Ya know, if the Fed. hadn't raised the Interest rates so much, so fast, these loans wouldn't have gone so bad, so quickly.
These mortgage loans were being issued on short lending terms with low interest rates, when interest rates went up "average Joe" couldn't afford to refinance them.
boom
Pop goes the weasel!
What a mess and the tax payer is getting stuck with the clean up costs, "average Joe", that's a shame.
Are they going to fix what caused the problem or just "throw money at it"?

A lot of truth? Seems to me the whole thing was pretty much spot on. I had the opportunity to buy into similar things here in Toronto - they were advertised in all the financial sections "Yields up to 19%" "100% backed by commercial/residential real estate", etc. Didn't understand them, and I won't buy what I don't understand, so I kept our cash in T-bills. Not only do I sleep at night, but I'll have to cash to buy when the inevitable bottom hits.

However, two key technical indicators failed on Friday. The Dow Jones Industrial Average closed below the "50% principle" level (you can look that on google) for the 2nd straight day (and today, Monday at noon, it is down nearly another 500 points), and the Dow Jones Transports Average, which previously had refused to confirm a Dow Theory sell signal closed below its January low, thereby sending a "sell" signal to Dow theory followers. The bottom may be coming, but it ain't here yet. Keep your powder dry!

I couldn't sit through this whole video, but I would like to say that if anyone seriously wants to understand what is going on then almost the only place where they will get factual information is at mises.org.

Jesus Huerta de Soto:

... central banks (which are in fact monetary central-planning agencies) cannot possibly succeed in finding the most advantageous monetary policy at every moment. This is exactly what became clear in the case of the failed attempts to plan the former Soviet economy ... For years [the U.S. Fed and EU Central Bank] have shirked their fiduciary responsibility, and now they find themselves in a blind alley. They can either allow the recessionary process to begin now, and with it the healthy and painful readjustment, or they can procrastinate with a "hair of the dog" cure. With the latter, the chances of even more severe stagflation in the not-too-distant future increase exponentially ... the most appropriate policy would be to liberalize the economy at all levels (especially in the labor market) to permit the rapid reallocation of productive factors (particularly labor) to profitable sectors. Likewise, it is essential to reduce public spending and taxes, in order to increase the available income of heavily indebted economic agents who need to repay their loans as soon as possible.

Unfortunately his prescription is the *last* thing that your politicians are going to implement, at least not until after a long and severe recession or depression and maybe not until after a disastrous world war. Politicians will never voluntarily give up power and money, and the credulous saps who vote are exactly the kind of people which they need in order to sustain their socialist control of the economy. The babies are going to keep voting for bigger and tougher nannies and the nannies are going to take them out and spank them for their trouble.

good video, I think they're "spot on" too, isn't that what's his name from Monty Python?

Last Saturday night Fox News had a special on what caused this financial meltdown. The interesting thing is that a lot of this was due to the Democratic idiology of putting everyone into a house come heck or high water, starting back in the depression. While I am still trying to find a recording of this program there are a heck of a lot available video of prominent (Dem) players saying that Freddie and Fannie was in great shape, there is no problem and more regulation wasn't required.

I don't know much about high finance and the markets, so the question arises, is the bailout doing any good, or would it have been worse without it? Is this a bandaid solution that is only delaying a meltdown at a later date?
I fear many decision makers have been looking at a short term solution. The TSE took a big hit this morning, leaving me to believe the short term idea is a crock. Am I wrong?

Something is killing the Google video feed, oddly enough.

Whoops, tried with Ubuntu, all OK now.

blanks - its not quite that simple. The rate increases were put in to quell inflation while trying to avoid stalling the economy - often a fine line to walk. The idea behind sub-prime mortgages was to make mortgages available to people who otherwise would be renters - in other words folks who would not have been able to obtain a mortgage in normal circumstances. This contributed to property values inflating greatly. So you have folks, under a subprime mortgage, buying $250,000 houses when under normal circumstances would not have been able to qualify for a house worth half that much. When the "sub-prime" period ended and it was time to face reality, folks could not afford the big increase in monthly payments. They started to walk away from their homes and tens of thousands of mortgages went into default. Add to this fact that they could obtain a mortgage with zero money down - they had nothing to loose by walking away. They had no equity in the first place.

