A chronolgy of the Financial Meltdown

The_Bear · 11-05-2007, 01:48 PM

Quote:

During May and June of 2005, the Standard & Poor's rating agency downgraded General Motors and Ford's credit rating, on the more than $450 billion of the two companies' debt, to junk-bond status. This set off an implosion of Collateralized Debt Obligations (CDOs)--a form of highly speculative instrument--which caused hedge funds to lose hundreds of billions of dollars, nearly triggering the melt-down of the world financial system.

In September 2006, the Greenwich, Connecticut-based Amaranth Advisers hedge fund, which had $9 billion under management, went bust, the largest hedge fund failure in history. This caused strong reverberations in the natural gas market--where Amaranth speculated--and among other hedge funds, which scrambled for liquidity, although the deniers of reality shouted that "the event wasn't as big as LTCM"

During January and February 2007 the sub-prime mortgage crisis, which had been festering since the last half of 2006, erupted full force, as banks began to acknowledge sizeable sub-prime defaults. The foundations of the $20 trillion U.S. housing bubble began to shake. On March 13, New Century, the second largest sub-prime lender (after Countrywide), once a hot property, was delisted by the New York Stock Exchange, and effectively ceased to exist. New Century's market capitalization had evaporated from $1.75 billion to a mere $55 million at the point it was put out of its misery. During the period between mid-Summer 2006 and November 1, 2007, 178 U.S. mortgage-related lending companies went out of existence. According to projections based on data provided by Foreclosures.com, during 2007, U.S. home foreclosures will reach 2.02 million, 52% greater than during 2006

During July 2007 in the United States, banks rang up spectacular losses in asset-backed securities, particularly Mortgage-Backed Securities (MBS). Then on August 9, France's BNP Parbias, one of the world's largest banks, announced that it was suspending all transactions in three of its "dynamic investment funds," which all held mortgage-backed securities. German banks announced five similar funds were being shut down. The crisis had now hit Europe, and expanded globally, causing markets to freeze up--ranging from junk bonds to commercial paper, far beyond the sub-prime mortgages and MBS. Between late July and the end of the October, the Bank of England, the U.S. Federal Reserve, and the European Central Bank, franticly pumped in more than three-quarters of a trillion dollars in short-term and medium-term funds, to prevent markets from melting down, and banks from folding. This set the ground for a Weimar-style hyperinflation.

During September and October, the U.S. banks recorded $35 billion in third-quarter write-downs and loan loss provisions, capped by these banks losing nearly a quarter trillion in market capitalization. But the losses were only a fraction of the actual losses that the banks carry on their books. During the last week of October, and first week of November, the crisis entered a new phase. With the more than $1.5 trillion SIV, conduit, and CDO markets frozen, Merrill Lynch announced an $8.4 billion third quarter write-down, and Citigroup a $6.5 billion write-down. But there were much worse financial convulsions going on inside these two companies, behind the scenes. Stanley O'Neal, and Charles Prince III were forced out as CEOs of Merill Lynch and Citigroup, respectively.

What will history say about our government, when it has failed to acknowledge even the simple fact that the economy is losing its sound footing?

What will it say about the Democratically controlled Congress, right now, that refuses to acknowledge there is even a problem?

What will it say about George Bush, who refuses to acknowledge that people are even losing their homes?

What will it say about the Republican Party, whose response to these economic downturns has been 'lets invade Iraq', or, 'lets give more money to the speculatin companies'?

What will it say about the state of our economy, over the past 40 or so years, that has allowed this to happen?

Wealth is not measured in dollars or bullion. Its measured in the amount of consumable goods: food, water, transportation, manfuactured goods, etc. Creating an economy that makes money off of money is creating an economy that's based on nothing.

sectionOne · 11-05-2007, 01:49 PM

Lake Lanier is dried up. it doesn't look good.

The_Bear · 11-05-2007, 01:53 PM

Quote:

Originally Posted by sectionOne

Lake Lanier is dried up. it doesn't look good.

lake lanier?

sectionOne · 11-05-2007, 01:56 PM

Quote:

Originally Posted by The_Bear

lake lanier?

consumable goods, drinking water.
Lake Lanier supplies Florida, Alabama and Atlanta water and it's almost gone.
and an indication that the US is broke, not only financially.

