Who caused the current US economic crisis and how?

[IntruderLS1]

Oh good. Thanks for getting partisanship out of it, and bringing the facts Tim. Well done.

 

[Fox Mulder]

I can understand your viewpoint, but I think that I am more of the opinion that I work hard to get further than someone that isn't as fortunate and it is my civic duty to help them through their tough times. I believe that charity is good for the soul and while some abuse that charity, others (probably more) truly appreciate it.

That's great--but government shouldn't be involved in "charity" directly because they waste it all. Set up the system so that it encourages private chairty, not government charity, the latter of which is an oxymoron if I ever saw one.

 

[Fox Mulder]

Oh good. Thanks for getting partisanship out of it, and bringing the facts Tim. Well done.

LOL! Really--Tim asks for "non-partisanship", then he posts the most partisan video he can find!!! :24:

 

[Fox Mulder]

The answer to this is fairly simple, its forcing "politically correct" loans rather than financiall correct loans down the throats of financial institutions. Its primarily liberal politicans' fault (and they fuck up everything when it comes to the economy) although the Bush Administration bears blame as well for pushing low income home ownership. This is the result whenever government tries to socially engineer anything--they fuck up the economy. People want more of this stuff, keep electing liberals.

One good thing that will come out of this is we wil be done with liberal bullshit programs to get poor people to own their own homes. Way to go liberals--government housing wasn't enough of a fuck up, so they had to come up with government housing through the back door by forcing lenders to give loans to people who couldn't afford them!

 

[BadBoy@TheWheel]

Next step:

Rather than giving 700 billion to the failed banks and mortgages out there, they should evenly distribute that 700 billion to pay down the principles on the current and in good standing mortgages in the US, you know help those of who "did it right".

Talk about stimulating the economy....Imagine 90% of the American people waking up one morning to realize the principle on their homes has dropped 25%, I guarantee they would spend a little more and maybe even borrow a little more, but still do it wisely.

Giving 700 billion to the failed loans is under the assumption that EVENTUALLY, the government can turn a profit to pay off the bail out, if that were true, we wouldn't be in this position in the first place. If the banks were loaning money wisely, they would have recouped a little ROI (return on investment), but the fact is, they all knew the loans were built on shifting sand.

Next case in point from my personal opinion: Yesterday the market made up more than half the previous days losses (well over 600 billion dollars returned to the market yesterday ) This tells me there is restored faith in the MARKET, not he government like what some are saying. All the political blowhards are claiming that it is on the wings of congress passing the bail out bill, I say bullshit, here's why:

It's not a linear equation, and I know it HOWEVER, with all the banks that have failed, here's what you have accomplished.....Ready for this......The economy has made the banks that have survived more powerful, there's more money in the system for them, less banks to distribute it through, and a little less competition, if they aren't holding a lot of bad "paper" then they will have a larger capacity to loan money, with less banks sharing the benefits.

My feeling is that is why the market surged, and I mean it opened up 100+ points from overseas trading and after hours trading, the central banks have plenty of money, in fact they are holding money, banks are not lending other banks money, so my thought is that once the smoke clears, and the bodies float to the surface, banks will cautiously go back to full speed, and the big sharks will eat the bodies, leaving some restored faith in the markets again.

Perhaps this will be a good signal for manufacturers of consumer products, the lesson is don't act like it's gonna last forever, maybe you should drop your fucking prices a little, and work on the principle that VOLUME is what makes money in the end.

 

[Tim]

Oh good. Thanks for getting partisanship out of it, and bringing the facts Tim. Well done.

Do you not get my point here? The partisan bullshit can be thrown back and forth all day long and we still won't be any closer to the true cause. That's the real problem, both sides playing the blame game. Everything I have found so far is pushing the blame on one side or another.

So I ask again, Does anyone have any good information on the real cause of this mess?

 

[BadBoy@TheWheel]

Do you not get my point here? The partisan bullshit can be thrown back and forth all day long and we still won't be any closer to the true cause. That's the real problem, both sides playing the blame game. Everything I have found so far is pushing the blame on one side or another.

So I ask again, Does anyone have any good information on the real cause of this mess?

One of the biggest issues was the purchase of large mortgage securities "bundles" by Fannie and Freddie, essentially when they purchase these bundles, they do so under the assumption that if the market is strong, the good solid mortgages will outweigh the ones that eventually go into default.

In this case, it didn't happen, when you have two out of ten in default it isn't a big deal if the securities are being invested wisely and the market can bear the losses, when you up that ratio to 4 out of ten, you can see the issue, the market has to bear that more of a burden.

That's one of the big contributors, failing securities ina market that made a lot of heavy hitters skeptical.

 

[BadBoy@TheWheel]

More to come, I have to sprint to a meeting

 

[BadBoy@TheWheel]

Bear in mind of course that Freddie and Fannie invest in the SECURITIES that back the mortgage market, so basically it's paper we're talking about, and they blindly buy these bundles from any number of lenders that are looking to shift assets.

It's like buying a car with a blindfold, they really have little idea what the future holds for the paper, they bet on the come line, you lose some you win some.

In the typical market, but with un-employment growing, the economy slowing, and housing going into the tank, there wasn't enough confidence in the markets to justify people backing the securities, coupls that with an all time high default rate, and your setting the stages for disaster.

 

[Strauss]

Who caused the current US economic crisis and how?

