that way. He was successful. He was a mayor. He did so much. He built the flyover bridge. And he was known. I remember those days I was young. My father used to adore Sata. He used to adore Sata. He was a mayor. When he was as a mayor, from there Sata became a minister. Whichever ministry Sata was sent to, he performed. Even as a minister of Warpanda and Cheeto, as he used to call himself, minister without portfolio, Sata performed. Sata was the secretary general of the MITE MMD. Sata was a successful secretary general of the ruling party MMD. And he started preparing himself for presidency. Unfortunately, it didn't go to him. It went to Manawasa. That's when he formed PF. And he struggled with PF until 2011 when they won an election. 2011, 10 years. The point I'm trying to make to you is that he is a successful, aggressive, strong character, motivator and inspiration Sata. He had to go through 10 years for him to be accepted to become president. 10 years for him to be accepted to be president. And then when Sata was president, if you look at Ed Gachagalungu, he was little known. Little known, really. Little known. Not much was known. And at one point, I mean, not that he is a bad man, a good man, a good man, a quiet man. During the time of UPND, of PF 10 years, Sata was kind of favoring him. Favoring him, favoring him. And other people started rising against him. He went on ZNBC. He was asked a question, do you want to become a president? He said, me, I don't even want to become a president. I don't even want to become a president. He totally refused. I can't become a president. I don't want to become a president. Then Sata died. But even before Sata died, even before Sata died, when Sata was going, Sata left Ed Gachagalungu with the acting position. He was acting. If you look at it, if you think about it critically, do you think Sata really left Ed Gachagalungu because he strongly believed that he should be the one to take over? I don't think so. I don't think so. Truth be told. I don't think so. Sata left the powers to Ed Gachagalungu because he was sick and he knew that he was going to stay maybe longer. And he didn't want to leave somebody who had that ambition, who had shown the desire to become president. Sata left the instrument of power with Ed Galungu because he didn't pose a threat. He didn't pose a threat. That's why he left the powers to Ed Gachalungu. He didn't pose a threat. And of course, when Sata died, what happened? Guys caught with the other guys, they went and told Ed Gachalungu, give us power. Did by Ed Gachalungu fight at all? No. He straight away gave it to them. You can talk about constitution and whatever, but come on, this is politics. This is politics. There is no power. No power. And some people just come and say, give it to us. He just gave it, just like that. He just gave it and went away. I'm talking about the character. The character. I'm building on to show you the character of Ed Gachalungu. Not insulting him, but this is his character. It's a fighting spirit, not a fighting person. No. He had the instrument of power. Imagine if that was Bakavimba. If that power, the instrument of power was left to Bakavimba. Do you think Bagaiskot would have gotten it? He wouldn't have. If power, that power was left to GBM. Do you think they would have gotten it? If they wouldn't have. If that power was left to Kuriva that Shimbakambuidi. You think he, Gaiskot would have gotten it. They wouldn't. If that power, let's imagine now. If that power was left with Haka in the Hilema. Imagine Haka in the Hilema was up, was PA for that point. And Sata left in power. Do you think Avena Gaiskot would have gotten that power? They wouldn't. They wouldn't. They wouldn't have gotten it. But Ed Galungu just gave it. He just gave it. Who fought for that power to come back? It is Benawidin Sanda. And the other people are more PA-ful. Respecting Sata. Let's be honest, truth be told. The people that rose and chanted that Ed Galungu should get power they didn't do it for Edgar. They did it for the respect that they had in Sata. It was the respect Sata has gone. Sata left the power of instrument with this guy. It is not Ed Galungu that they admired. It is not Ed Galungu's leadership that they admired. No. It is the respect that they had for Sata that they chanted. Let's give it back to Edgar Chagolungu. And then Arabic came in. Arabic came in and strengthened by Edgar Chagolungu. Arabic came in and strengthened by Edgar Chagolungu. Had Harabi not come in it would have been difficult. But Arabic came in and helped Varungu to become president. Now we had elections on the 20th of January. 