Jump to content

The Great Depression


Recommended Posts

At the risk of possibly upsetting you and a few other Americans, let me give you the impression I have as a Brit. The last US Administration created a climate of encouraging personal debt and advancing home ownership loans and mortgages to people barely able to afford them. So freely was the money running out of the big banks and institutional lenders such as Freddie Mac and Fanny Mae that they had to seek help from overseas banks who, rather foolishly it must be said, advanced huge loans. Of course, that bubble burst in 2007 and the British Bank Northern Rock became the first casualty. As British Banks can not fail, the British Government was forced to act.

 

Sorry to be a bore here, but the last US administration did not create the climate of encouraging ...

 

It was in fact the Clinton administration that started the big push to get poor people into home ownership.

 

I know its fashionable to blame BUSH for everything, but that does not make it correct.

 

And for the record, I am neither Republican or American.

Link to post
Share on other sites
  • Replies 62
  • Created
  • Last Reply

Top Posters In This Topic

  • ckfm

    14

  • Earl

    5

  • Markham

    5

  • Huck Finn

    4

Top Posters In This Topic

Posted Images

Yes I am afraid that there is a very simple answer to this.

 

It is because the democratically elected British Government has decided that it should be like this.

 

They did have the option of letting HBOS, RBS etc go bust, and letting them default on its debts.

 

However they probably decided the systemic risk was so great it was cheaper to rescue the bank.

 

This of course is assuming that your original premise (that British banks went bust because American banks defaulted) is correct. And this I have just strongly disputed because it is incorrect.

 

And I think the British Goverment line is that by recapitalising and taking large stakes in RBS, LBG et al, it will eventually become a profitable investment when the depression/recession ends and the banks start making money again.

 

Whether it will or not is another question (and when), but the idea is definitely that your relatives are lending money not giving it away. Your daughter might be OK, granny less so

 

Ok I promise to stop now. But I think you made so many mistakes in your post I just could not help it.

Link to post
Share on other sites
eggnoggin

US banks leveraged 30 to1... UK banks 40 to1 and knitted beyond comprehension.. the real problem is curbing the might and creative indulgence of a free and innovative US... relative to the nannying ..dead horse beating .. starving .. bumbling .. "tyrant loving" giants and whining midgets around the world... :o

Link to post
Share on other sites

I think it started back with Ronald Reagan when making debt got popular and accepted. Nobody wanted to do the math that mounting interest is not a good thing to have in the yearly budget. But hey, we all got used to it and thought it will solve itself eventually. Now we have the mess and the current administrations (all over the world) are still trying to solve the initial problem with the same "band aid over a heavily bleeding wound" mentality.

 

How will it end? In hyperinflation of course, everybody knows that who can add one plus one but soon they will start to imprison people who will speak it out loudly.

 

.

Link to post
Share on other sites

It started with President Wilson and the creation of the Federal Reserve in 1913.

Link to post
Share on other sites
Pedro el Lobo
What to do, it is time to make money :o

You will have to short the market.

You can do this with ETF's

 

I dont know how you can morally support shorting the market. It seems to me allowing this tactic unregulated is part of what has the US market in the mess it is in. But then again those wishing to make a quick profit usually are not worried about how much their method may be contributing to a economic downfall as long they are raking in some bucks, no matter how small that profit may be. I just know I could not do it, then again I like to believe I am a contrarian, investing for the long term. True right now I am not looking so smart but in a few years most of this will just be history and the ball rolls on.

Link to post
Share on other sites
I dont know how you can morally support shorting the market. It seems to me allowing this tactic unregulated is part of what has the US market in the mess it is in. But then again those wishing to make a quick profit usually are not worried about how much their method may be contributing to a economic downfall as long they are raking in some bucks, no matter how small that profit may be. I just know I could not do it, then again I like to believe I am a contrarian, investing for the long term. True right now I am not looking so smart but in a few years most of this will just be history and the ball rolls on.

 

 

 

LOL

 

 

I got a good laugh out of this one.

 

First of all, small traders have no influence on the market whatsoever. They are just trading for a living and cover their short position sooner than later.

 

There is a rule which says that you can't short a stock on a downtick which basically means that the stock has to go up a little bit before you can short it. You can only short a stock if your broker has inventory of it.

 

The big companies which do shorting are hedge funds and market makers. Sometimes they are one and the same. Those market makers can short at any time "in order to keep their stock balanced" (supply and demand).

 

Then last year in October the SEC introduced some rules which forbid shorting and from one day to the next many traders had to buy back the stocks the were short and made big losses. What did this do positive for the market? 0, Nothing.

 

I truly believe that all market restrictions for the public are only done so a few can still make a fortune on Wall Street because the rules are not valid for them.

 

Also, keep in mind that there are always 2 people in a trade, one who thinks that the market goes down, the other one thinks it will go up. Many traders can't figure out anyway where the market goes, trading on the wrong side/emotionally trading etc, just like our fellow above who wanted to short at a (potential longer term) bottom.

 

Short covering (covering/buying of short positions) often fuel rallies and don't harm the markets at all but helps them to gain momentum in an upwards trend.

 

 

.

