Fifth Larget US Investment Bank in Trouble?

Discussion in 'Current Affairs, News and Analysis' started by Brick, Mar 16, 2008.

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  1. Typical Americans, we have out Northern Rock so when they lose one of theirs it just has to be bigger and better. :) Seriously though, what could be the knock-on effects of this?
     
  2. High Inflation.
    All caused by Greed.
    People who could not afford a house taking on 'Mortgage' they could not afford, if interest rates rose.
    People selling 'Intricate' mortgage deals to folk who could only afford on exceptionally low interest rates.
    Very cleaver Financiers who bought up these mortgage Debts and then Packaged them and sold them on as High Paying investments, to Banks willing to take a risk for high value returns.
    World inflation rising due to Oil going from 25-30 $ Yankee to over 100 $ Yankee.
    john
    Thank King George and his running dog Blur.
     
  3. In Oz we also have the "investment" herd buying investment properties and trying to generate wealth which has also added to house prices which has in turn brought in more investors.

    Greed indeed.
     
  4. A retired Australian banker I know said to me recently, Last time we had a mortgage crisis in Strailia. The authoritys just made 25 year mortgages into 30-35 year mortgages and solved the problem that way.
    However when many many Mortgages have all been assembled into a Package which has then been sold on, offshore and broken up and repackaged you have no chance of taking relatively 'Simple' solutions.
    john

    Some folk are asking just who where the people who Packaged these Mortgages.
    One tale is that one Elliot Spitzer was investigating and so Private Detectives where tasked to check into his personal dealings.
     
  5. Can it really be laid at their feet though? Whilst I suppose it certainly illustrates a lack of regulatory control and oversight and so as such they have to carry some of the blame for being the head of government, it's the bankers and so called financial experts that have to shoulder the majority of the blame for the whole affair.

    Christ I'm arguing in defence of Blair, I feel slightly dirty.
     
  6. jonwilly's simple world.

    No Iraq war no price of oil going through the roof and no end in sight for the Inflation that is coming.

    I take an interest in Interest Rates, for I live on my pension and my Stash.
    Go back say 6-9 months and the Financial Commentators where all saying that interest rates would be rising for inflation was taking off world wide.
    I maintain that National Governments worldwide are deliberately playing down the Inflation rate in their country, UK is the classic example.
    I know prices for the basic food have risen quite drastically on food where I live.
    High Oil price means high price at pumps and the cost of transport affects all goods that have to be moved.
    Regime change is Illegal and now even the Yanks are admitting that the Iraq war was to remove Saddam.
    The above is why I blame Bush and Blur.
    john
     
  7. The whole credit system is crumbling. I don't think you can pin it on just a few individuals.

    China's massive growth sucking all the real jobs out of the western economies is one root of it. The whole "free trade" thing only works if everybody is doing it or there's a power that can enforce it. The growth of an economic nationalist China while the western countries were globalizing free traders has left those western countries in a mess.

    The other root is "not as clever as they think they are" types playing games with debt to make themselves billions. This was sparked off by computerization making things possible that didn't used to be.

    Bankers forgetting the old rules and joining in.

    Too many lawyer politicians and professional politicians and not enough with different experiences and knowledge.

    Crappy media that believe government statistics -- "Iron Chancellor" Brown -- total joke.
     
  8. I think all this is true but I think there's two elements.

    1) There's how strong the basic underlying system is. How well it can deal with a crisis.

    2) The various crises that get caused by various events.

    The western economies could have survived the economic consequences of Iraq, higher oil price and higher govt spending, if the underlying economies weren't built on hot air.
     
  9. I consider Bush to have been the worst President in US history.
    From what I gather from the web/press, he is non to bright and a 'Reformed Alcholoic' what ever that is.
    He is also said to be very easily influenced by Certain Folk (Rove and above all Chaney) who know how to present matters to him in a manner with which he will sympathize.
    The Neo Cons fed their view of the world and the US's place in it to Bush before 9/11 and the events of that day accelerated Bush's action on Iraq.
    He took his eye off South America and failed to provided leadership to the western world.
    john
     
  10. If I thought Bush was actually in charge I'd prob agree. But I think he's always been a glove puppet for Cheney/Perle/Wolfowitz/Rove etc.

    I saw a documentary a few years back. Fly on the wall type thing with him campaigning before the first presidential nomination. He came across ok as a bloke before he got the nomonation. Totally out of his depth as a president though.
     
  11. China's 'massive growth' didn't spontaneously occur. It was fueled by economic growth in the US, much of the EU and other Asian countries.

    Chinese major export markets in 2007: US 21%, Hong Kong 16%, Japan 9.5%, South Korea 4.6%, Germany 4.2% (2006)

    The 'sucked jobs' were in mostly labor intensive and unskilled manufacturing jobs. China's per capita GDP is somewhere between Namibia and Azerbaijan according to the IMF and the World Bank.
     
  12. I have a feeling those long term mortgages in the US will become longer term mortgages. The political will is certainly there on both sides.

    On Elliot Spitzer, well he was very pro-consumer but completely unable to work well with anyone. Even those who supported him got alienated by his 'ways'. Supposedly it was his large movements of money that drew the IRS, then FBI to him but I sure that some were looking into his dealings. He has only himself to blame in that sense.
     
  13. Supply and demand.

    The supply moved to China.

    The workers who lost their jobs no longer have add to demand.

    The Chinese workers don't either because they don't get paid enough yet.

    The demand side of the equation has been made up with debt.

    The debt bubble is bursting.
     
  14. I could be wrong but hasn't it been argued that the flow of cheap goods from China is one of the major factors that have helped keep the lid on price increases and inflation stay so historically low?
     
  15. Yeah. The UK inflation includes stuff like that and excludes lots of basic foods etc. God knows what the real inflation rate is.

    (Also not blaming China exactly-- it's just so big and the change has happened so fast. Was always going to make a big wave.)