Minor Axis did. (I'd put a smiley to indicate that I'm joking but then Minor would post this long rambling discourse that, generally, constitutes whining, teeth gnashing and general diarrhea of the mouth.....so no smiley.....even though I'm joking.)

Mulder did.

 

[IntruderLS1]

In this case, it didn't happen, when you have two out of ten in default it isn't a big deal if the securities are being invested wisely and the market can bear the losses, when you up that ratio to 4 out of ten, you can see the issue, the market has to bear that more of a burden.

This is one of the things that ticks me off about this "crisis." Most people think that 2 in 10, or 4 in 10 households are going under. This simply isn't the case. We're looking at between 0.1% and about 4% (in SoCal and Florida) of homeowners going into default.

In business school, they teach you to generate a crisis in order to move a plan of change. I see this as a manufactured crisis. I smell a rat here, and it's a big one.

The banks are tightening up because they want to sell their devalued items are a bargin to taxpayers. The Dems love this because it puts government in the middle of the market, and the republicans like it because big business is the winner here.

This thing is B.S. from top to bottom. Mark my words.

 

[BadBoy@TheWheel]

This is one of the things that ticks me off about this "crisis." Most people think that 2 in 10, or 4 in 10 households are going under. This simply isn't the case. We're looking at between 0.1% and about 4% (in SoCal and Florida) of homeowners going into default.

In business school, they teach you to generate a crisis in order to move a plan of change. I see this as a manufactured crisis. I smell a rat here, and it's a big one.

The banks are tightening up because they want to sell their devalued items are a bargin to taxpayers. The Dems love this because it puts government in the middle of the market, and the republicans like it because big business is the winner here.

This thing is B.S. from top to bottom. Mark my words.

Those numbers aren't based on fact...They are simply an example of how defaulted mortgages can impact the market

I personally think the bail out is B/S

 

[Tim]

I also see this bailout as complete B/S... but we are in a situation where something has to be done.
When the fed came out and painted a very vivid picture of our economy collapsing, it became a self fulfilling prophecy. The moment he publicly opened his mouth, we were committed to the bailout. But I think that was the plan from day one.

 

[Fox Mulder]

I also see this bailout as complete B/S... but we are in a situation where something has to be done.
When the fed came out and painted a very vivid picture of our economy collapsing, it became a self fulfilling prophecy. The moment he publicly opened his mouth, we were committed to the bailout. But I think that was the plan from day one.

Agreed--the Great Depression was pyschological primarily.

I would like to be "bailed out" myself! I'm not behind in my mortgage, I just don't feel like paying it anymore!!!

 

[BadBoy@TheWheel]

I also see this bailout as complete B/S... but we are in a situation where something has to be done.
When the fed came out and painted a very vivid picture of our economy collapsing, it became a self fulfilling prophecy. The moment he publicly opened his mouth, we were committed to the bailout. But I think that was the plan from day one.

I see all the banks that are left after the debacle....

Merging into.....THE WORLD BANK...Muahahahahaha:willy_nilly:

 

[Minor Axis]

Great article in Newsweek on this subject- The Monster That Ate Wall Street.

They're called "Off-Site Weekends"—rituals of the high-finance world in which teams of bankers gather someplace sunny to blow off steam and celebrate their successes as Masters of the Universe. Think yacht parties, bikini models, $1,000 bottles of Cristal. One 1994 trip by a group of JPMorgan bankers to the tony Boca Raton Resort & Club in Florida has become the stuff of Wall Street legend—though not for the raucous partying (although there was plenty of that, too). Holed up for most of the weekend in a conference room at the pink, Spanish-style resort, the JPMorgan bankers were trying to get their heads around a question as old as banking itself: how do you mitigate your risk when you loan money to someone? By the mid-'90s, JPMorgan's books were loaded with tens of billions of dollars in loans to corporations and foreign governments, and by federal law it had to keep huge amounts of capital in reserve in case any of them went bad. But what if JPMorgan could create a device that would protect it if those loans defaulted, and free up that capital?

A pretty good description how banks invented a mechanism, to unload their cash reserves safety net intended to cover bad loans and how AIG volunteered unknowingly to take it in the shorts. The mechanism is called - "credit default swap". Great article.

 

[BadBoy@TheWheel]

Great article in Newsweek on this subject- The Monster That Ate Wall Street.



A pretty good description how banks invented a mechanism, to unload their cash reserves safety net intended to cover bad loans and how AIG volunteered unknowingly to take it in the shorts. The mechanism is called - "credit default swap". Great article.

Here is the argument I have with that, I don't think AIG didn't know I think they saw a short term opportuity to make huge money and got greedy.

I don't think they were mis-led at all

 

[Minor Axis]

Here is the argument I have with that, I don't think AIG didn't know I think they saw a short term opportuity to make huge money and got greedy.

I don't think they were mis-led at all

I agree with you. I did not mean to imply AIG was misled, I ment they only saw the imagined up side, not the possible down side.

 

[BadBoy@TheWheel]

I agree with you. I did not mean to imply AIG was misled, I ment they only saw the imagined up side, not the possible down side.

Then I concur Totally.

If the FTC actually starts pulling short call tickets and trending what was happening, some of these hedge fund (modern junk bond dealers) big wheels are going to prison.

They have a knack for seeing the end, but they can't keep their little hands off the pile of chips in the center of the table..