Our financial system is crumbling this week.

[G. Keenan]

That [expletive] is scary.

Who's ready for the politics of fear? Cause it would totally work.

Fear is definitely driving stocks down. People who really shouldn't be selling are selling.

[Hungary Jack]

That [expletive] is scary.

Who's ready for the politics of fear? Cause it would totally work.

Fear is definitely driving stocks down. People who really shouldn't be selling are selling.

Fear is causing banks to hoard cash and refuse to lend to even creditworthy borrowers.

Good thing Mrs Jack bought that big bale of hay. A neighbor down the street has a pet bunny that eats hay. I am going to barter hay for beer.

[sighyoung]

That [expletive] is scary.

Who's ready for the politics of fear? Cause it would totally work.

Fear is definitely driving stocks down. People who really shouldn't be selling are selling.

Fear is causing banks to hoard cash and refuse to lend to even creditworthy borrowers.

Good thing Mrs Jack bought that big bale of hay. A neighbor down the street has a pet bunny that eats hay. I am going to barter hay for beer.

Forget bartering. In a couple of months, you'll be brewing the hay.

[planet planet]

That [expletive] is scary.

Who's ready for the politics of fear? Cause it would totally work.

Fear is definitely driving stocks down. People who really shouldn't be selling are selling.

Fear is causing banks to hoard cash and refuse to lend to even creditworthy borrowers.

Good thing Mrs Jack bought that big bale of hay. A neighbor down the street has a pet bunny that eats hay. I am going to barter hay for beer.

Is the business you inherited from your wife's aunt feeling the SMB credit crunch?

[sighyoung]

That [expletive] is scary.

Who's ready for the politics of fear? Cause it would totally work.

Fear is definitely driving stocks down. People who really shouldn't be selling are selling.

Fear is causing banks to hoard cash and refuse to lend to even creditworthy borrowers.

Good thing Mrs Jack bought that big bale of hay. A neighbor down the street has a pet bunny that eats hay. I am going to barter hay for beer.

Is the business you inherited from your wife's aunt feeling the SMB credit crunch?

Watch it, Hungary. She's been hoarding cash, and she wants to buy it for pennies on the dollar.

[G. Keenan]

That [expletive] is scary.

Who's ready for the politics of fear? Cause it would totally work.

Fear is definitely driving stocks down. People who really shouldn't be selling are selling.

Fear is causing banks to hoard cash and refuse to lend to even creditworthy borrowers.

Good thing Mrs Jack bought that big bale of hay. A neighbor down the street has a pet bunny that eats hay. I am going to barter hay for beer.

Which is much more serious. I'm talking about individual investors who don't have immediate need for cash (retirement, college, etc.) selling their stakes out of panic and forgetting the long term view. Even if we go into a depression, it probably won't last 10, 15 years.

[planet planet]

That [expletive] is scary.

Who's ready for the politics of fear? Cause it would totally work.

Fear is definitely driving stocks down. People who really shouldn't be selling are selling.

Fear is causing banks to hoard cash and refuse to lend to even creditworthy borrowers.

Good thing Mrs Jack bought that big bale of hay. A neighbor down the street has a pet bunny that eats hay. I am going to barter hay for beer.

Which is much more serious. I'm talking about individual investors who don't have immediate need for cash (retirement, college, etc.) selling their stakes out of panic and forgetting the long term view. Even if we go into a depression, it probably won't last 10, 15 years.

10-15 yrs. isn't that comforting to the 35+ age group.

[greenback44]

I think it's crazy to blame foolish first time home buyers for this mess. There was incredible amounts of money being created in Asia, money that needed to be invested. Treasury bonds, the standard safe investment for foreign investment, were paying 1 and 2%, so essentially nothing. Investors found the housing/mortgage market and when all the "good" loans were made that wasn't enough. So they found more customers aka homebuyers, who were less and less qualified.

Of course this country has been in a deregulatory mood for quite some time, and that includes Clinton's '90s, so who was going to pay attention to Chicken Littles protesting and proclaiming when so many people were making so much money. Forget all the red flags, trying to stop that financial momentum was impossible until it was too late.

Not only was their dereg in the banking and finance industries, the same was true for real estate appraisers. No longer did they need to do an actual and honest appraisal. Just use the hyperinflated market as the standard and pay no attention to the structure itself.


Anyway, in hindsight it's clear that there were some that saw the inevitability of this disaster but you try to stop a $500 trillion dollar boulder from rolling down a hill.

The New York Times had two articles over the weekend that related to the bolded stuff. First, part of the problem was the lack of Chicken Littles. Well, when the SEC thought about loosening capital requirements, maybe there was one:

http://www.nytimes.com/2008/10/03/busin ... ref=slogin

In letters to the commissioners, senior executives at the five investment banks complained about what they called unnecessary regulation and oversight by both American and European authorities. A lone voice of dissent in the 2004 proceeding came from a software consultant from Valparaiso, Ind., who said the computer models run by the firms — which the regulators would be relying on — could not anticipate moments of severe market turbulence.

“With the stroke of a pen, capital requirements are removed!” the consultant, Leonard D. Bole, wrote to the commission on Jan. 22, 2004. “Has the trading environment changed sufficiently since 1997, when the current requirements were enacted, that the commission is confident that current requirements in examples such as these can be disregarded?”

What makes it more frustrating is that the signs were plainly there, and the folks in positions of power just completely misread them.

http://www.nytimes.com/2008/10/05/busin ... anted=2&em

Capitol Hill bore down on Mr. Mudd as well. The same year he took the top position, regulators sharply increased Fannie’s affordable-housing goals. Democratic lawmakers demanded that the company buy more loans that had been made to low-income and minority homebuyers.

“When homes are doubling in price in every six years and incomes are increasing by a mere one percent per year, Fannie’s mission is of paramount importance,” Senator Jack Reed, a Rhode Island Democrat, lectured Mr. Mudd at a Congressional hearing in 2006. “In fact, Fannie and Freddie can do more, a lot more.”

No matter how well-intentioned, that's a pyramid scheme.

[G. Keenan]

That [expletive] is scary.

Who's ready for the politics of fear? Cause it would totally work.

Fear is definitely driving stocks down. People who really shouldn't be selling are selling.

Fear is causing banks to hoard cash and refuse to lend to even creditworthy borrowers.

Good thing Mrs Jack bought that big bale of hay. A neighbor down the street has a pet bunny that eats hay. I am going to barter hay for beer.

Which is much more serious. I'm talking about individual investors who don't have immediate need for cash (retirement, college, etc.) selling their stakes out of panic and forgetting the long term view. Even if we go into a depression, it probably won't last 10, 15 years.

10-15 yrs. isn't that comforting to the 35+ age group.

I would think that your average 35 year old is still looking at another 25-35 years before retirement.

[AWvsCBsteeeerike3]

Roubini again.

His essay on the 12 steps to a systemic financial crisis.

http://media.rgemonitor.com/papers/0/12_steps_NR

His followup as of today:

http://www.rgemonitor.com/roubini-monitor/253853/


The reason I don't comment much in this thread
(but read every word written here) is that I really
don't have any answers. I don't even know the
questions.

If this guy's right, we should all just up and move to a different country that has a [expletive] currency. Then, transfer your money, become very wealthy and start developing that country. If enough people do it, it would actually work. And, if this guy is right, it would be worth thinking about because there will be a boatload of people that are straight [expletive].....like entire families....