Are we headed into a depression? - Page 2

Cephus · 10-01-08, 10:18 AM

Quote:

Originally Posted by Goobieman

Please, cite something that indicates banks are getting free money under the bailout plan.

They're having all of their bad paper bought up, plus depending on how the bailout shakes out, their bad credit card debt and other bad loans. What else would you call it?

Infinite Chaos · 10-01-08, 11:03 AM

Quote:

Originally Posted by Cephus

That just says that there were a lot more homes sold that had no business being sold last year than this year. The housing crisis was caused by people being given loans that had no business getting them in the first place. Cheap and easy credit with few restrictions and companies not only not paying attention to credit worthiness, but actively telling people to lie about their income so they could get bigger houses and bigger loans, caused this disaster. The mortgage companies didn't care because they knew by the time the loans came due, they'd be on a beach in Fiji sipping martinis and other companies would hold all this bad paper.

I have no argument with that except I was referring to the UK. We don't have a "sub-prime" market. The problem in the Uk was with people trying to jump onto the buy-to-let bandwagon. Thinking they could buy rental homes and make money from their tenants. These people artifically put prices up and dried up the housing market. A re-adjustment was always on the cards in the UK. A guide to this has been that certain UK banks are in position to buy up failed US banks while buy-to-let specialists like the Bradford & Bingley have been put up for nationalisation.

Quote:

Originally Posted by Cephus

The problem isn't the bill not getting passed, it's the fact that all these banks are sitting there with baited breath

In this instance I read that banks don't trust each other and the internal rates that banks lend money to each other are very high. Money just isn't flowing. While your premise of CEO's escaping is probably true the international nature of the failure of the markets show it isn't just an American problem.

shiznit770 · 10-01-08, 11:16 AM

No one wants a depression, but a recession is a necessary thing. For years Americans bedrock of investment has been their homes. Sounds like a great plan except it completely ignores supply and demand. House values cannot continuously rise, it makes no sense and is only hurting the layperson.

The bailout solution will only delay the inevitable. You can blame the irresponsibility of the Financial Institutions as much as you want, but the true cause is our entire system. Which relies on government intervention to keep prices rising and us thinking we're great. We've become so deluded to think that we cannot suffer a recession, but instead must "fix" it. Other countries suck it up and take their losses while learning from their mistakes. We want to fix it immediately and then forget about fixing the mistake half a year later.

Cephus · 10-01-08, 04:27 PM

Quote:

Originally Posted by Infinite Chaos

I have no argument with that except I was referring to the UK.

That's fine, I was basing it on the U.S. market since there wasn't any indication that you meant otherwise. My mistake.

Quote:

In this instance I read that banks don't trust each other and the internal rates that banks lend money to each other are very high. Money just isn't flowing. While your premise of CEO's escaping is probably true the international nature of the failure of the markets show it isn't just an American problem.

I think that mistrust is overblown in the media, although certainly because banks don't really know what their assets are worth, they're going to be much tighter on lending out any capital at the moment. I've heard reports that most banks are being flooded with cash by the federal government and the banks are just sitting on the cash, "just in case". I still think that a huge component of this whole mess is banks waiting to see how much money they can make out of this mess and knowing that stopping up the works is the fastest way to get the financial grease flowing.