Link to post
Share on other sites
Sorry to be a bore here, but the last US administration did not create the climate of encouraging ...

 

It was in fact the Clinton administration that started the big push to get poor people into home ownership.

 

I know its fashionable to blame BUSH for everything, but that does not make it correct.

 

And for the record, I am neither Republican or American.

here's a thread on this topic. I had nuttin to do with it as it's over my head.

 

(a bit of the the original post)

Too many people got too greedy, Millie said, with all those 100% home loans. But whose fault was it, I asked Millie, the lenders or the people taking the loans? Millie did not hesitate for even a second. It was the government, she said. When Clinton was in the White House, she said, they came out with something called

Link to post
Share on other sites
Markham
Yes I am afraid that there is a very simple answer to this.

 

It is because the democratically elected British Government has decided that it should be like this.

 

They did have the option of letting HBOS, RBS etc go bust, and letting them default on its debts.

 

However they probably decided the systemic risk was so great it was cheaper to rescue the bank.

 

This of course is assuming that your original premise (that British banks went bust because American banks defaulted) is correct. And this I have just strongly disputed because it is incorrect.

Thank you for your illuminating posts and for correcting some of my misconceptions!

Link to post
Share on other sites
I gave some thought to that idea of a bear market rally.

 

I am wondering why you are bearish after the DOW Jones lost 55 % of it's value, other indices and sectors actually look quite bullish and many emerging markets (China, Brazil) are already rallying like crazy.

 

I stick to my statement I made last Friday, even more, I say this is an excellent buying opportunity which won't come very often. We may see some kind of retest over the next weeks or so but if you want to buy into the US or European stock market, now is the time.

 

.

 

 

Nice market action today with the DOW Jones gaining 240 points. I looked back at the chart and saw that the S&P500 futures contract printed a low at 666. I am not sure what this number means but this could be something important.

 

The Swiss Francs posted an over 3% loss against the Euro today as the Swiss Federal Bank announced that it would be buying other currencies and fend off further appreciation of it's currency. I mentioned this a few months ago and see it reinforced with today's action. The Swiss Francs could be very weak in the future as Swiss Banks have the same or even more problems as Banks in other countries. On top of that, the Swiss financial system opened up to inquiries from the US prosecution system and is releasing information about US citizens who are committing tax fraud. I am pretty sure that other countries will jump on that one. Needless to say what this could mean for this former tax heaven.

 

The Euro seems to be finding a bottom against the US $$, so it's time to load up on this one or at least diversify into the EU currency out of the US$$.

 

.

Edited by scianna54
Link to post
Share on other sites

i think that the u.s.a has not seen the bottom .Not even with this bounce in the market. in the mid west i could take you on a drive through towns that there are hundreds of factorys standing empty.drive down one street and up another.Hole towns empty.I have seen this myself. Over my lifetime the midwest has went bust. its not just talk things are looking realy bad in the states.Some may laugh but as the way the U.S. so goes the rest of the world.

Link to post
Share on other sites
i think that the u.s.a has not seen the bottom .Not even with this bounce in the market. in the mid west i could take you on a drive through towns that there are hundreds of factorys standing empty.drive down one street and up another.Hole towns empty.I have seen this myself. Over my lifetime the midwest has went bust. its not just talk things are looking realy bad in the states.Some may laugh but as the way the U.S. so goes the rest of the world.

 

 

Thanks for bringing it up.

 

As pointed out before, the stock market will rise because of the imminent hyperinflation plus devaluation of the US$$.

 

The bottom of this recession will be somewhere in 2013 - and it will be worse and bader than we can imagine.

 

.

Link to post
Share on other sites

Actually, Bill Clinton signed a bill in 1999 removing regulations on banking from a previous law called Glass-Siegel,(spelling?) and Jimmy Carter started the Community Re-investment Act and then Clinton really pushed it later. I heard this from a financial guy named Bob Brinker, not a political comentator. Of course I have my own opinion that the dumocrats did all they could to engineer this economy and blame on Bush and the wealthy so that they could win an election. Home ownership can be a very good thing, if you can afford it. Of course I bought a home I could afford even on a lay-off and I live simply.

 

Roger

Link to post
Share on other sites
Alan S

The Glass-Steagall Act had many benefits.

(It is a shame we didnt have something similar in the UK.)

 

Unfortunately it also had some negative effects, including limiting the amount of profits banks could make.

 

It was 1999 when it was repealed, whichever president was there then.

Link to post
Share on other sites
  • 2 weeks later...
i think that the u.s.a has not seen the bottom .Not even with this bounce in the market. in the mid west i could take you on a drive through towns that there are hundreds of factorys standing empty.drive down one street and up another.Hole towns empty.I have seen this myself. Over my lifetime the midwest has went bust. its not just talk things are looking realy bad in the states.Some may laugh but as the way the U.S. so goes the rest of the world.

 

 

The "bounce" is going on. Dow up almost 7 % today. We can still go higher 15 to 20 % from here without much of a breather.

 

.

Link to post
Share on other sites
Guest
This topic is now closed to further replies.

×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use, Privacy Policy and Guidelines. We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue..

Capture.JPG

I Understand...