Massive Economics Thread

[-Z-]

These 2 huge finance companies will soon be taken over by the US government.

between the 2 they hold 1/2 the mortgages in America.

this will be the biggest government bail out in US history.

Taxpayers (of the future again, your children, and theirs, th same peole paying for Iraq)

will pay another 1/4 - 1/2 Trillion for this.


Z

[FriM46]

Thats the U.S. government for you, I believe they'd do somethin like this, but just for the record could you post your source?

[KLL]

These 2 huge finance companies will soon be taken over by the US government.

between the 2 they hold 1/2 the mortgages in America.

this will be the biggest government bail out in US history.

Taxpayers (of the future again, your children, and theirs, th same peole paying for Iraq)

will pay another 1/4 - 1/2 Trillion for this.


Z

they don't hold em.. they guarantuee them. at least thats supposed to be their busienss model.



as for scource, its allover the news. hard to miss.

[FriM46]

they don't hold em.. they guarantuee them. at least thats supposed to be their busienss model.



as for scource, its allover the news. hard to miss.

Really? I keep missin it somehow then, I'll pay more attention next time =/

[KLL]

watch bloomberg or some real news channel

[Tnova]

Z, i don't want to say you can't post your opinion, but really, you look for the bad in anything dealing with the US. You got to understand that it gets tiring reading the constant bombardments of threads. Now it is a problem, but it isn't so much linked to the republican party as you seem to be hell bent on laying blame for everything wrong in the world.

In my opinion the present credit bubble was created by Alan Greenspan, the man who was so lauded and praised during the Clinton years and so many Democrats seem to have steamy dreams about.

Alan Greenspan reign in the Federal Reserve was responsible of the Dot Com bubble and the present Credit bubble. Probably two of the largest pops over the Feds time with the exceptions of the 1929 stock market crash.

This didn't just start last year, this is a by product of low interests rates, and slow reaction by the FED to raise them during good times. Which managed to produce this highly leveraged products. In some cases only 5% assets versus 95% of debt. So if something went down in value as much as 5%, the loan basically had no collateral against it and was worthless paper. Because debt was so cheap, and interest rates were so low, they could do this and make huge sums of money. The US just didn't benefit from this these products are around all over the world. Foreign governments were in love with these same high yield products as well.

Most mortgages from pre 2003 are in decent shape, home values go up and down, but it doesn't matter till it recognizes by a sell. Market prices have fallen, but they had risen quite a lot in the last 5 years to, so it is a normal adjustment. And welcome for many people trying to buy houses in Florida, California, and Texas.Now these market adjustments in the hottest markets have threatened some morgage companies capitalization as they have to mark them to market and recognize losses even though nothing has changed with the mortgage.

The problem has been cheap money and a change in the way loans have been sold. Use to, the bank made the loan and held it. Now they just issue the morgage and then it gets sold and bunched in a bunch of other large loans to be sold over the market. Now they think they are all a certain credit rating, but they have no clue.

Now there are alot of variables i could go on and expand on, but this is the basics

[KLL]

In my opinion the present credit bubble was created by Alan Greenspan, the man who was so lauded and praised during the Clinton years and so many Democrats seem to have steamy dreams about.

Alan Greenspan reign in the Federal Reserve was responsible of the Dot Com bubble and the present Credit bubble. Probably two of the largest pops over the Feds time with the exceptions of the 1929 stock market crash.

i completely agree. i still don't know why so many people orgasm whenever greenspan speaks and treat him like he's buffet.
he and bernake are both rather incompetent.

This didn't just start last year, this is a by product of low interests rates, and slow reaction by the FED to raise them during good times. Which managed to produce this highly leveraged products. In some cases only 5% assets versus 95% of debt. So if something went down in value as much as 5%, the loan basically had no collateral against it and was worthless paper. Because debt was so cheap, and interest rates were so low, they could do this and make huge sums of money. The US just didn't benefit from this these products are around all over the world. Foreign governments were in love with these same high yield products as well.

Most mortgages from pre 2003 are in decent shape, home values go up and down, but it doesn't matter till it recognizes by a sell. Market prices have fallen, but they had risen quite a lot in the last 5 years to, so it is a normal adjustment. And welcome for many people trying to buy houses in Florida, California, and Texas.Now these market adjustments in the hottest markets have threatened some morgage companies capitalization as they have to mark them to market and recognize losses even though nothing has changed with the mortgage.

The problem has been cheap money and a change in the way loans have been sold. Use to, the bank made the loan and held it. Now they just issue the morgage and then it gets sold and bunched in a bunch of other large loans to be sold over the market. Now they think they are all a certain credit rating, but they have no clue.

Now there are alot of variables i could go on and expand on, but this is the basics

yup, under greenspan the amount of M3 money circulating increased from 3.6 billion to over 10 billion USD. meaning he almsot trippled the amount of money going around, while the actual value of the US economy grew at a much slower pace.

msot of the US' economic grwoth in the last decade or two is due to the FED simply throwing moeny at it.
last time we did that in germany, we called it hyperinflation.

[-Z-]

i completely agree. i still don't know why so many people orgasm whenever greenspan speaks and treat him like he's buffet.
he and bernake are both rather incompetent.


yup, under greenspan the amount of M3 money circulating increased from 3.6 billion to over 10 billion USD. meaning he almsot trippled the amount of money going around, while the actual value of the US economy grew at a much slower pace.

msot of the US' economic grwoth in the last decade or two is due to the FED simply throwing moeny at it.
last time we did that in germany, we called it hyperinflation.

I too agree with Tnova... And I did not mention the republicans in this...

The democrats are not my fav group of people wither...

I'm not usually a negative person... just when I See negative things I will not try to pose them, as neutral or good..

And these are important matters, all citizens of Amerika, and North america should be concerned.

I could get angry at everyones ignorance of these real issues, but I do not... Maybe If I had children I would be a bit more testy.

Z

[Mwahahahaha]

Banking is about the capitalization of gains and the socialization of losses.

It happens again and again and again and again. The business of banking is making great profits over a short period of time and then lose it all by taking too much risk pretending they've done a good job. Before the crack, the financial sector in USA took in one third of the profits of the corporate sector which is simply stupid.

As said before, Greenspan ****ed up, and he even had the nerve to critizice what happened afterwards. Greenspan's prolonged low interest rates created the housing bouble, and the old bastard still have the nerve to run around the world charging tons of money speaking about why we have a crises today.

[-Z-]

Ali brought this to my attention today, he is studying Finance in school, I found this quite disturbing, but not surprising.

the 1st of many I suspect:



Lehman Brothers Holdings Inc. (NYSE: LEH) (pronounced IPA: /ˈliːmən/), founded in 1850, is a crisis hit[1] global financial-services firm. The firm does business in investment banking, equity and fixed-income sales, research and trading, investment management, private equity, and private banking. It is a primary dealer in the U.S. Treasury securities market.

On September 15, 2008, it filed for Chapter 11 bankruptcy protection[2] listing bank debt of $613 billion, $155 billion in bond debt and assets worth only $639 billion.[3] The filing is the largest bankruptcy in US history. [4] Until the bankruptcy procedures are completed, the company is still in existence.


Lehman Brothers (LEH) shares tumbled 80% in U.S. pre-open trade. Macquarie Private Wealth associate director Marcus Droga stated: "You've probably seen more in one day of financial history than we've seen since the great crash of 1929. I'm not suggesting the US market will crash tonight, but in terms of landmark events, it's an historic day."


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Stop wasting money in Iraq.

Z