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The attack spiked on September 9th, when there were over 1 million undelivered shares in Lehman. On September 10th, there were 5,877,649 failed trades. The day after, there were an astonishing 22,625,385 fails. The next day: 32,877,794. Then, on September 15th, the price of Lehman Brothers stock fell to 21 cents, and the company declared bankruptcy.
"The world consumes 85 million barrels of oil per day, but it's not uncommon to trade 1 billion barrels per day on the various commodities exchanges," says White. "So you've got 12 paper barrels trading for every physical barrel."
The same is true for mortgages. When lenders couldn't find enough dope addicts to lend mansions to, some simply went ahead and started selling the same mortgages over and over to different investors. There are now a growing number of cases of such double-selling of mortgages: "It makes Bernie Madoff seem like chump change," says April Charney, a legal-aid attorney based in Florida. Just like in the stock market, where short-sellers delivered IOUs instead of real shares, traders of mortgage-backed securities sometimes conclude deals by transferring "lost-note affidavits" — basically a "my dog ate the mortgage" note — instead of the actual mortgage. A paper presented at the American Bankruptcy Institute earlier this year reports that up to a third of all notes for mortgage-backed securities may have been "misplaced or lost" — meaning they're backed by IOUs instead of actual mortgages.
Originally posted by poet1b
Personally, I think Obama's presidency will be judged by what he does to clean up corruption in our nations banking/investment markets, because that is where everything has gone completely astray. Even health care is a result of crooked financial dealings. If Obama fails to enforce the laws, or establish laws to prevent rampant fraud against corruption, then in 2012, our economy will still be in ruins. and Obama can then expect to lose, but I doubt if the republicans can deliver a credible candidate. For the first time since 1860, a third party candidate will have a chance.
When the banking and finance system start taking a 40% bite out of the economy, as ours is currently doing, then that economy can not survive. A market system thrives on the exchange of goods and services, not on betting at the craps table.
Originally posted by Udo Hohnekamp Lux.
Our system of paying interest on credit and debit is a Ponzi-scheme or a
chain-letter. It will exhaust itself mathematically every 60 to 90 years
based on the average rate of interest in that period.
Introduction to Long Wave Theory
Kondratyev produced ground breaking theories interrelating economics and politics, taking into consideration such events as war, discoveries, public opinion, and weather as integral parts of a long-term economic life-cycle. Within a market system, Kondratyev proposed economic trends tend to generate harmonics with a periodicity of approximately 53 years. These harmonics are systemic.
James Monroe, a president for our times?
As Barack Obama tries to address soaring rates of unemployment and home foreclosure, he would do well to bone up on a predecessor, James Monroe. In 1819, at a time when mortgage foreclosures had forced thousands of Americans from their homes and unemployment had soared to 16.8%, President Monroe presented a plan to Congress for restoring the nation's economy.
At the time, tens of thousands of Americans were streaming westward across the Appalachian Mountains to buy federal land at $2 an acre, borrowing more than they could ever repay. As land prices soared, banks lent every penny they had and more -- no questions asked. Many banks issued their own colorful bank notes -- backed by no-one-knew-what. One Rhode Island bank with a capitalization of only $45 issued bank notes with a total face value of $800,000.
With demand for land all but insatiable, speculators rushed to borrow bank notes as fast as banks could print them and buy land to resell to gullible would-be settlers, who expected to repay loans from crops they hoped to plant on the properties. The frenzy was so great that purchasers never checked whether the speculators actually owned the lands they sold or whether they sold the same lands multiple times.
Monroe ordered his secretary of the Treasury to disburse millions of dollars from the Bank of the United States -- the 19th century equivalent of the Federal Reserve -- to help states build and expand the national infrastructure. Monroe put tens of thousands of Americans back to work building a vast network of roads, turnpikes and canals that linked every region of the nation with outlets to the sea and shipping routes to other continents.
A great new "National Road" linked the Potomac River to the Ohio River and opened the West to large-scale farming, with thousands of tons of grain, furs and other raw materials pouring over the Appalachians to Eastern manufacturers and cargo vessels in Eastern ports. Improvements in the steamboat lowered transportation costs and increased the speed with which goods traveled to market on the Mississippi and Ohio rivers and other waterways. And in one of the most spectacular engineering schemes the world had ever seen, the first 15 miles of the 360-mile-long Erie Canal opened in upper New York state. It eventually linked the Great Lakes with the Hudson River and the Atlantic Ocean and helped make the United States the wealthiest nation on Earth.
Monroe's plan ultimately ended the depression and ushered in the greatest period of prosperity the nation has known. As the economy recovered, government deficits turned into surpluses, and Monroe rejoiced. "At no period of our political existence," he declared, "have we had so much cause to felicitate ourselves at the prosperous and happy condition of our country.
Originally posted by poet1b
reply to post by Taikonaut
The idea that business will self regulate itself is absurd.
There is no such thing as a free market.
Attempts to create a free market type of economy is what creates these boom bust cycles.