There's been a lot of mis-understanding on a variety of thread about the meltdown, so lets sort it our here. Lets start off by saying this was the ultimate comedy of errors and we can probably go back a very long long way in time. 1. Dotcom bubble bursts. The Fed lowers interest rates to around 1%. 2. With no where for large investors to invest, they move to housing. 3. After a while of this cash cow churning out massive profits, the market is saturated. 4. Lenders start to make increasingly risky loans, resulting in pretty much anyone with an OK credit rating getting a loan, regardless of savings or employment status or income level. http://www.nytimes.com/2011/12/01/opinion/kristof-a-banker-speaks-with-regret.html?_r=4 5. The lenders were not stupid. They knew this was going to blow up in their faces, they needed a get out plan and that get out plan was to wrap up these loans into AAA loans, hiding them them from view. 6. The loans were sold all over the world, on the premise that they were secure. 7. The inevitable happened and the lenders stopped paying their mortgages. 8. The ripples of non-payments went around the world. 9. Banks around the world suddenly realised that they did not know how much subprime debt they owned. 10. Banks around the world suddenly realised that they did not know how much subprime debt OTHER BANKS owned. 11. Banks stopped lending to each other. 12. Banks lend to other banks, without this, the entire global economy stops functioning. 13. Countries such as Greece were greatly impacted, as their cash flow relied too heavily on lending and repaying banks. 14. Countries like Greece have their rating cut, meaning that they now have to borrow at a higher rate of interest, making their problems more difficult to resolve. 15. If a country like Greece stops being able to pay its debts, the countries they owe money to, lose a source of income. A source of income that they use to pay their debts. 16. If just one of these dominos falls, it will affct multiple other countries. 17. These other countries may not be able to pay their debts. 18. Loop to step 13. 19. This impacts us all. Europe and the US and Canada and Australia and NZ etc... We should stop throwing mud at each other and ask some fundamental questions of the current state of the global monetary systems. Does this system serve us as well as it should? Does this system provide a framework for normal people; working and middle class, who want nothing more than to go to work, earn a decent days pay for a days work. Save, send kids to school and collage and then retire with a moderate lifestyle. I would say no. I would say the current system does not serve the masses.
All is well and good now though, since the Bilderberg controlled Federal Reserve will now be printing money for European Union and Japanese bankers and loansharks. Trilateral Commission plan in action. New law passed by Congress, thanks to John McCain (R) and Carl Levin (D) will instruct US citizens to accept this adjustment, by using Military to interrogate dissenters at undisclosed places, for an indeterminate period of time, without access to lawyers. WELCOME MY COUNTRYMEN to the NEW WORLD ORDER!! Hope to have some enlightened discussions with many of you at the detention facilities (that is if they do not decide just to shoot me first). 2+2=4 NO! You do not understand... try again and follow: 2+2=5. REPEAT: 2+2=5, 2+2=5...
Hmmm....I read it twice. 19 items on the "list", and no mention of the culprit.... central government intervention in the private sector lending industry to socially and economically engineer "the American dream of home ownership" to previously unqualified borrowers. Not a peep about Fannie Mae or Freddie Mac. Not surprising considering the source... as progressive leftists/marxists/socialists/communists are loathe to lay any blame for this economic meltdown at the feet of their God, central government... because such is the only entity on the planet that can continue installing and enforcing their confiscatory/redistributive, outcome based social "justice" agenda. For additional proof, look where leftist OWS protesters were NOT directing their angst and ire, and read their list of demands.
I believe in simple analyses and solutions wherever possible . So what is wrong with the present system? ( System NOT practises ). I contend nothing much is wrong . The comedy as you put it , but the unmitigated tragedy that I think it is, are caused by lack of transparency and basic failures in strict , truly independent regulation WITH all embracing powers for punishment of infractions . What have I missed?
Absolutely. There is no one culprit. As I said at the very start, we could go back a very long time and this is a comedy of errors. Yes, it would be nice and handy to blame one party or one individual, but this is not the case. As usual in politics, the political parties say what they need to say, as they view their jobs as keeping their party/side in power. They do not see it as doing what's best for the people.
If you want to nail it on the head - greed. But in this period of time we've seen the advent of the computer and it being put to use in the calculation of very very complex financial strategies. Assumptions that the free market and access to information over the web will resolve deficiencies in the markets (Greenspan). We've seen banks move from the place you put your money for a reasonable interest rate, and a place which gives you a mortgage, and keeps ownership of that mortage, to a place where you don't get interest on your savings, and which sells your mortgage debt abroad. I could keep going on. Of course re-regulation of the banking sector and stock markets is required. The markets should be reduced back to their original intent; a place to invest money and receive (hopefully) a return via dividends. The main thing that needs to happen, is that we as individuals need to understand that the goold old days of the '80s and 90's are gone. We no longer get to replace our TV set each year. Our house is a home, not an investment conduit. Money is something to be saved, not frittered away. The narrower the gap between rich and poor in our societies, the better our own lifestyle will be. etc... I think people are still not on board with their own responsibility to austerity, they assume it's something that our governments do.
