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It doesn't look like an old-fashioned bank run because it involves the biggest financial institutions trading paper assets so complicated that even top executives don't fully understand the transactions. But that's what it is -- a spreading fear among financial institutions that their brethren can't be trusted to honor their obligations.
...Investors are nervous because they aren't sure how to value these bundles of securitized assets. So buyers stay away, prices fall further, and the damage spreads.
The public, fortunately, doesn't understand how bad the situation is. If it did, we might have a real panic on our hands. And there would be more pressure for bad policies -- ones that try to freeze the damage, rather than letting prices fall to levels where buyers will return and the markets will clear. Hillary Clinton's proposed moratorium on home foreclosures, in that respect, is one of the truly bad ideas of our time. It would make the situation worse by increasing even more the illiquidity and inflexibility of the housing market.
People will endure amost anything just to keep what they have.
all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed
Originally posted by lifestudent
There has been no time in our history that the fed has reduced the interest rate so drastically in such a short period. That the banks have not passed any of that on to the public is reprehensible and indicative of the problems with our financial system, IMO.
Originally posted by JacKatMtn
reply to post by palehorse23
It's just too obvious to me to accept the current speculation and projection, something more devious is happening,...
Sort of like, why would the US dollar be allowed to become so weak unless someone knew that the dollar was soon to be nonexistent?
Conspiracy, speculation, sure but one that might not be far fetched.....
Originally posted by Escrotumus
Originally posted by lifestudent
Yet you don't hear anyone on the financial channels talking about this. This is indeed indicative of the sorry state of the dollar and banks being gunshy to lend to anyone. Basically they want to get the cheap loans to pay off their debts but they don't want to pass those savings on to Joe Consumer. It's reprehensible and the government has so far let them get away with it. I think they just chose to raise interest rates because they knew they'd be forced to lower them soon and then they will just be back to where they were before the FED lowered the rates.
My freind, you are more correct than you know I think. The major American banks are making a fortune on this spread, and it is unconscionable that they are not passing the savings to your people. It has happened before, and will continue as long as you, the American people, allow it to continue.
One side note, oil is primarily valued in US$ Watch the fireworks after a number of major producers switch to Euros. It's my belief that Bush went into Iraq to secure a direct supply for this very reason; he was too dependant on unstable regimes for oil. Nothing more. Unless you secure some form of victory soon, the recession you think you avoided will be far worse than the one you're already in.
Just my 2 cents!