Freedom for All · 11-05-2007, 02:02 PM

Quote:

Originally Posted by The_Bear

What will history say about our government, when it has failed to acknowledge even the simple fact that the economy is losing its sound footing?

Depends on who the victors are.

Quote:

Originally Posted by The_Bear

What will it say about the Democratically controlled Congress, right now, that refuses to acknowledge there is even a problem?

This problem has been growing since Woody Wilson pushed the 16th Amendment giving congress the power to steal money from Americans and since FDR began abusing that power by crafting ponzi schemes, and since LBJ publicly announced that social engineering is a "Great" idea. Today's toady's spending stolen money are late comers and pikers.

Quote:

Originally Posted by The_Bear

What will it say about George Bush, who refuses to acknowledge that people are even losing their homes?

That it's not the president's job to stop people from buying homes they can't afford and it's not his job to stop banks from foreclosing on mortgages taken by people who can't afford them. That the stupid shall be punished in a law of nature.

Quote:

Originally Posted by The_Bear

What will it say about the Republican Party, whose response to these economic downturns has been 'lets invade Iraq', or, 'lets give more money to the speculatin companies'?

It'll say that there's no difference between the GOP and the Democrats.

Quote:

Originally Posted by The_Bear

What will it say about the state of our economy, over the past 40 or so years, that has allowed this to happen?

That every society that expects it's government to provide bread and circuses to the people is doomed to collapse, as are those societies that refuse to learn their own histories.

The_Bear · 11-05-2007, 02:16 PM

Quote:

Depends on who the victors are.

Right, but that's not going to be US.

Quote:

This problem has been growing since Woody Wilson pushed the 16th Amendment giving congress the power to steal money from Americans and since FDR began abusing that power by crafting ponzi schemes, and since LBJ publicly announced that social engineering is a "Great" idea. Today's toady's spending stolen money are late comers and pikers.

Unfortunately, FDR actually helped the economy.
A) He reformed the banking system
B) He brought the farms out of bankruptcy
C) He reduced the lines for soup kitchens to near nothing.
D) He increased the peoples' trust in the economy.
E) He drastically decreased poverty in old people

A few other things, but that's what's important right now. That's a lot more than could be said for free marketers Harding, Coolidge, and Hoover, who were either despised because of their failure to bring people out of poverty, their failure to do anything about people in poverty, or their general economic policies that led to the Great Depression.
The free market is a means to an end, not an end in itself. The free market, as thought of by Adam Smith, is designed to increase the overall utility among all the people who take part in it. However, if 25% of the nation cannot work, and 50% of the nation is in poverty, then the free market is bad.

Quote:

That it's not the president's job to stop people from buying homes they can't afford and it's not his job to stop banks from foreclosing on mortgages taken by people who can't afford them. That the stupid shall be punished in a law of nature.

Right, but what happens when interest rates are artificially kept low, deluding people into thinking that they can buy homes, for the purpose of spurring investment in the economy?
What happens when the people that have made the money from these homes, are the biggest investors in the economy?
What happens when massive people lose what they have worked for, because of some other persons failures?

Quote:

It'll say that there's no difference between the GOP and the Democrats.

Some legacy they are gonna have then.

Quote:

That every society that expects it's government to provide bread and circuses to the people is doomed to collapse, as are those societies that refuse to learn their own histories.

except....societies that do not regulate their economies to the point that they need to be regulated are economies that fail, are societies that fail.

The_Bear · 11-05-2007, 02:17 PM

Quote:

Originally Posted by sectionOne

consumable goods, drinking water.
Lake Lanier supplies Florida, Alabama and Atlanta water and it's almost gone.
and an indication that the US is broke, not only financially.

ah.
Yes.
My point exactly. It doesn't matter how many dollars you have, if there is no water for you to drink.

Crestwood33 · 11-05-2007, 02:22 PM

The only thing holding the markets up are hope, fear and tinfoil??

The_Bear · 11-05-2007, 02:24 PM

Quote:

Originally Posted by Crestwood33

The only thing holding the markets up are hope, fear and tinfoil??

IS that you agreeing with me or saying that i'm making this stuff up?

Crestwood33 · 11-05-2007, 02:48 PM

Quote:

Originally Posted by The_Bear

IS that you agreeing with me or saying that i'm making this stuff up?

.............. I certainly agree with your statement about water, one of my favorate thoughts is "If I have the last source of potable water in the world I will get all the gold and all the oil in the world"