The 2008 Meltdown And Where The Blame Falls
Armageddon was threatening the financial system on Wednesday, September 17, 2008. The largest bankruptcy in American history, that of investment bank Lehman Brothers on Monday, September 15, had roiled global markets, accelerating the stupendous decline in values of every possible investment vehicle Generika Levitra 10mg common stocks, corporate bonds, real estate, commodities like oil, copper and gold, private equity and hedge funds alike. In the midst of the chaos Merrill Lynch, the firm that had brought Wall Testosterone Enanthate Nedir Street to Main Street, was absorbed in a shotgun marriage by Bank of America Bank of America.
Only days earlier came the recognition at the New York Federal Reserve Bank and the US Treasury that AIG, the largest insurance company in the world was running out of money. This required an immediate injection of $85 billion in bail out funds. And later another $100 billion, still not paid back to Uncle Sam.
That day, Sept 17, an even greater crisis was pending. All day long the chairman of General Electric, a company recognized across the globe as a leading industrial giant, was calling the Secretary of the Treasury, Hank Paulson to warn that the next day, Sept. 18, that GE would no longer be able to roll over its short term debt. The American business system was on the cusp of faltering mightily. The US economy was on the brink of a precipice into the unknown.
Messrs Paulson and Bernanke, at the Fed, knew the nation could not suffer the risk of a total breakdown in industry and finance. So, they decided to instantly guarantee the $600 billion commercial paper market, which is widely used to finance day to day operations of all major firms. This guarantee became part of the total cost of bailing out Wall Street, which totaled over $7 trillion when you added guarantees to loans, investments and outright grants. The bailouts were key to raising the Fed''s balance sheet from $1 trillion to $3 trillion and to upping the nation''s total amount of debt some $5 trillion to a record $15 trillion.
Conversely, the household wealth of the nation, measured by losses in financial markets and the historic drop in residential real estate was reduced by a sickenly humungus $12 $14 trillion at 4-chlorodehydromethyltestosterone the very bottom of the whole process in March, 2009. You take that money $12 14 trillion away from the asset side of the ledger and add another $5 trillion in debt and you are bound to experience a decline in the nation''s GDP and a very much slower rate of recovery from such a trauma. A recovery that could take 10 years or more according to Harvard economist Kenneth Rogoff. That brings us to 2018. Need I Kamagra 100 say more?
How did we reach this very near call on a total systemic breakdown?
Firstly, there were no cops on the beat. Laissez faire free "Jintropin China Supplier" market economics was the prevailing public policy. Federal Reserve chairman Alan Greenspan spoke of irrational exuberance but took no steps to cool off markets in the late 1990s. In fact, he was asked by Loews chairman Larry Tisch and former Goldman Sachs co chairman John Whitehead to raise the margins on trading, and refused, Testosterone Enanthate 1000 Mg Per Week claiming falsely that such a move was up to the SEC and not the Fed. Not true.
In 1999 the Glass Steagall Testosterone Cypionate Negative Side Effects Act which had separated commercial banking from investment banking for 66 years, was overturned a move that opened the door to more speculative trading on the part of Wall Street firms.
Then, in 2000 Messrs. Greenspan, former Treasury Secretary Rubin and his successor Lawrence Summers pressed to pass a bill that would prohibit the regulation of derivatives the fastest growing and most complicated and murky new financial product. This was an incredible mistake, as derivative contracts like mortgage backed bonds and credit default swaps mushroomed in across the globe without any oversight, strict capital requirements and on an organized exchange where buying and selling were handled daily.
The result of this vacuum; no one anywhere knew who owed what to whom across the world. Despite the danger lurking in the rapid depreciation of these contracts, Bernanke publicly stated the absurd amount of sub prime mortgages being sold to unsuspecting buyers would not spread to a much wider, deeper crisis. He didn''t know what he was talking about, sadly.
Lastly, in 2004 the major firms convinced the SEC to let them value certain assets on their balance sheet at values they chose rather than marking them t o market which would reveal what losses they were carrying. This added another dangerous laxity to financial regulation. The system was falsifying its accounts believing the investments would bounce back.
The entire catastrophe''s underlying theme was summed up later by this admission from former Fed chairman Greenspan . " I made a mistake," he admitted in a hearing, " in presuming that the self interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms." And we made this man into the wise parental guardian of American capitalism for 18 years. We journalists, that is.
"who cares what the house is worth, I want that six percent commission, and we''ll flip foreclosures because HOUSES ALWAYS GO UP
you get small minds thinking alike, and the world went to hell. You want to blame somebody, you also need to look in the mirror, somebody had to be a mortgage holder along with all the mortgage makers.
We''ll take ten years to dig out of this hole, and the stock buying public is still looking for increased housing builds (!!!!!!!!) as some kind of recovery. Hint: Let''s get the eight million empty homes off the books, not create more inventory to work off.
But hey, what do I know, what does Peter Schiff know, what does Nuriel Nurobeni know, what does Mark Faber know, what does Ron Paul know.
Who listens to them? They''re in the minority, because they''re right. A students all. And you know there are more D C and B students than A students, how could they be right?
How''s that working out for you?
American Economy runs on edge of a cliff due to their high salary, higher product prices, house rents , medicare, lawyer fees etc etc. Its running at the edge since 20 years, A 10% less profit for companies means its a start of economic chain link downturn, a 14% then its a chain disaster.
During 2008 recession the companies were doing false audit, irregular spending, loaning etc.
A series of complaints in 2006 2008, made Government to intervene and verify the so called private (company confidential "buy cheap jintropin online" data) records of the companies, they include software companies doing false audit, bid hacking (eg Satyam World Bank) and other companies doing false audit, false salary reports by software companies.
All above accounted up to 10% .
A 30% reduction in prices will improve American sales, and inturn improve economy.
Wonder why their prices are high despite of mass production.
Robert, I think you are underemphasizing the real driver for the whole mess, which was panic. Panic can shut down overnight credit in the blink of an eye, and the effect is like taking the oil out of a running engine. Paulson and the Fed were partly responsible for the panic because of their handling of Bear and Lehman, which raised the question ''who''s next''.
Greenspan''s comment that he believed banks to be the best judges of their own risks isn''t so shocking, even if the banks'' performance was. Who is more qualified? The same SEC that still couldn''t deal with Madoff after eight years of warnings?