The large investment banks were also able to shop around for the best ratings that their money could buy. AAA ratings on mortgage backed securities didn't mean jack. Before the meltdown in August 2008, these phony ratings were then revised downward, putting even more pressure on vastly over-leveraged banks - some over-leveraged as much as 35 to 1. Many purchasers of these securities the world over, started to realize the true nature of the risk they had bought and were still holding. That particular scam's time was up... BOOM! Say hello some seriously misrepresented toxic assets. Rating agencies like Moody's, S&P, and Fitch should not be permitted to receive payment for their ratings by the issuers of securities they are rating. Such payments easily turns into a cash for ratings scheme. This situation, as far as I know, still exists, having yet to be addressed. See - Bond Credit Ratings - Criticism
Not quite the right answer, but a good try. The one element you missed is the most important. The investment banks deliberately set up these mortgage backed securities to explode. This is what Citibank s being prosecuted for right now. The reason they set them up to explode was very simple - they make more money that way - by short selling the securities - shorting the market for the very paper they were purveying as investment grade triple A rated paper once it was issued. What is coming out is that they deliberately sought shonky mortgages to package with the good stuff to make it explode. These were the NINJA mortgages - no income, no job, and similar. The other little product they used is called a CDS - credit default swap. In which I agree to pay you a yearly payment and you agree to pay me a large sum of money if I default on my debts. Its like an insurance policy, except that the parties don't even have to be related at all. It is this little device that has metastasized right through the financial system that is scaring the hell out of the worlds bankers at the moment - and not just in Europe.
The global meltdown is the result of greed, plain and simple. Blame the folks that make the most cash today to find out who specifically and individually. Psssst..start with the right wing, and go from there. Our world of haves and have nots is defined by the rich. What was the question again??? Is it really that complicated?? I think not.
I didn't ever say we weren't ALL to blame. Given the two parties, one is blatantly FOR the super wealthy, one isn't as much. That's as good as it gets in our system of 2 choices. I'll vote against the ones most blatantly FOR the super wealthy every time. That's the choice. Not too tough I don't think...even for an American Idol public.
You forgot the most important one, (any theory which leaves out the role of the Jew shall be insufficient) 0.) Jews set up Federal Reserve system. Occupy Wall Street: Undertones of Anti-Semitism
Self interest is a great thing, when it comes to surviving and taking care of your family....agreed. Self interest, on the large political scale, means that people with the largest amounts of cash are all that matter. You can go round and round all you like, but the right wing is all about the wealthy. They represent no other people other than the wealthy. Problem with that is, not everybody is wealthy. What happens next is the wealthy dictate to the rest of the non wealthy society who gets what, in the form of laws, priveleges, and even who is worthy of society. In short....money controls all. You have a lot of it??? You're good. No need to change anything. You vote republican. Things not so good? Poor? Black? Well...only one party for you. The dems. On occasion, they'll throw you a bone, while the right will simply give you the finger. Bottom line....if all the poor people voted every election, AGAINST any republican, we might be in a little better shape today. As it stands though, corporate America has formed, and demands profit at all costs. Your plight is of no interest to them because their ONLY goal is to profit, MORE and MORE and MORE, and if that means taking it from poor people, in the form of low wages, or outsourcing, then so be it. C'mon people...it's really simple...if you're wealthy, white, and vote republican....you're on the gravy train. If you're poor, and too afraid to vote against your job masters, then, so you don't vote, you're only sealing your own fate. The idea is to VOTE. There are many, many more of US then there are of THEM. Vote against a republican, and things will have to change. Don't vote, and the big boys will keep sucking up the wealth of us all, then blame us for it, while sending the thefted cash offshore somewhere. You guys want a shot at fixing things> VOTE AGAINST a republican any chance you get...don't stay home. VOTE the cancer out!!!!
I just saw the movie "Inside job", I recommend it. Basically Wall Street has infiltrated the US goverment and implemented the golden rule: "He who has the gold, makes the rules!" How I wish they had not bailed out Goldman Sachs. This might have been the only chance in a long long while to get rid of them.
Because he is not. Government is a tool of all that... But yeah, continue believing in the utopia better said dystopia of free market. And capitalists don't see that the problematic markets were much more unregulated than the others... So were close to free market. Capitalism is a system that have periodical crisis, and that is said by everycapitalist. How a system with crisis can be good? Ok. And to who you will focus your ire? Against a worker or the boss? Who's fault? Is fault of the worker for do what the boss is saying(maybe a bit) but the main guilty is the boss. So guess who are the bosses here. Government is not. Just is a puppet. Remember that USA is a plutocracy, and what means that?
Free market includes free competition in currencies, sound money. The central banks of each nation allows them to monopolize the currency and creation of credit, therefore "Goldman Sachs rules the world." Statists think they can elect people who will act on behalf of the majority, when it rarely ever happens, but they sure do want to keep trying. Mr. Hope & Change was bankrolled by Goldman Sachs and other large banks. "Greenspan put" gave the largest banking institutions a guarantee that any losses would be supplemented by the Fed. They took non-risk risks.