20th of January 2015. How many votes did by Edgar Chagolungu get to beat to beat to beat HH. It was about 800 800 and the 800 chakut. Had 770 270 chakut. The difference was basically was basically 27 27,000 votes. The difference was basically 27,000 votes. That was the difference between Edgar Chagolungu whose party was in power PF was in power. PF was in power. The only thing the only votes that he got they were 27,000 votes. That's what separated them with HHM who was in opposition. Who was in opposition and when Edgar Chagolungu became president when he became president in 2015 how was his leadership President Edgar Chagolungu with due respect you could see that he was not in full control of government he was not in full control of government and myself I remember very well I was criticizing Edgar Chagolungu for being too weak I was criticizing him I said this president is too weak and other people were telling me no no Edgar Chagolungu is because he is going to have an election next year so he doesn't want to rattle his friends he wants to keep them you will see after he wins a full term that's what you are saying you remember that you are saying no no no this man is not weak just give him time when he comes back you will see when you have a full term he is just finishing this term and he knows that next year there will be elections so that's why he is being soft to his friends what happened he came 2016 elections came Edgar Chagolungu was fully in charge he was a president voted president with the instrument of power with everything all the state machinery behind him all the state machinery behind him having had laid the country for about one year six months how many votes did he get what was the difference between Edgar Chagolungu and Edgar Chagolungu what was the difference it was only 100,000 votes only 100,000 votes with all the state machinery behind him with all the state machinery behind him with all the state machinery behind him I must tell you if you don't realize as a person that is in charge and you have only been in power for one year six months if you are a performer you would not beat your opponent by 100,000 votes you would not you would have done better you would have done better unfortunately that's what those are the results that he got those are the results that he got that's what he got came 2021 what happened with all the instrument of power with him and everything all the state machinery everything at his disposal everything at his disposal with kadas beating people what everything was in his hands everything was in his hands what happened in 2021 he was wired by one million votes one million votes one million votes he was wired how did that happen how did that happen the man was in state house the commander in chief the man was in charge of the police the man was in charge of everything everything was in his hands everything but an opposition came and wired him with one million votes one million votes now we have this person I'm talking about you see I've run you through the leadership of I've run you through the leadership of and his character his character if you look at the character even when when he was president because I was saying that in 2015 you were saying no let him let him have a full term you will see what he would do did we see that between 2016 and 2021 did we see Ed Galungu being in charge of government did we let's be honest Ed Galungu's government was the most abused government not by himself but by so many people so many people did a lot of things in the name of the presidency without him knowing so many things were done so many things were done in the name of Ed Galungu I'm sorry for me that is a serious weakness that is a serious weakness we had conflicts did you see Ed Galungu confronting anyone did you see did you see Ed Galungu confronting anyone just in 2015 they had a conflict between himself and your GBM what happened did your Ed Galungu confront GBM to say come let us work together and so on and so forth did he because GBM at that point he was a heavyweight he was a heavyweight especially in Nwapula northern part of Zambia he was a heavyweight and if Ed Galungu was politically strategic politically astute with a character he would have not let GBM to go to to a kind of GBM he couldn't confront he couldn't confront GBM but GBM ended up going to a kind of H&M and that is how UPMD got so popular in the northern part GBM did if you don't know it did if you don't know it took votes to a kind of H&M what about a kind of H&M a kind of H&M was friends with GBM do you think they agreed? no they didn't they didn't but because of politics GBM brought GBM close and met in vice president while Ed Galungu left GBM that's how they survived that election they would have lost it 2016 it was the same situation Bakambuidi truth be told Bakambuidi he's a political giant he's a political giant they have started having having differences did Bakambuidi did Ed Galungu confront Bakambuidi no he didn't he only fired him quietly without confronting him without confronting him because Ed Galungu is not a confrontational person he's not a confrontational person he doesn't confront people he just fired Bakambuidi