Wall Street Bank Run

Sorry for being on an economic kick lately, but I can't help it. It just seems to be getting worse by the minute. Just ask Justin Oldham. This article from the Washington Post is a kind of "simpler" way to look at our current economic situation. I say simpler not to degrade anyone, but to hopefully help people to understand how big of a problem we really have. God knows that I as well as many others have a hard time trying to sift through all the mumbo jumbo that is involved with economics. So, I hope this can help. Again, it points out the fact that the US is currently being "bought up by China and oil countries. That is a scary thought actually. Who knows how we will end up when China continues to grow both militarily and economically.

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.

reply to post by palehorse23


I am concerned as you are though I wouldn't place it all on China, at least from my view, it is too obvious even to those not market savvy.

I keep thinking that this long delay and denial of recession, (even politicians conflict in their opinions of whether we are or are not in recession).

I have no proof only theory that those who control the wealth, and have created this current mess, have been given the time needed to protect themselves financially.


Regardless of where they are, it appears that many across the world are reaping the benefits and those not in the club will pay for the mistakes that have been made.

Sure, if you have the ability and the resources, and recognize this pattern, there is an opportunity to capitalize on this current situation, that doesn't make this current situation less unscrupulous.

It's much more complicated than China alone, others would never let that happen unless they wanted the blame pointed in China's direction.

Opinion, I could be wrong but thought I would share my own little angle on the current situation.


ed:sp

[edit on 2/23/2008 by JacKatMtn]

reply to post by JacKatMtn


I actually agree to a point Jack. China isn't the only one with a hand in it. But, IMO they are one of the biggest players as we continuously see them on the rise in more ways than one.
I have a hunch that Israel is a big player as well seeing as how we are putting every effort into ensuring that nothing happens to them. I believe the article does mention that oil countries are staking a claim to our situation as well.

reply to post by palehorse23


It's just too obvious to me to accept the current speculation and projection, something more devious is happening, there is no way that China would be allowed to gain control of all that they have so quickly if those involved knew it was a fantasy of sorts.

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.....

reply to post by JacKatMtn


Most definitely it is a "game" that already has a predetermined outcome. That is what scares me and pisses me off the most. We are just pawns in an elite game of chess. As you said before, if you aren't in the club, you are going to be tossed aside as a part of the losses. It seems they think of us as collateral damage necessary to get to the outcome they desire.

I can definitely tell the Fed and others must be scared about something. They say it's likely we won't go into recession. Then the Fed cuts interest rates 1.25 percent within a 2 week period. Money is so tight with banks that they are only loaning money to people with the best credit scores I've heard. The Dow only drops a small tiny percentage and the Fed does emergency rate cuts as if he scared to death that a panic will erupt.

Then I read stories about how the FDIC is getting perpared for the possibility of a major bank or banks going under here in the US. I still believe at least 90 percent of Americans don't know how at risk our financial assets are. I believe things are so leveraged and spread around though, that the entire global financial system could collapse. As far as our politicians go, they just continue to say things like there is a risk of recession blah, blah, blah but they don't think there will be one. Then they are ready to use all their tools to avoid one. Meanwhile the cost of food and energy skyrockets here in the US, over 10 percent of mortgages here are underwater where they owe more than the house is worth. A panic or bear market will likely only make things worse. However we're in a bear cycle now I believe. Things will get worse I believe. The Fed and others want interference instead of letting the market reach a new bottom where a lot of buyers would be satisfied and ready to jump back in. I kind of wish the Fed would butt out just a little bit. Of course they only have 3 points left before they start giving away money. Oh I forgot, they are doing that too.


[edit on 23-2-2008 by orionthehunter]

I created a thread the other day that nobody had any interest in as to why the FED keeps lowering rates when the bank is raising them like there's no tomorrow. Mortgage rates have went up over 1% point in the past 3 weeks after the FED lowered the rate by 1.25%...

I also don't see any country buying us up. I remember years ago everybody was afraid that Japan was buying the US lock, stock and barrel and that wasn't exactly true. The mortgage mess is the real issue here. I would also say that the 10% figure of people upside-down in their homes is probably way on the low side. Double that and you'd be more in the ballpark imo. I am close to being in that boat myself through no fault of my own. My town has been decimated by illegal aliens and foreclosures and homes are languishing on the market here. I've got some hard decisions to make this year about whether I walk away or stick it out in a town ruled by corrupt politicians, rampant illegal immigration, highest real estate taxes in the state and general dilapidation.

It truly is amazing what the top 5% can accomplish when they throw the other 95% a few crumbs to keep them occupied and unaware of the true plan. People will endure amost anything just to keep what they have. Once they lose what they have then look out top 5%. There may very well come a day in the near future when the 95% may come after the 5% looking for blood but only if/when we hit rock bottom.

reply to post by Escrotumus

People will endure amost anything just to keep what they have.

Seems a paraphrase of what our founders wrote in the declaration of independence:

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

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.

[edit on 24-2-2008 by lifestudent]

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.

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. That way they actually never really lowered their rates. None of these banks will fail. We the taxpayers will bail all of them out and their execs will all walk scot free with nary an investigation into any wrongdoing on their part. The top 5% will get all get very very very rich from this and we will all lose a bit more of what we have. Not enough to make us look for blood though. There is a fine art to manipulating the masses.

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.....

If I might be indulged, I'd like to inject just a smidgen of Paranoia into our ruminations:



"Sort of like, why would the (majority of the population) be allowed to become so weak unless someone knew (or had reason to suspect) that the (majority of the population) was soon to be nonexistent?"



