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HorizonDesign
Joined: 31 Jan 2009
Posts: 54
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 Posted: Sat Feb 21, 2009 7:05 pm Post subject: Reflections on the national and global economy |
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When we think the crisis at home, it is a natural tendency to also want to look at the world as a whole.
Maybe some believe that once things get better at home, they can start to improve globally as well.
How did the local crisis have such global repercussions?
Is it more important to stay focused on fixing these here, or are we missing the bigger picture, if we focus solely on the situation at home?
What factors have lead to the current world crisis we are seeing?
All these questions come to mind as well.
Anyone have any ideas on how to solve not only the local national but also the global crisis and abate things not only at home but also over-seas?
At least a first step seems obvious - to set straight things at home, since our economy has an incredible impact on the rest of the world.
Now that we are finding as a country some solutions to fight the domestic crisis, it is also time to think of the Global Economy and new solutions at home that will help the world economy as well.
It is becoming ever more clear that globalization has created serious problems of inter-connectedness, and thus the problems of this country become the problems of the world.
So in effect, globalization has brought us many bad effects, such as:
1. Increasing cost of living in poor countries, as prices slowly become standardized across currencies, making the weaker currencies and lower wages able to afford a much lower standard of living.
2. Increasing divides between the rich and the poor, between large corporate interest, and national interests, between the need to stabilize and fortify/build local markets, and the watering down effect of to much openness on the part of world markets.
3. Spreading of US economic crisis like a wild fire into other markets. What began as a domestic crisis has had global repercussions. This, the greatest negative effect of all.
4. It has sent US jobs overseas, turning us into more of a service economy, and thus diminishing our productivity, forcing many to seek gain in financial markets, rather then in productive industries. Now, with the collapse of these institutions, is is making it very difficult for the world to now develop new wealth, and capitalize on the wealth we already have, as credit markets become frozen globally. Thus,
5. Freezing of global credit markets in general as a result of US losses.
And the artificial inflation of US housing prices, and over-dependency on fueling growth by debt has brought us many bad effects domestically:
1. Increase of cost of living in the US.
2. The busting of our economy.
3. The busting of financial institutions and credit markets.
4. Debt has began to superceed the the generation of wealth and the ability to be paid back, thus causing the destruction of monetary value, life savings and the ruining of fortunes.
It has also lead to the exposing of many fraudulent companies as well, so we are in a sense, in a cycle of cleansing of the system, since in times of hardship, the greatest scheming companies are ever more coming out in the news. The recent cases of Madoff and the Texas Financier as well.
We have seen it announced recently that we may have hundreds of Enron size culprits in the markets, who contributed to all this mess as well. |
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HorizonDesign
Joined: 31 Jan 2009
Posts: 54
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| Posted: Sat Feb 21, 2009 7:47 pm Post subject: |
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So, essentially, we have seen the un-raveling of the global economy.
Domestically, we have witnessed basically the same, and the systematic failure of the mortgage finance industries, leading to the present situation, in a sort of "domino -effect", which has not only crippled the American economy, but the global economy. The utter complete failure of past administrations and public agencies to prevent this from happening is now the greatest error that now lays upon us an incredible problem that has resulted in loss of income for this generation and has jeopardized the future of this nation. The day of reckoning has come, and the financial institutions continue falling like dominoes. As can be seen, nobody knows the length of the damage, the depth and extent of the "digital green backs" that has evaporated, and the degree of commitment of financial institutions to these failed investments.
Obviously America cannot use public money to prop-up financial institutions which have not acted legally, which have failed in their experience of wealth accumulation, jeopardizing the life savings of millions. Now these same groups attempt to rob people back of their life investments, and of their vary homes.
And there are problems with loan origination and loans which were broken up and re-sold to various groups, further adding complexity to the situation.
At home, the mortgage loan originators are, in many cases, no longer able to prove ownership of many of these loans, and in many cases this is actually good news for a great part of American home-owners as, if they decide to fight these loans and save their homes many people will be able to just become "squatters" in their own homes, and battle the banks and keep their own homes, particularly since many of the titles were sold and re-sold irregularly. So let America use this to it's favor. Let people keep their homes and the banks and mortgage institutions which originated them take the loss.