Bakambuidi what did Bakambuidi do? he went and formed NDC NDC they went to Kabushi Bakambuidi walloped PF walloped PF then you have a number of these back and forth with people Harikara for example Harikara these are the issues between Harikara and Ed galungu and Harikara ended up resigning and up to today most of them had resigned but they had issues did ed Galungu confront No in a panong dailand let me tell you in a panong dailand me who is talking you people who are busy me who used to talk with గలాలునీమునెల్లేనాడంంధిలోన్లునోయుతె. గలానునిటికీంత్ఱా. తమునాలునునీటా. భినున్ట్టినేటికీటిహా.aging didn't don't minute men people  forgot to show so many Hawks one is a వానినినాశqingవాసంవలాసంనిల౪నింగా మరానినిలాసంయాూయాచామానిల౾నిలానియాటాదిటి మరిలినినిసంరి ర౸ందికంటిటియాదూనింటానిని stärనింటరి�  Phill  Verantwort acağız  뽑 five list  Queensland  teaser bia いう哪 where If you want to remain in the dark, stay there. Me, I am out. I thought you wouldn't be there. So, I thought, if you want to, wouldn't be there is a nice man. He's a nice man and whatever, but really, he must also wake up. He must also wake up. Just like other PF members must also wake up. Then you must wake up. If you want to remain in the dark, stay there. If you want to remain in the dark, stay there. If you want to remain in the dark, stay there. You must also wake up. If you want to remain in the dark, stay there. Just like other PF members must also wake up. Stay there. Stay there. He used to force, he used to confront him, he used to talk to Muana Wasa from wherever he was used to talk. He was courageous to mention Muana Wasa, he was courageous to even call him names until they had to come together. What about HH? HH how long has he been in opposition? HH how he used to confront HH? He used to confront him, he used to confront him big time. It is no joke, HH do you see him confronting them? That day when they were cutting the gate, they were cutting the gate, he was inside, we were there, I was there. HH it took me and Make Bizuru and that guy Bukari to say no, no, no, boss e-mail e-mail. But no, no, no, don't go. But look how long it took before he came out. He was inside, how long did it take? But look how long it took for him to come out. And indeed when he came out, everything was sorted out. Everything was sorted out. If he had not come out, they would have cut that gate. It was me, I was there pushing him. Go, I was there pushing him. I was there pushing him. I was there pushing him. It was me, I was there pushing him.  Go out, go out. And that's how he went out. Look, what is this? They have been harassing him left, right and centre. Have you heard that kind of Ed Galungu coming out? Have you heard Ed Galungu coming out? Look at what happened to this man from Kenya. This man from Kenya, Uhuru Kenyatta. Uhuru Kenyatta, once they went to his house, they went to the mother. He came out gun blazing, facing them. Look at what happened to Ed Galungu. Nothing, nothing. Is that the character that can get presidency from what kind of each name? How kind of each name? After suffering all these years in opposition, after suffering all these years in opposition, you think you come and give power to a person who is not able to get your insight. Let's talk.  Let's have a press conference. Zuman, for example, let's talk about Zuman's case much. But when Zuman was arrested, and the issues and wherever it was going, it was pointing to Ed Galungu. It was pointing to Ed Galungu. I pushed. I even discussed this with Ed Galungu. I was pushing. Say something, come out. Say something. Nothing he couldn't. The only thing that happened, I was sitting here, there is a press conference. I was hoping it was him. I was excited it was him.  Who does that? Do you think he will come here, harass my children, harass my wife, and I let my daughter to come to start talking for me, and for my wife and for the family? Who does that? Who does that, let's be honest, who does that?  Who does that? If you cannot stand for your family, how can you stand for the nation? How can you stand for the nation? How can you stand for all these people? My only issue is that he is not a fighter. He is not a fighter, and you can't force him to fight. It is not his nature. It is not his nature. I was disappointed. That day I was very disappointed. I went there actually. I went and I... It's not that I have not expressed these things I am telling you. I have expressed to him directly. So, I was very disappointed. I was very disappointed. I was very disappointed. I went there actually. I went and I... I gave him directly Sometimes to Alekalafimabili if you are under express these issues. I express myself to say how could Tasila be the one to be talking? You should have been the one talking. Why should be Tasila the daughter be talking? When you are the father, you are there. Why? And indeed, I said it. I said this that at the rate at which we are going, I