Is it possible that all the plots, ploys, and machinations we see being brought to bear by the "Powers That Be", most obviously in the financial and political arenas, are part of a grand "Survival Scheme"?

I am not suggesting that those, supposedly, "In The Know" actually have specific knowledge of an actual impeding cataclysm.

I doubt that, even with all their resources and analysis, that even They know the Nature, the Date, and the Hour of Our Doom...

But it seems, based on the the actions we have all observed, that They know (or, at least, seem themselves to be convinced of) Something that they are loathe to tell Us!


Maybe I'm just nuts, uttering dire warnings of wars, plagues, and disasters; I certainly have no hard evidence to offer, beyond the histories we all might draw insight from. "Those who do not learn from History..." etc..


Consider, in light of JackKat's observation above, the many actions of our (US) own government;



-The deceptions and hyperbole (obvious to many dissenters) employed to engage in "endless" wars overseas, straining and depleting the nation's military and financial resources;

-The steady evolution of what was once a fiercely privacy-worshiping society into a society given to 24/7 surveillence and governmental monitoring; even when such intrusion is performed without legal safegurds.

-The easy and undebated passage of laws (PATRIOT ACT's I and II, Protect America Act) whose enactment fundamentally changes the relationship of the citizenry to its "rulers".

-Certain provisions of the Continuity Of Government (COG) Act which allow the imposition of martial law under what some consider "loosely and somewhat dubiously defined" circumstances.



I might also add the "justifiable", but curiously intense, actions various branches and bodies at many levels of government and industry are taking to deal with the "threat" posed by an, as yet, undefined "Pandemic".


I may be wrong, but I am not at all convinced that these "Circle the Wagons" actions are limited to just the "Sacredy Cats" in the US.


I sense an definite "Global" attitude of rats making for the lifeboats.


Just wish that I too knew whether and whither to run!

I'm going to take the other side of this arguement; by the way Bhadhidar, I don't think you're nuts; you've made some points that are something we should all consider.

While I agree with us allowing the markets to keep falling, i.e. not letting Hillary's plan come to fruition(thats just dumb, but what the people want to hear), I'm more optimistic about the market. We can't get scared off, then we lose. If we make a run, or get scared, then the worst that most people can imagine will happen; the problem can be fixed, but it will take a great effort from people to help make it work. I know a lot of people are complaining about the banks, and they should be, but, they, the banks, are not all responsible for the demise. Examine people's credit; for the most part, it's horrible. The mortgage problem is both peoples inability to pay(higher cost is only part of the problem) as it is the banks fault for giving out bad loans.

Me, I hardly go out to eat, or go anywhere. Why? I don't have the money. If I put something on my credit card, I make sure I pay it off. There are some people out in the there that think credit is ACTUALLY money. I know there's a lot of credit problems; I can see the houses being foreclosed on in my neighborhood, but, I also know how those people living in them lived. Going out to eat every night, buying junk you don't need, not paying bills...and we wonder why the scenario is so bad? It's not all the banks; people must be accountable too. It's easy to point the finger, America has gotten good at that, but to actually fix the problem would take a whole lifestyle change for a lot of people and I don't think most people can, or will do that. So even when we fix this mess, crisis, what have you, we'll still fall back into the same old cycle.

The Fed should just stay out of the picture entirely. All it is doing is providing a crutch to the stock market. By the way, I do like when my stocks go up, however, it's just for a day, maybe an hour and then some more bad news comes out. These giant lending institutions are making the problem worse by not taking their losses all at one time. Instead of one massive hit, they are spreading it out. This could be to manipulate stock prices so those that have money can cash in (I wish I had money, I would be buying).

I know what you mean Escrotumus when you say nothing is mentioned on the news, or any other place. Doesn't congress have something better to do than put baseball on trial? Sure I'd like to know if Clemens is lying, but not from congress. And then you've got Sen. Spector talking to the NFL. Who cares? That's not congress' job. Sorry for that digression, but it's true. And on the News, instead of talking about important things going on we get to hear about Britney Spears. I really could careless what happens to her, or what happens on American Idol. But, most people don't care about the important things and its sad. How many do you think know of the Presidents Executive Orders, or what the Patriot Act actually means? Probably not a lot, but if you asked them who won American Idol, I'd bet they could tell you.

I think a lot of people want America to be bought up so to speak. There are a lot of people who have a lot of money to make from it. I don't think most people in America would care if it was sold; they live their lives and are "happy" living that way. I believe you can think of what's happening now as thus: the final outsourcing of America.

[edit on 24-2-2008 by ChrisJr03]

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!

Well I just found out today that homes in my town have plunged another 15% in value in the past month due to all the new foreclosures that have hit. I now owe more than my house is worth and I actually bought this place near the bottom of its value. God only knows how much further the values will drop. I am really on edge now because of all the trash, illegal aliens, gangs, insane tax rates and corruption here. I have yet to get a new tax assessment for this coming year but I'm sure it will be 50-100k over what I could sell it for which means that I will be paying $4k a year in tax on a house that is now worth 220k. How much more of this can a man take?

Thank you for this post.

It is very informative.

Yesterday, I paid $7.00 a gallon for milk! I was like whoa...

I too have cut back on so much just to make it to the end of the month. I think about getting to the end of the month with my head above the money, more and more.

I don't have any credit cards anymore. It's loan sharks at their finest.

Great rate, one day late on a payment, and your looking at 18% plus penalty.

I am worried. I wish we could work together to fix this, but the forces we would face are insurmountable.

Just like the blackout of the broadcast of 60 minutes in Alabama. "Oh it was just a glitch." They have us by the short hairs. Right before our eyes, we see a new America.