The Credit Crunch

[peteweaver]

There's quite a few claims by conspiracy theorists that the USA is heading towards another depression, and that this was deliberately engineered by the banks. I'm of the opinion, that quite a few conspiracy theorists do not understand the concept of inflation & deflation in the housing market.

[eromitlab]

Well, when they get their economic education from Alex Jones and Ron Paul, that's what happens.

[Francesca R]

There's quite a few claims by conspiracy theorists that the USA is heading towards another depression, and that this was deliberately engineered by the banks. I'm of the opinion, that quite a few conspiracy theorists do not understand the concept of inflation & deflation in the housing market.Who in the banks, and what do they gain from it?

Many of the big banks have had their stock drop by about two thirds. Just about every senior executive officer in a bank receives much of their compensation in mandatory deferred stock or options.

I would need to understand the motive.

I could understand the claim that the banks and all in them have a vested interest in the preceeding bull markets, but that's quite well known and becoming more well known

[peteweaver]

Presumably by big banks, they mean: the bank NM Rothschild & son, who's owners seem to be scapegoat for a lot of conspiracy theories.

[lee5]

Well, when they get their economic education from Alex Jones and Ron Paul, that's what happens.


I don't think it is fair that you put those two in the same category.

[JimBenArm]

I don't think it is fair that you put those two in the same category.
True enough. One's an idiot. The other is a moron.

[Francesca R]

Presumably by big banks, they mean: the bank NM Rothschild & son, who's owners seem to be scapegoat for a lot of conspiracy theories.That's not a very big bank.

[fuelair]

That's not a very big bank.
But it once was and the name is easy to remember.:)

[uk_dave]

There's quite a few claims by conspiracy theorists that the USA is heading towards another depression, and that this was deliberately engineered by the banks. I'm of the opinion, that quite a few conspiracy theorists do not understand the concept of inflation & deflation in the housing market.


Yeah, but thanks to 'bank truthers', the conspiracy has been exposed leading JP Morgan Chase to up it's offer for Bear Stearns and so postpone the depression until another time, preferably when 'truthers' aren't looking.

[lee5]

True enough. One's an idiot. The other is a moron.

One is a nut job.

The other is just old in his ways and not practical to modern times.

I really don't understand all the hate for Ron Paul around here. The man is not stupid, just stubborn.

I think you guy's just don't like him because truthers do.

[ktesibios]

One is a nut job.

The other is just old in his ways and not practical to modern times.

I really don't understand all the hate for Ron Paul around here. The man is not stupid, just stubborn.

I think you guy's just don't like him because truthers do.

Well, when I observe that darned near every kook, crank, quack and paranoid on the 'net is virtually waxing orgasmic over a politician, the effect is decidedly off-putting. You could obtain a very similar effect by offering me a sandwich after I've seen flies swarming all over it.

Now about this bank thing- what the "the economy is collapsing" Chicken Littles seem to anticipate is a replay of the Great Depression of the 1930s. I have no training in economics, but if I remember my history correctly that depression was characterized by a lot of bank failures, which led to increased regulatory oversight of the industry and the establishment of the FDIC as sfety measures.

I have my own opinion of the "boss" classes, but I have yet to encounter a business type who actively wants to see his company or industry in ruins.

[Tippit]

There's quite a few claims by conspiracy theorists that the USA is heading towards another depression, and that this was deliberately engineered by the banks. I'm of the opinion, that quite a few conspiracy theorists do not understand the concept of inflation & deflation in the housing market.

It's likely you are the one who doesn't understand the concept of inflation and deflation in the housing market.

The artificial boom in the housing market is the direct result of the Federal Reserve's debasement of the US Dollar, as documented by the Adjusted Monetary Base (http://research.stlouisfed.org/fred2/series/BASE). The bust is the result of a peak in demand both for housing, and for speculative real estate. If it weren't for the Federal Reserve's fiat money there would have been no artificial boom in the first place, just like the so-called "roaring twenties".

[Tippit]

Yeah, but thanks to 'bank truthers', the conspiracy has been exposed leading JP Morgan Chase to up it's offer for Bear Stearns and so postpone the depression until another time, preferably when 'truthers' aren't looking.

The $30B Fed bailout of JPM which led to the BSC deal (which is now being renegotiated) is like putting a band-aid on a gaping head wound. The money created out of thin air by the Fed to support wall street isn't being used to extend more loans to the already tapped out US consumer, it's being used to speculate against the dollar. The only question is whether you like your depression deflationary, or hyperinflationary.

[jaydeehess]

From the perspective of a Canadian, who's banks are heavily regulated, the probelm seemed to be the lax regulation in the mortgage business.

If you offer people mortgages in which you pay interest only for several years and then re-finance with your house worth more you will get a lot of people doing it. The fly in the ointment being that if the house is worth less then you will have to come up with a whopping sum of money on your own, basically having postponed and raised the amount of down payment required, in order to re-finance.

If it is a scheme that sounds too good to be true then it probably is and probably should not be allowed by law.

Then there is the mortgage brokering that makes the company that signs the mortgage unconcerned with it after signing because they have sold it off immediatly to another concern. If you offer a mortgage you should be the one who sees it through.