In the meantime, the mortgage companies (ie Fannie Mae and Freddie Mack)were left holding the bag so to speak. Other institutions took big bundles of these mortgages, repackaged them as mortgage backed securities and sold them to institutional investment firms, pension funds and so on. When mortgage payments that these firms depended on to make money began to dry up the value of these securities started to plummet. They were headed to becoming worthless - and the market for selling them virtually disappeared. The securities were viewed as "toxic". Hence, the bail-out. Creating a repository for the toxic debt is what the 700 billion is all about. The bailout actually started when the federal government took possession of the Freddie and Fannie this summer. They needed to because they were on the hook for guaranteeing all of their obligations anyway. This is the same Fannie and Freddie that Barney Frank just this summer said was in good shape going forward. When he said that, people dumped millions of dollars in their stock and ended up loosing 90% of their money when the government bought them for 10 cents on the dollar. Of course Barney said it was someone else's fault.

Banks no longer were willing to lend to other banks because no one knew what shape their fellow banks were in. With banks unable to obtain funds to lend, credit to consumers also dried up. Hopefully the 700 billion is enough to get this thing turned around but I doubt it. I wouldn't be surprised to see it go to a trillion.

And now the other shoe is dropping in Europe. Stay tuned. Scarry times indeed.

O'Bama (Irish) or McClain (Scottish). In times of financial difficulty I'd go with the Scot.

"High Grade Structured Leverage Account" eh! Ha - just another name for "scam".

"good video, I think they're "spot on" too, isn't that what's his name from Monty Python?"

If you are thinking of John Cleese, no - not him. It's John Bird and John Fortune
http://en.wikipedia.org/wiki/Bremner,_Bird_and_Fortune

different bob, all this didn't just start this summer with freddie and fannie , this bailing out has been on-going now for two years, I think it started with the "Hedge Fund" company's and some Banks.
Inflation took off because the Fed. lowered Interest rates too much and then turned around and raised them right back up leaving mortgage holders dangeling.
I don't know all that much about it but what I do know just wreaks of reckless and careless management especially on the part of their government.
Just pathetic and careless, really, just sickening.

All the economic stimulus of lower interest rates and social investments via Fannie and Freddie; a 30 year + effort at deflecting recessions has now finally come home to roost...A depression (Remember it's a worldwide lack of cash problem)and not just a recession (Slow down in economic growth) might be in the works. A depression now in our spoiled society would spell total disaster and possible anarchy. In 1929, people were much different than today + a lot where still living off the land wereas today most are city dwellers that don't know squat about survival and sharing. I smell a civil war brewing down south and we up here might have many many uninvited guests soon.

I know, Kate would say I'm a doom and gloomer...I hope she's right and I'm totally wrong.
Keep your powder dry though, just in case.

The Grapes of Wrath to Madmax?

it is exactly the truth.

I was over at "www.anncoulter.com" and linked into the news link on Barney Frank. This person is a disgusting humane being. This meltdown has been delayed, hidden and prolonged for a long time.

The average joe is asked to bail them out. I think a lot of them should be hanging on light posts.

Sounds allot like the fabricated financial statements of the large accounting firms and corporations in the dot.com melt down last go around. Little happened that time as well. The new tax or fraud, you decide.

...time to start piling up the sand bags and gun powder...

...stock pile that is.

Yes, the crisis is certainly important, but in terms of the average Canadian, what really matters is whether there will be a job for them, whether prices are rising, and the high cost of gas. See my two new anti-harper internet political ads at:

Ad # 1 http://www.youtube.com/watch?v=Hn6bLRw4LG4

Ad # 2 http://www.youtube.com/watch?v=Szu-7WR_rU8

Cheers

Todd....

Grow-up, the government is not as omnipotent as your parents.

Watched the whole skit.

EXCELLENT!!!!