In fact, when the majority of these institutions claim in public hearings that they are attempting to help home buyers re-fiance, they are doing the exact opposite in practice - making it difficult to reach agreements with buyers and imposing on them conditions they know they will not be able to meet, thus forcing them into loosing their homes. So not only should we declare a nation wide moratorium on all bank repo's of properties, but also require all financial institutions, on a global scale, to provide proof of ownership of the loans. If they cannot do so, then they shall be placed into a holding until they can be properly securitized and the proper holding established, with a moratorium on owner payments until each one is resolved. Some can also be seized due to irregularities and forfeited/assigned over to public coffers.
One idea is the authorities can proceed to assign these mortgages in due process of law, only with proper proof of ownership on the part of the financial institutions. This way, the shares of losses can be better determined and the new conditions of the loans better established.
As can be seen, many of these loans were being financed several times, outside the rules as established, and even without the knowledge of the buyer. When irregularity is demonstrated, the proper authorities can assign the home owner his own repayment terms, and/or reward him a discount on the loans, due to the hardship being caused on citizens by these irregular market activities damaging American wealth. For the loans that it is able to negotiate, the public sector can then re-finance the loans back to home owners at easy terms, and the mortgage crisis thus can be abated.
Holding depository institution?
We have seen those in charge go back on the holding bank idea, for various reasons, including the complexity of valuating these investments. In effect, it is difficult to place all these bad -mortgages into a "bad bank", (holding bank) if the majority of these have no single originator and thus do not belong to any one institution. Further, the cost would be to difficult to calculate as well.
They are not doing their job
In essence, the entire system has failed systematically, including the SEC in failing to detect the Maduff debacle in time. And now, in no way should America's future now be held hostage to these faulty mortgage institutions. It is time the public interest evaluate all the bad mortgages which demonstrate irregular activity on the part of financing institutions, and establish quality groups or categories of loans, to be able to filter out the good from the bad, and further look into those which are classified as dubious, on a case by case basis. For those which have no originator or owner, it can require the banks to share the loss and the loans which are found to be too complex and entangled can be mandatorally re-negotiated on new terms with buyers, or have the institutions risk default of the loans.
Recent leadership efforts to encourage institutions to re negotiate the loans have been good efforts, and promising money to those which successfully do can also be a good stimulus. But we need to be careful not to be throwing out good money after bad lending practices.
New Directions
And getting to the core of the crisis, by making every effort to get the banks to reduce the principal, reduce the payments, and bring in pools of private investors combined with government funds, is a direct combination of ideas as had been suggested in another thread here earlier, in embryonic forms. These ideas were thus appropriated in part, with combinations of new ideas and focusing in on the best combination of ideas to help the entire system get back on it's feet, by offering government backing of these loans for investors, so that they can come in with infusions of money and thus shore up the value of these investments and thus stabilize housing prices and the balance sheets of these housing lending institutions. So the first effective step has been taken.
Many Forms of Outstanding Debt
Once the housing financing situation has been stabilized, it will be time to look at other types of great outstanding debt that will multiply, such as credit cards, auto loans, as more defaulters join the list. So these other forms of accumulated debt also threaten the greater economy. So new standards for debt pardening and/or re-negotiation need to be established for these industries eventually as well. Huge write-offs, if they occur, could only further weaken the industries ability to lend.
Multiple problems
So in effect, we have multiple problems at the core:
1. Housing crisis.
2. Defaults on other types of loans, such as credit cards, auto loans and so forth.
3. Diminishing employment and spending power.
4. Diminishing public revenues as a result.
5. Increasing indebtedness reducing spending capacity and slowing down the economy.
To get credit flowing again, the first steps have been taken. Now, setting up new public funds, backed by new securities will be of utmost importance, to pave the way for the opening up of credit markets.
All these steps are necessary to start helping the global economy as well.
While we need to avoid too much protectionism, at the same type we are at a stage where we need to encourage consumption of US made products. So this requires a delicate balance as well.