said it. I said it. I said it. I said it. I told them in the house, I told them that at the rate at which we are going I said it. I said it. I said it. It was coming. I said it. I knew that case was not over. I knew that case was not over. I knew that this case you have a purpose. It will come back. It will come back. You need to prepare when they will come back. You need to prepare. And indeed, they came back. And what did they do? My husband was inside. Just like I said it. I said it. And just like I said I said it. I said it. Of course I can't discuss in details what I said and whatever. Generally, I'm talking about the character. And even there, I'm done. Who were talking? He was just there sitting with other people coming. No. He should have spoken there. He didn't speak. I am glad at least okay. At least he refused to go. That is one thing that I appreciate. But even talking is a politician. He's a politician. He came out to come out and talk. The attention was on him. A politician if the attention is on you you would be shooting yourself in the foot if you don't talk. You have to talk. You have to talk especially when your friends create an opportunity for you. Use it. Nothing up to today he has said nothing about that. He has said nothing. My politics are my politics. And that case let me not even discuss the details of let me not go into that case. But surely that case requires a man to stand up a man to show character not what is currently going next like the way I go in Kumakotin like anybody else they will be going in Kumakotin like anybody else before you know it before you know it will be convicted before you know it will be convicted at the rate at which we are going at the rate at which we are going before you know it will be convicted in the image scene it needs character it needs character that case needs character by Edgar Rungu now if all these things that I'm telling you how can you talk that you confront to get power from you know what that means how can you hand over power to Edgar Rungu he can even hand over power to me than to Edgar Rungu I can assure you that he can even he would even rather hand over power to me or anybody else than Edgar Rungu there is a serious field how can he do that putting on my own muscles he knows that if I also lose power this is possible he knows he knows that if he loses power he can go to jail and he knows one person who will definitely take him to jail it's Edgar Rungu there is no doubt in him there is no doubt in him the mind of what kind he is he doesn't doubt it he knows it that if Edgar Rungu would come back he knows he's going to jail he knows he's going to have the worst than what he had when he was accused of treason he knows that so he you think you can do that it is not that it is impossible it can be done but it can never be done in the manner that what Edgar Rungu is carrying himself it can never be done it can never be done it can't but it can never be done just for him to be on the ballot just for what Edgar Rungu to be on the ballot cookawakandu cookawakandu just for him to be on the ballot next even if he is on the ballot mo ampera mavochi aweena haka mnda itchnema to give power hee... hee... mnolandak no Edgar Rungu he had no choice to give it is because of his character it is because of the character  muitos  엄 잖  LINKE  Пока  documentation of equiv соз lava  בךثر ետ...  अप पहल  अधा सग कि एज ा�esting high  अधा सग कि इस बे कि वगत聚ốn  अघ इस अप छौ भ पन्大家। The next minute is being arrested and whatever whateverぇ Tiaga is being thrown all over you think you can do that Stop wasting your time Stop wasting your time looking at what Edgar Chagualung He can't he doesn't have it in him He doesn't have it in him At least he would even fought for his family Just for his family, at least he would have fought if he's afraid to fight for his family  Advis.  Gad-gal Li-pado accordingly.  Too bad your family went the troughchih.  Too bad nobody's around.  Too bad they weren't very good.  Too bad was wrong. They know, some of them know that this cannot happen but they are cowards. They don't want to tell him the truth. They don't want to tell him the truth. Others are waiting that when the money will start coming, they will make money. I know, I can't mention who they are. But people who have said no. Apaaa Audi Two You know pushing This ধ� prix dudaстрой� prosperity ন্া� economies ইাইছ, crackers�జনజ ক�кий঳্ magnesium. spoilers  Breeze you think that will happen even in 1990 1991 it didn't happen like that it didn't happen like that kawanda was not removed did not go because of the riots no we had an election nicely and kawanda didn't just believe that zambians didn't want him at that point it is not the the the prices of whatever whatever which was kawanda no it is the overconfidence of kawanda which made him to say let's go for elections let's go for elections so that you see why that's what he was saying