Are we in the middle of a financial meltdown?

1,054 posts in this topic

 

Cinzia, why not have hubby go somewhere like Sharebuilder and open an investment account. He can pick the stocks and invest as little as $50 a month, it's a sensible way to invest and supplements savings really well.

DId I really use the word "Hubby" in a sentence? My God, am I catching the Gay or what? I've never used that word before.

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And this time the bailout bill has passed in the House - 263-171.

 

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CNN: Oct 3, 2008 - The House of Representatives has approved a $700 billion bailout of the U.S. financial system. The vote was 263-171. The dramatic vote came five days after the House stunned Washington and Wall Street by rejecting the administration's proposed bailout. That sent the Dow Jones industrial average down 777 points -- the largest single-day drop ever.
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I believe this clip has been posted before on TT, but in light of this topic, I think it bears another look.

 

George Carlin delivered this monologue a couple of years ago when privatization of Social Security was being pushed but it certainly speaks to today's issues.

 

 

Now that's gospel, thanks for that.

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Here is a comment (with which I totaly agree) copied from a website called the Huffington Post about the $700 billion handout to fat cat Wall Street financiers:

 

The unemployment rate will still increase, growth (what growth) will still remain anemic, house prices will continue to fall, the number of houses in foreclosure will continue to rise, credit will be harder to get, states and localities will remain in a fiscal crisis, and there will be cutbacks in basic public services. ... Our living standards in the future will be lower than they otherwise would have been.

 

So why oh why give those bastards the money? Could it be Georgie felt sorry for his buddies.

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So why oh why give those bastards the money? Could it be Georgie felt sorry for his buddies.

The Democrats have controlled the Congress for the past 2 years and hence, the budget and the the spending...now that we've got that straight...

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Deutsche Bank just figured out that it would cost a lot more (100 instead of 35 billion to the end of 2009) to keep the german HRE alive. They declined to be involved - therefor the bailout plan has failed. What kind of bank (Im referring to HRE) cant figure out, how much money they will need to pay their debts? Or did they just hope that if they had the promise for 35 billion, they could blackmail the taxpayer to pay for the rest too? If they cant sort it out this weekend, we´ll probably experience a very interesting Monday at the stock exchange. :angry:

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The Democrats have controlled the Congress for the past 2 years and hence, the budget and the the spending...now that we've got that straight...

but he credit crunch was beginning to bite before they gained control of the House. How do you explain that?

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the subprime mortgage problem in the USA, which ultimately triggered the credit crunch, was underway before the Democrats had majorities in the House.

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Subprime mortgages are actually an expansion of credit (albeit usually a less than optimal one) and are definitely not consistent with a credit crunch, BTC. Nor was there any credit crunch beginning prior to the Democratic takeover of Congress in 2006/07 (which is anyhow a totally unrelated matter). Subprime mortgages have been around for a long time- certainly before the Republican takeover of Congress in 1994/95.

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What kind of bank (Im referring to HRE) cant figure out, how much money they will need to pay their debts? Or did they just hope that if they had the promise for 35 billion, they could blackmail the taxpayer to pay for the rest too?

One possibility is that the 35 billion were their short-term funding shortfall, whereas the 100 billion are more towards mid-term (the latest press release says something about needing the money some time in 2009, as opposed to the more or less immediately required 35 billion). So maybe they were hoping that "normal" refinancing possibilities would reopen a few months down the road. The thing is that just about every bank is engaged in Fristentransformation (i.e. transforming short-term deposits into longer-term lending), so if funding dries up for whatever reason, most banks would become illiquid. Having said that, 35-100 billion mismatch does sound like a reckless sort of gamble.

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Subprime mortgages are actually an expansion of credit (albeit usually a less than optimal one) and are definitely not consistent with a credit crunch, BTC. Nor was there any credit crunch beginning prior to the Democratic takeover of Congress in 2006/07 (which is anyhow a totally unrelated matter). Subprime mortgages have been around for a long time- certainly before the Republican takeover of Congress in 1994/95.

look the US housing bubble burst in 2005 leading to a massive increase in defaults over subprime mortgages. It is that level of defaulting that led to the interbank loan system breaking down and hence the credit crunch. This is textbook stuff Conqy and it had nothing to do with a Democrat dominated House no matter how you might want to spin it.

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As usual, BTC, you are wrong on something, in this case your timing. The Case-Shiller index did not begin falling until the second half of 2006 (and not in all parts of the US) and mortgage lending remained strong into 2007, when lending tightened up.

 

but he credit crunch was beginning to bite before they gained control of the House. How do you explain that?

As for your mistaken claim of a spin, please note that I pointed out above that the Democratic takeover of Congress was totally unrelated to the subsequent credit crunch.

 

Subprime mortgages are actually an expansion of credit (albeit usually a less than optimal one) and are definitely not consistent with a credit crunch, BTC. Nor was there any credit crunch beginning prior to the Democratic takeover of Congress in 2006/07 (which is anyhow a totally unrelated matter). Subprime mortgages have been around for a long time- certainly before the Republican takeover of Congress in 1994/95.

BTC, you are all too often shown to be mistaken about what you state about my posts, in large part because you do not read them carefully.

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I think those trying to make this out to be specifically the fault of one or the other part yin US or UK or wherever are being a bit naive.

 

I mean isn't part of the problem the low interest rates that came in after the dot com bubble burst (which was in 2000)

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I mean isn't part of the problem the low interest rates that came in after the dot com bubble burst (which was in 2000)

Not really. The problem is that the banks/government or whoever you wanna blame made credit far too easy to obtain.

 

I actually *personally* don't even think you can blame the populations that accepted this credit, as we are pretty much known to be ignorant greedy sheep, so if the

credit is dangled in our faces we take it. This was known by the banks and governments.

 

The governments permitted it because under the usual 5 year voting patterns they do not want to do anything to slow down an economy or remove

the "feel good" factor for the punters. They only care about getting voted back into power.

 

The banks permitted it because they are so big that no single person ever really takes the can when it goes wrong. So they just take the extra

profit in this month's pay packet and wait for the shit to hit the fan. They only care about short-term profits.

 

So if the UK and USA banks/government had been more like German and French banks with their lending, this whole buggery mess would never have happened.

Actually the German and French people have a more responsible attitude to credit, but not sure if that is a cause or effect.

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The credit problem we are facing now is nothing but a result of the fraudulent derivatives game which was played over the last decade.The sub prime mortgages problem was just the spark which caused the whole house of cards to collapse. People were warned for years and whoever wanted to hear is/was prepared for the calamity. Now we have 2 choices, inflation of immense proportions or a hurting depression. Question is which is the lesser of the two evils?

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