Do everything yet not the essence?
And now, after all is done, to little is done if the same structure we have today remains in place and the same key players continue to control the market for debt. A complete over-haul is thus is necessary then on this nation's credit markets.
Will so much spending really solve anything?
How can we be lead to believe that compounding our errors of the past will lead us out of a basically credit crisis, mortgage crisis, greed crisis and a crisis of too much spending, which has caused debt to exceed the production of wealth? This is no longer sustainable as well.
Truly, if they think sending our budget into the stratosphere is doing us a favor, they should do some serious re-thinking of their strategies.
Further, the two recent packages of nearly 800 billion would not have been needed, had we used our greater enginuity, and devised programs of the future, innovations of the future, that would make this nation rich only on 160 to 180 billion investments, such as new space programs/cities that would attract global investment, by attracting the latest technology and innovation into core massive projects that would ignite a furry of growth and prosperity and lead us into the space age.* If this had been done, all the growth that would be fueled by these new industries would finance all the government expenditures for ages to come, as had been suggested originally in the other topic on outside the box ideas.
Bank nationalization?
And now, it seems many are tending to think that bank nationalization is inevitable. What are others opinions on this? Do you think so and if so, why?
At present, it seems first the cost to do so would be prohibitive.
Second, it would only discourage the free market and free economy and lead even further to market losses. At this time, leaders should take on a more firm position on this subject, and send to the markets a clear signal that there is no interest or intent to nationalize the banks, otherwise we will only see the markets slide even further. At the same time that we don't want to give good money to institutions that will not make good use of it, we also need to make sure those that really need it are getting it. This is why the latest "stress tests" may prove effective to weeding out those who are just using the system to their advantage from those institutions that really need to help to survive. This step is crucial to opening up again the credit markets as well.
A Crisis of Confidence, Basically
So the next and biggest step leaders should take is to shore-up investor confidence. We are reaching a stage of a confidence crisis. All the solutions are there and can be implemented, but until confidence is restored, we will have a long way to go to re-store normal market forces. We need to set these normal market forces into action by demonstrating that all the market fears can be contained and avoided. So when the market sends clear signals of what it does not want to see happen, we need firm action on the part of leaders to contain what is not desired.
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*seen also in the other discussions. |
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HorizonDesign
Joined: 31 Jan 2009
Posts: 54
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| Posted: Sat Feb 21, 2009 8:06 pm Post subject: |
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Here are a few links on these subject matters, that one can have a look at:
This first one is quite relevant -
http://www.msnbc.msn.com/id/29242063/
and a few more good links, worth having a look at -->>
Current showdown is latest chapter in 8-year, Texas-sized legal drama
http://www.msnbc.msn.com/id/28830348/
Ex-corpsman, 84, blames 'greed, greed, greed' as he faces losing his home
http://www.msnbc.msn.com/id/29198366/
This one explains how they got the whole thing rigged:
http://www.msfraud.org/howtheysteal.html
| Quote: | Sept. 19, 2008 (Bloomberg) -- As it stands, the rest of us will be paying much money over a long time for the greed and bad judgment of those who melted down the economy.
Hundreds of billions of taxpayer dollars are propping up firms that a relative few money lenders and Wall Street wizards ruined.
If that weren't enough, the crisis is shrinking the money that Americans diligently socked away for retirement, down payments on first homes, college for the kids or this winter's heating bill. We might as well have opened our windows and tossed out cash.
Beyond crimping living standards around the globe, the crumbling of the U.S. financial system has prompted action radical for a nation devoted to free enterprise. However necessary, it's nothing short of astounding that the U.S. government essentially nationalized the largest insurance company in the country.
The real kick in the teeth is that the executives who inflicted all this financial pain, who forced unprecedented government takeovers, walk away with hundreds of millions of dollars. It's up to us -- innocent little us -- to dig into our pockets, into our futures and into our children's futures to fix their spectacular errors. |
And the same site has a page entitled "let them pay for the melt-down".
Congresswoman Marcy Kaptur says it’s time for homeowners to fight back, exercising squatter’s rights:
see the same site, page "don't you leave"...