so that you see why it's a miracle and to his shock he lost the elections he couldn't believe it he couldn't believe it so don't expect that in zambia there can be a revolution or there can be this coup because others are even talking about coups forget it not in zambia that is not part of us we know the ballot abantu ala fuluwa you hear even people they say no we are upset hey but we are waiting time for us to talk will come we will go and talk we will go and talk they talk in the ballot they don't talk way through any other means that is zambian so that's to happen to change if they have to change any change of government it's in 2026 and in 2026 for we have to be on the ballot for pf le kenyuku iweb le kenyuku iweb abantu ala fuluwa and you have seen there are even examples there are even examples where is bama lanji where is bama lanji with all his money with all his support bama lanji has support bama lanji bala bapipaku kuwacha nivale saba malanji is a god in kuwacha where is he where is he in kuwacha where is he bama lanji what crime did bama lanji commit what happened what did the court say you saw this is an issue in statements which they are not supposed to issue making fake laws making first fake discrimination just to bar bama lanji naboma bama lanji presented paper one thing is that once hh says something beer is assured he is going that direction And this is something that I have liked, not in a positive way, but at least he says it. How can the HNM say it? This is the direction I am going. It's up to you to take it or leave it. Even when he was opening parliament, he said it. If we want to prosecute and persecute you, he didn't hide. And it's the truth. That's HNM. That's HNM. It's up to you to take it or leave it. Whether the law says this or whatever, HNM is ruling. HNM is in charge. And one person that he will not accept, like he has been saying it, he is saying it. It won't happen. It won't happen. Guys, it won't. You need Jesus Christ. I don't know even Jesus Christ will not accept it. He will not accept it anyway. Jesus is so high size that he will not give up. ᗢ ᗍ ᗡ ᗰ ᗗᗟᗦᗘᗝ ᗩ ᗧᗊᗮᗸᗟᗔᗗ ᗔᗼ ᗱᗵ ᗣ ᗤᗻ ᗽᗮᗼᗮᗉ창ии ᗑ ᗥᗮᗶ ᗴ ᗳᗱᗱᗿ ᗦᗲ ᗯᗠbras ᗈᗜᗬᗬᗬᗜ ᗀ ᗠᗱ ᗥᗜᗜᗬᗮᗭ ᗘ � か ᗔᗬᗬ ᗰᗜᗬᗯᗌ ᗧ�ᗿ ᗝᗼᗮ� like I've betrayed the Edgar Chagallungu whatever whatever some of you you are coming out like I've betrayed Edgar Chagallungu and I know even my Edgar Galungu might feel like that but I want you to know that if there is a person that you should appreciate it's me if there is a person even those people that you are eating with those people that you are eating with those people that you are chilling with I can assure you much as this information what I'm saying is seemingly bad I want to tell you that I am a better person I am a better person than those people that are around you because these people have actually been scheming from a long time from a long time after he lost power what did he do he went and resigned he went and resigned and there were people who were pushing that agenda to say Edgar Galungu is gone Edgar Galungu is gone Edgar Galungu is gone but Edgar Galungu did realize to say I think I've made a mistake he did realize he did realize that he made a mistake to to resign but he knows he wrote a letter to to cabinet so he has stayed quiet he has stayed quiet much as he wants that no one call me here and start saying no no no let no one call let no one call on that on that issue that's all I can tell you but Edgar Galungu is gone Edgar Galungu is gone he would have issued a statement he should have issued a statement yes he has been saying it in public he went to Chipata he said this he went to there was he was also interviewed he said same thing no I don't want and whatever whatever whatever that is a smoke screen that is a smoke screen I want to tell you this that is a smoke screen that is a smoke screen and coward is at the same time because really a person who is courageous you're supposed to face it to say here this is my position but but Edgar Galungu realized that say I shouldn't have resigned meanwhile Kupe F but more than today we're excited they wanted to take over they wanted to take over they started pushing the agenda of replacing him they wanted to push in the agenda of replacing him but some of us we realized why Edgar Galungu is still interested we realized and we thought to push away some of those people who had that agenda in a I pushed some of those agenda I even attacked certain people I even attacked them not because my Edgar Galungu told me to attack this one and that no but because I knew his interest I knew his interest and I went out for those people to make sure that you know that machination stops this is why today you can't talk about this general conference that you talk about how do you think that general conference was was put on ice how do you think that was put on ice and who was pushing the agenda for that who was pushing the