Our financial system is crumbling this week.

[Arthur Dent]

The Economist noted how European banks had lent 1.46 euros for every euro in deposits. The comparable figure for US banks is 0.96:1.

Wait, what? How did they do that? I understand fractional reserve banking, but what is that? Imaginary reserve banking?

[lukethedrifter]

I think it's crazy to blame foolish first time home buyers for this mess. There was incredible amounts of money being created in Asia, money that needed to be invested. Treasury bonds, the standard safe investment for foreign investment, were paying 1 and 2%, so essentially nothing. Investors found the housing/mortgage market and when all the "good" loans were made that wasn't enough. So they found more customers aka homebuyers, who were less and less qualified.

Of course this country has been in a deregulatory mood for quite some time, and that includes Clinton's '90s, so who was going to pay attention to Chicken Littles protesting and proclaiming when so many people were making so much money. Forget all the red flags, trying to stop that financial momentum was impossible until it was too late.

Not only was their dereg in the banking and finance industries, the same was true for real estate appraisers. No longer did they need to do an actual and honest appraisal. Just use the hyperinflated market as the standard and pay no attention to the structure itself.


Anyway, in hindsight it's clear that there were some that saw the inevitability of this disaster but you try to stop a $500 trillion dollar boulder from rolling down a hill.

[sighyoung]

I bet I can buy those books for pennies on the dollar, and when the market recovers . . .

[cardinalkarp]

This is depressing.

[BenNX74205]

I bet I can buy those books for pennies on the dollar, and when the market recovers . . .

[Dillagii]

This is depressing.

Its not. Indian market also crashed!!

US Dollar - Indian Rupee Value Chart

[sighyoung]

Here you can get the argument for Dow 36000 for free, and save the pennies it would cost on ebay:

http://www.theatlantic.com/issues/99sep/9909dow.htm

[Freed Roger]

These might be cheap fuel burn to heat your shack in Hooverville this winter.

Maybe we need a new name Hoovervilles - any suggestions?

[lukethedrifter]

These might be cheap fuel burn to heat your shack in Hooverville this winter.

Maybe we need a new name Hoovervilles - any suggestions?

New subdivisions?

[Freed Roger]

Kevin Hassett is senior fellow at the think tank American Enterprise Institute where he directs economic policy studies. He regularly appears on Bloomberg Television. He advised President Bush in his campaign, and he currently serves as a senior economic adviser to the John McCain 2008 presidential campaign.

http://en.wikipedia.org/wiki/Kevin_Hassett

Thanks for this info. Not surprising.

Last night the clowns on Fox were trying to pin it on Acorn - claiming much of the subprime mess was because Acorn forced banks to make these loans. You know - the big mighty powerful Acorn FORCED them to give loans. Then they showed an Acorn protest, about 20 people milling about.