I think these guys gave the upraised middle finger salute to the Democrats that were MANDATING that lenders make loans that could not be paid back... good job guys.
I remember the old days when my Dad actually saved money and bought a used car -- no payments. Credit Cards didn't even exist. The only debt he had was a mortgage. When you create credit your create purchasing power but you also elevate price. It doesn't matter how much purchasing power is created or how it is created, it will never keep pace with the velocity of price. My how the world has changed in such a short period of time. Off to the bank I go tomorrow to save some money.
I opened a savings account at the bank when I was 10. Parent was on it too of course. Put all my grass cutting money in it. Back then $5 a yard was great.
I did the exact same thing. I saved $15 per week cutting grass and then the old man took me out on the job site when I was 16 swinging a hammer. I saved $8000 and paid for my first two years of college in cash. Then I bought a car -- a used car. A 1975 Pontiac Grand Prix. Damn, that thing sucked gas. I bought my gas with cash and borrowed money off the folks on a regular basis. Ohhhh....the good old days!
Federal regulators The Federal Reserve and the SEC failed to stem the reckless behavior of big banksâdespite clear warning signs of potential collapse as early as 2006. That was the conclusion of a March 2009 report by the U.S. General Accountability Office. One problem: Regulators took at face value assurances from banks that they had enough capital to back up their financial gambles..... As long as people,especially congressmen, continue to think like this the country will continue in its tailspin. The federal reserve is no more part of the US government than Federal Express.It is a private bank founded to protect banking rip offs..
Angelo Mozilo AND the Clinton Administration urged people to take out mortgages they couldn't afford. There was a bill that encouraged low income families to get homes... many of which they obviously couldn't afford because of poor credit history. FNM and FRE took a lot of these. If the U.S. imitated the Japanese approach to business, there would be a lot of lives lost.
The name of the game is to use that new credit as soon as possible before prices rise. The credit has to be levered and your bets should be decent. By the time the credit makes it through to the masses, the next down cycle is about to begin.
Yep. And something is going to have to be done about it, because it no longer works and is causing massive dislocations in markets.
I've determined that the ability of banks to create credit out of thin air ultimately provides the impetus for the banks to use any marketing technique at their disposal to increase lending due to negligible or zero real cost. This is how the housing asset market inflated to unsustainable levels. Mortgages were predominately financed by peoples' savings prior to 1980 and therefore housing prices could not grow much faster than the rate of the economy. When banks entered the housing market with full force, house prices began escalating out of control as lending surged, boosting demand, which resulted in higher house prices and therefore a false safety net of "collateral" to inspire further lending of money created out of thin air. This unsustainable system was further compounded since banks began selling (bad) loans off their balance sheets, freeing up "capital" to be magically created and re-directed to the burgeoning housing market at zero absolute cost should the bubble burst. Of course, this only pushed the housing bubble out further and further to levels absolutely obscene relative to the growth of the economy and peoples' purchasing power. Long story short, the ability for banks to create money has been abused and we were forewarned by the constitution's creators as well as Keynes among other economists as to the dangers of allowing private institutions to create money. Only the government should have the capability of creating money and only through a nationalized bank. Guess which is the only state with a surplus and with a gdp that has not exploded since the credit crunch? New Jersey -- The only state with a nationalized bank. http://www.huffingtonpost.com/ellen-brown/but-governor-you-can-crea_b_207806.html Great site with more info on banks and money: http://www.webofdebt.com/articles/dollar-deception.php