President Obama’s Remarks on the Homeowner Affordability and Stability Plan
A President who basically "get's it"
http://livinglies.wordpress.com/a-president-who-gets-it-mostly/ |
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justellus
Joined: 22 Jan 2009
Posts: 200
Location: World Wide
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| Posted: Mon Mar 09, 2009 10:29 pm Post subject: Credit Default Swaps and Derivatives are the Cause |
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The Cause of the Meltdown is Credit Default Swaps and Derivatives.
A crisis of confidence or are derivatives and credit default swaps (terms nobody understands) the cause of the melt-down?
http://www.cbsnews.com/stories/2009/03/08/sunday/main4852193.shtml
These complex names nobody understands...and how far deep do these go into the market? Very far...
| Quote: | Posted by american_11-2009 at 2:48 PM : Mar 8, 2009
You make an important point here, the subprime mess ".......started the unraveling of the global economy"
The subprime and mortgage problem is only the tip of the iceberg. Cowboys at the banks made rash and very risky bets called derivatives. Derivatives, and particularly credit default swaps are what are unraveling the global economy.
Think about the numbers. We could have bailed out the defaulted subprime mortgages 10 times over by now. The root of the problem is not the mortgages, but rather $160 TRILLION in derivatives.
Why is GE in trouble? Credit default swaps. Why is Citibank, JP Morgan and Bank of American in trouble? Derivatives and credit deafult swaps. Why is GM in trouble? GMAC financing had high number of derivatives that can't be supported since car sales have gone down. IT"S THE DERIVATIVES THAT ARE BRINGING THE ECONOMIES OF THE WORLD DOWN. |
Thus,"" we have a long way to go still. AIG is a prime example of the lack of regulation wrecking the US and world economy.
So how now will all this mess be sorted out if nobody knows the extend of the damage caused by these mechanisms of mad greed unleashed unchecked in the markets for so long, and now come back to collapse on us and vent their furry, all in the name of greed?
They were so inter-twined with the sub-prime mess, corruption, unchecked insurance companies meddling in gambles and swaps that now cost the world a fortune to fix.
In essence, now tax payers are paying for the greed and corruptions of the banks and financial institutions that created all this mess, by the wretched gambles with investors and client's money..in clever makings that brought millions in commissions to those who devised such devilish schemes of fortune hoarding.
Now who is left to pick up the tab but the average citizen, over-taxed and over-burdened now and committed to paying for eons to cover all the gov debt needed to flush money back into the pockets of the crooks in attempting to fix it. It will never be fixed this way, and no amount of money will be able to cover or fix this huge mess these derivatives and credit default swaps have created. Or rather, those who devised, manipulated and used them to amass fortunes and wreak havoc with our economy in the process. And now, the inter-connected economies are spreading the havoc of these bad investments like a wild-fire.
a discussion on AIG and the derivatives -->.
http://moneycentral.msn.com/community/message/thread.asp?board=MarketTalkwithJimJubak&threadid=991556&boardname="""""""Hide&header=SearchOnly&footer=Show&linktarget=US95parent&pagestyle=money1 |
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justellus
Joined: 22 Jan 2009
Posts: 200
Location: World Wide
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| Posted: Thu Mar 12, 2009 8:05 pm Post subject: |
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This link below contains some recent Obama perspectives on the Global economy and local efforts to contain the crisis:
http://www.cbsnews.com/blogs/2009/03/11/politics/politicalhotsheet/entry4859035.shtml
Very related to this topic as well.
And this link is related to the credit default swaps and derivatives:
http://www.cbsnews.com/blogs/2009/03/09/business/econwatch/entry4854959.shtml
How has AIG benefited banks and what banks? It is time we all know.
Who are the banks behind the AIG bail-out? Are they are benefiting from public funds to help relieve their looses in derivatives, on the cost of the public coffers?
Truly bailing out AIG is only further helping these banks that now are benefiting from the AIG bail-out. So who is this bail-out really serving, the interests of these banks or the interest of the public? Whether it is the former or the later, if public money is being used, the public has the right to know which banks this is benefiting. |
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