[boloboffin]

When you cause a depression, you can short a whole bunch of stuff and make oodles of cash. Then, you let things get better, buy a whole bunch of stuff low, and then sell it high!

Lather, rinse, repeat. It's the Fiat Money Tidal Energy pump! It makes perfect sense.

[Dr Adequate]

Who in the banks, and what do they gain from it? Lots of bad debt, I guess.

On the other hand, they're not in it for the money, they're in it for the evil.

[Corsair 115]

From the perspective of a Canadian, who's banks are heavily regulated, the probelm seemed to be the lax regulation in the mortgage business.Yes! I've been saying that since the problem started in the U.S. There's no subprime issue in Canada and housing values are holding up well in spite of a slowing economy. So what are the differences between the two nations?

Different finanical regulations and different financial practices.

To date all I've seen in U.S. media coverage is about how to clean up the mess; I've seen nothing about what caused the mess in the first place and what steps can be taken to prevent it from happening again.

[dudalb]

Presumably by big banks, they mean: the bank NM Rothschild & son, who's owners seem to be scapegoat for a lot of conspiracy theories.


And the ultimate irony is is that the Rothschilds are really not in the top echelon of bankers anymore.

[dudalb]

Yes! I've been saying that since the problem started in the U.S. There's no subprime issue in Canada and housing values are holding up well in spite of a slowing economy. So what are the differences between the two nations?

Different finanical regulations and different financial practices.

To date all I've seen in U.S. media coverage is about how to clean up the mess; I've seen nothing about what caused the mess in the first place and what steps can be taken to prevent it from happening again.

The basic problem is you adapt a system like Canada's, a lot of people will scream that the Government is keeping them getting the loans they need to buy a new house.
I think the real issue is is that Americans simply are more suspicious of massive government then Candians and Europeans are.
It's a different outlook,and I do not see that chaging soon.
I have a feeling that if the banks do get burned bad by the Housing crisis, they will tighten up loans in their own best interests.

[The Atheist]

There's quite a few claims by conspiracy theorists that the USA is heading towards another depression, and that this was deliberately engineered by the banks.

And I bet they don't change their opinions once time has proven them wrong.

[jaydeehess]

The basic problem is you adapt a system like Canada's, a lot of people will scream that the Government is keeping them getting the loans they need to buy a new house.
I think the real issue is is that Americans simply are more suspicious of massive government then Candians and Europeans are.
It's a different outlook,and I do not see that chaging soon.

Oh that much is also obvious to those of us looking in from the north.
There seems to be large segments of American society that are suspicious of just about anything. It is odd to many non-Americans just how much that suspicion drives policy.

It also certainly feeds big industry and allows them free reign because it is supposedly in their best interests to self regulate. That is fine until just one outfit bucks the guidelines and, for instance, starts cornering the loan maeket by offering sub-prime mortgages which forces others to follow suit. I am sure that many in the banking industry recognized that this could not stand for long. However there were people making money hand over fist and although it would eventually come down to those with mortgages and some institutions that would suffer, the people at the top, who made the major decisions, would come out just fine personally.

That is when it is in the majority's best interests to have gov't determine where the lines are that cannot be crossed.

I have a feeling that if the banks do get burned bad by the Housing crisis, they will tighten up loans in their own best interests.

Sure, for a while, and then some whiz will see an 'opportunity' that will make a lot of money over a decade or so and much the same will happen again.

Wasn't the Savings and Loan crash in the 1980's somewhat similar to what is happening now. Easy credit to risky ventures. That time it was business loans IIRC, this time it was home mortgages. Next time it'll be personal lines of credit perhaps. Already there is a lot of bad credit card debt, maybe that industry is next.

[Corsair 115]

I think the real issue is is that Americans simply are more suspicious of massive government then Candians and Europeans are.Part of the difference was due to regulation. But another part of the difference was due to practices — banks here are more conservative when it comes to making loans.

If the effect of the subprime problem was just confined to the U.S., I wouldn't have too much to say. But this problem isn't just hurting the U.S., it's hurting a lot of other countries as well. A made-in-America problem is having global ramifications. Put all this together and revamping the financial regulations so as to prevent a similiar fiasco in the future seems like a very good idea.

[Francesca R]

When you cause a depression, you can short a whole bunch of stuff and make oodles of cash. Then, you let things get better, buy a whole bunch of stuff low, and then sell it high!

Lather, rinse, repeat. It's the Fiat Money Tidal Energy pump! It makes perfect sense.And so who "caused" the depression and where are their profits from shorting a whole bunch of stuff?

[jaydeehess]

Part of the difference was due to regulation. But another part of the difference was due to practices — banks here are more conservative when it comes to making loans.

If the effect of the subprime problem was just confined to the U.S., I wouldn't have too much to say. But this problem isn't just hurting the U.S., it's hurting a lot of other countries as well. A made-in-America problem is having global ramifications. Put all this together and revamping the financial regulations so as to prevent a similiar fiasco in the future seems like a very good idea.


Indeed, when the USA sneezes everyone catchs a cold.

[Francesca R]

So we still haven't ascertained who's in the frame to have conspired to produce the credit crisis, or what their motivation was . . .