agenda but we managed to stop it members of parliament today members of parliament today I mean I I was saying this is what I confronted the I can say this members of parliament are divided members of parliament contributed money for that convention to change the council for the constitutional convention they contributed money but everything is on ice everything is on ice and I'm sorry I have to say this is a gentleman he was calling me trying to convince me otherwise but but I mean do you even know that but they want to remove you they want to remove you I saw it in that kalimba kalimba wrote a story of how they want to change the structures and so on and so forth and whatever whatever and they want to remove it as the as a leader of opposition they want to remove it why because I mean they are seeing him as a as a threat they want they are seeing him as a threat and yet this man I mean this is a man that has been so loyal to Edgachagalungu so loyal the day that I realized to say why Edgachagalungu me once this I went to him I told him can you pull back and he accepted mundbina has been accepting all the time in lawyat in kurivalung lawyat in kurivalung he called me in the morning lawyat no lawyati lawyat finshi lawyat finshi mundbina wake up wake up the people that you are saying lawyat lawyat lawyat they're not lawyat to you they're not lawyat to you they want to remove you as the leader of opposition they want to remove you they want to embarrass you hey they want to embarrass you I mean I appreciate you have been very good really I really appreciate you have been very good to me but I want to tell you the truth in dad I just want to tell you the truth this is me telling you the truth those people that you are being loyal to they want to remove you they want to embarrass you and I don't know somebody told me it even came out given lubinda wanted to announce it the last time when he because some some of you they had a meeting by PF but a few days ago they are the meeting and given lubinda wanted to announce that he wanted to announce that but he saw the austerity of the MPs he saw the austerity of the MPs and that's how they changed their mind not not that I'm saying but given lubinda is whatever they but no no no no I have respect for given lubinda please I have respect I have respect for you I have respect for you are given lubinda I have respect for you I have so much respect trust me but the point is that you know there is machinations going on these machinations going on and the challenge which is there is that you just don't know where Edgachagonungu stands this is the problem you can't tell where Edgachagonungu stands is nankomito is one person that you talk talk talk talk but nankomito nankomito and that again frustrated me seriously because you'd say no this this this this let this happen let this happen nankomito a good example I can give you the appointment of this naka chinda as secretary gen this issue has been there from time in memorial appoint sg appoint sg appoint sg up to today they don't have an sg why don't they have an sg because having an sg would have helped even with some of these agenda but where Edgachagonungu has failed to move to appoint an sg why so you it's very difficult to really be sure where Edgachagonungu stands and what you do next you can't it's like a you know a gambler who is holding his cards very close to his chest you don't know which card is going to drop and for me I don't operate like that I don't operate like that ah no no I don't if we say Friday we are doing this it is that not Friday comes you have a story you shani you shani you shan party naka chinda is a good example that I've given and I'm said talking about this even a I didn't I didn't mention this couldn't couldn't couldn't run because even brand would brand was the the content he was in is he was in France he was in France but the moment that Edgachanungu came in he he stood by he stood by the side but with what is going on to a sg one word you can even be left out you can even be left out so that's straightforward you know so why was all these things has been happening why was all these things have been happening I have been facing uh court court charges the UPND has been coming hard on me UPND has been coming hard on me of course it is a government system they have been coming hard on me and as they have been coming hard on me I have not gotten the help that I should get looking at what I've been doing let's face it take you for but I've been helping massively I've been helping massively I have kept things I have brought things I mean I push a lot but what help do I get really when I am in those problems when I'm arrested when I'm arrested twice my wife had to borrow money twice twice my wife had to borrow money yes you come and see me muare tabredi about mutifungo baria shana shani but at the end of the day what about my wife when she's at home who is