›

the banking business model is dead

snigletsniglet
edited October 2008 in The Economy
surkanstance wrote:
In the upside-down economic universe America finds itself in these days, banks can no longer be viable businesses. Due to the government intervention in mortgage finance (e.g. ownership of the Governmental Special Entities like Fannie/Freddie/FHA) it has become impossible for private finance to compete with the artificially low interest rates that the government has on offer. Who would want to get a mortgage from a private bank for 8% when they would qualify for a government backed loan at 5%?

http://surkanstance.blogspot.com/2008/09/banking-business-model-is-dead.html

Comments

  • AlexAlex
    This is very interesting and eye opening (at least for me) explanation of the whole monetary system. Pretty scary, really. It is 47 minutes, but it worth it.

    Money is debt. http://video.google.com/videoplay?docid ... 2583451279

    Alexander
  • SeattleMooseSeattleMoose
    Alex...I cannot thank you enough for the link to that illuminating and yes, scary video.

    I have sent the link to all my family and friends and asked them to do the same.

    Tim, this link should be put in a special place so EVERYONE gets to see it.

    It confirms everything I only "felt" but now more fully understand about the rotting and leaning tower that is our debt/interest driven financial system.

    To sum up...not only is a crash coming, it is inevitable.

    OUR WHOLE FINANCIAL SYSTEM IS AN UNSUSTAINABLE GAME OF MUSICAL CHAIRS!!!
  • TJ_98370TJ_98370
    Alex -
    .
    Good video. It goes a long way toward explaining the "debt is wealth" mentality.
    .
    If you consider what a bond, CDO, MBS, etc. really is and how these "instruments" are traded as something of concrete value, as opposed to what they really are (just a promise to pay back a debt), alot of the financial system really does look like some massive potentially unstable scheme.
    .
  • TJ_98370TJ_98370
    .
    Sixty Minutes investigates Wall Street's credit default swaps, reputedly the major reason for the current economic crisis. Video and transcript -
    .
    A Look At Wall Street's Shadow Market
    .
  • rose-colored-coolaidrose-colored-coolaid
    TJ_98370 wrote:
    .
    Sixty Minutes investigates Wall Street's credit default swaps, reputedly the major reason for the current economic crisis. Video and transcript -
    .
    A Look At Wall Street's Shadow Market
    .

    I don't understand this "witch hunt" aspect of the overall credit collapse. Everyone is worried about finding the one derivative that is causing the pain...but who out there with a high school education can seriously believe that all that Wallstreet magic has resulted in exactly one culprit financial derivative?
  • Charles DeanCharles Dean
    The Credit Default Swaps are a pretty big culprit, but there are at least a dozen different things that caused this to happen.

    I would personally suggest that it was a storm of massive deregulation, regulators looking the other day, rampant greed and a system that was rewarding corporate leadership for short-term big gains over good long term safe investing.

    To blame the entire collapse on one thing is a case of not being able to see the forest for the trees.
  • rose-colored-coolaidrose-colored-coolaid
    Charles Dean wrote:
    To blame the entire collapse on one thing is a case of not being able to see the forest for the trees.

    Although, if I were to blame one thing, it would be leverage.
  • FreedomLoverFreedomLover
    Someone didn't tell BofA, Wells Fargo and JP Morgan Chase that they're dead.
  • FreedomLoverFreedomLover
    rose-colored-coolaid wrote:
    Charles Dean wrote:
    To blame the entire collapse on one thing is a case of not being able to see the forest for the trees.

    Although, if I were to blame one thing, it would be leverage.

    That easy gained leverage to consumers was designed to win elections. You know it and I know it. Only our "leaders" won't admit it.
Sign In or Register to comment.