who is who is how is she surviving we survive on hand to mouth hand to mouth song of mutifungo ninshi yode walks tabredi tabredi she had to borrow money twice twice na fuma baria na uidef into pa no kirikit kirikit get my gate was not opening my security this house was completely open it was difficult nani mutifungo na fuma I had to sort out things here not that they didn't know I was telling them please na papa to help me with this please help me this now we will see now we will see now we will see I ended up borrowing money from ffl that kayan came from america I borrowed 15 000 quads to sort out the gates and fix the I mean some of the things which were broken because I was completely open completely open and it's not that people didn't know they knew I became so vulnerable to a point of of soldiers coming here and I didn't get that help I didn't get that help I went to borrow money and to be honest from the time that I borrowed money I've never had a 15 000 quads for me to pay her I haven't even had money for me to pay her but next thing kusam fwatiya honestly I mean let's us be real let's us be real you think of it and yet really I mean let's be real come let's be real let's be real let's be real somebody got stuck kaisazuru was inside there the wife was struggling and whatever whatever when he got borned somehow money came out I mean what's that what's that so when you're pointing fingers at me come on think twice think twice think about yourselves first of all how have you treated chilufatairi how are you conducting your business when chilufatairi na yoku na sumka ane were dapu ane were dapu na is sumka ima mo akutsi pata vali pusha at no in am not and I want now they come back what's happening and you hear what he said I reckon SG SG takudi come on and you think you can get power like that you can't get power from a kind hdm you can't so in a way this is why now I have changed I'm standing on my own I'm talking like this not for a kind hdm I'm not talking for a kind hdm I'm not talking so that my cases can be can be with you no I'm just standing on my own I've pushed agenda for people and firstly they don't act accordingly they don't show me confidence Vaed Galungu doesn't give me confidence that we can get power from a kind hdm if he was if he was a kind hdm let's go we will win we will push it but not Vaed Galungu no and then on top of that not being so straight because sometimes you can fight you fight you fight you get into power by sir push up on a push we will understand it is very possible so I am way besides I'm becoming vulnerable vulnerable and highly exposed to these cases and really the support that I have gotten is not the support I can rely on I can't rely on this support you know when you have got good support sometimes I can be in jail but if I know that my family is being looked after properly you know some of us I'm that kind of a person I wouldn't mind going to jail if I know my family is okay it's okay I'm not in jail I'm not in jail I'm in woodlands police station and my wife is stuck what about Ivanka and a good example look at also Zuma Nizimba look at Zuma Nizimba but but it was different why is it different why was it different why not so even me I'm thinking because you can't tell me that look at me I'm mobilizing and people have started meeting in different parts of the country the other day I was in the office you know we are meeting here we have a meeting we want to I didn't have money I didn't have money I called somebody I called somebody please help me with so much help me with the one five and somebody looked around and gave me one five if me I can mobilize what about I'm not in jail I'm in jail 15 people in jail 15 people in jail 15 people in jail I mean I still have a lot of issues that need to sort out 15 people in jail I mean can you tell me how I'm in jail how I'm in jail and I'm saying this not to expose Balungu is to help him ǃ ʶ ʰ COMM ʚİ ʲ switched ʲ Rĭ uku ẓr ʲm li ʲm liew ʲm ʻeɪ dʲr ʲm ii tʲrge Treaty ʲrther nʲi m poolsw y씨 ʲm l dunno ʲm lเลย dʲr re�ht niʲg PDF ʓm jə stars Bi ʰr Kl rend ʲmjê b çee Most Look after them, please. Look after them. You can't be neglecting people like that and when things go bad and you expect them to jump, you expect them to go with you to my police, you expect them to speak for you. Come on, no. It doesn't work out like that. It doesn't work out like that. And you are the former head of state, you can't tell me. In a natural friend next to organize one, five Nantumina Avantu. I will like what I'm meeting. What about you as a former head of state? Let's just be real. Let's be real. So in, you can say whatever it is, but at least I say it as it is. Temus aluna, teku chita eksposi finshi, but just the way it is, ba lumute tyvapuki pawa kudi haka indi ichi dema teit. So I'm standing on my own. And as I'm standing on my own, don't expect me to speak for you. You don't expect me to speak for you. Don't expect me to speak for anyone. No. And I will say things as they are. I will say things as they are. I will not favor you. When somebody is your friend, you know. You come out in a certain way. But when you're not friends, you just come out straight away. When you are careless, you are alarming the nation to say the president is going to dissolve parliament. At now, I was talking about what about resign. Some people have been calling him to resign. There are two different things. When you say the president must resign, and when you say the president is coming to dissolve parliament, these are two different scenarios. I can say it. Let the president, I can say it before. But if I'm going to say he's going to stop government, he's going to dissolve government, I mean that is a serious issue. That's a serious issue. That's a serious issue. At now, I was not saying that they should give me a call out. What were you saying? It is on video. It is on video. You said it. Why can they send a call out to me? And you want to make it like Bakapokola, they have an obligation to send a call out. It's not a law to send a call out. And yes, the members of parliament, they protected you on parliament grounds. But the fact is that if it is a criminal matter, they can arrest you from anywhere. A criminal matter, they can arrest you from anywhere. Even in parliament, they can arrest you if it is a criminal matter. Unless what you say within parliament, that is different.  Parliament is not a refuge for criminals. If you have committed a crime, no. No. So, I'm sorry. I'm sorry for me. The police were not wrong. And I'm not saying this because it is just what it is. The police can arrest you on parliament grounds. And what Munia said, it is wrong. It is alarming the nation. It is alarming the nation because you also encourage Munia Zulu to go astray. You will worship the young man even when he has done something which is wrong.  He is courageous. No. Courageous is not doing something wrong. No. When you are saying something that is responsible, that is not being courageous. Ok, if you are courageous, be ready to go to police. Don't start running away and start making excuses in the parliament. You are marching to me and call out. No, they wanted to abduct me, abduct me. Come on. Let's face it. But at the end of the day, we know where they take us. This is Zambia. Even some of these ways, they are abducting, abducting, abducting. Why do you want to create things which are not there? Abduction, abduction, abduction. Muzambia abduction. When we say that we are not going to go astray, we will go astray. We are going to go astray, we will go astray. We are going to go astray, we will go astray. We will go astray, we will go astray. So, come on. Of course, the police should conduct themselves more professional. More professional, that is for sure. But come on, let us not create laws for our convenience. No, let's not create laws for our convenience. And truth be told, what happened in... It brings me to this issue of now. Vālungu attending Yama Cheichi and whatever, whatever. Come on, let's be realistic again. Let's be realistic. Let's be realistic. Vālungu is not going to those churches to pray. He's not going to pray, he's going there to campaign. He's going there for politics. This is politics. Let's be honest. And that's what I can tell you. Be courageous. Just be courageous. Come out even the campaigner. I want to contest 2026. Not for my reputation much age. It's not right. And we should just say it as it is. We should just say it as it is. Let us not pretend that you're going to church to pray. If you're going to church, you're not going to church. I go to church every day. Every day I go to church. Every day I go to church. Have you ever seen me going with the... ... Do you see me doing that? I go to church quietly. I pray. Hmm? I even spoke to Bahadankale. I even spoke to Bahadankale today. He told me, oh no, I'm going to church. Did you see him in my camera? He was afraid of me. Did you see that? Because for me you can say no. Because you don't have members. But I'm afraid of members. Do you see him going to church? We should stop this behavior of women politicians in Mozambia. You should stop it.  And I'm going to... I'm a papaz. I'm a reverend. You are also very political. You don't call these people to come and pray.  Stop it it is wrong and you are only fooling yourself and those other people, zambians, want naive otherwise we can see it you don't have the courage to come out have the courage, yes nd can public order nd toughen the challenge then We want to hold a meeting and talk politics. We want to have a meeting. We want to do this. I want to challenge people Not to cover them in a match age. So this is me now Saying things as they are. I think in a move. Let me open phone calls. You can call in power sub now Power sub don't call direct call Call power sub