heres the real question: is whats good and healthy for the market good for you? and in this instance the answer is no.

credit is a commodity like any other. there was a surplus of credit in the system. americans were encouraged to borrow (mortgages) which created demand for the kind of credit banks wanted to sell. half the time the credit itself wasn’t even real, merely leveraged off some other hyper-inflated commodity that the bank/investment bank owned.

banks didn’t care about lending money to people who couldn't afford to borrow because that isn't how banks make their money. banks provided the money for mortgage companies to lend in return for the right to package and sell the bad debt to investors.



so now we've got nuclear winter and australia is still like "wtf m8?" oh wait. no now we have a situation where most of the sources for capital have dried up due to writedowns. this causes failures of investing and lending institutions that are overexposed in either subprime securities or got shorted into the ground in the wake of their writedowns.

who do we blame for this? as much as i hate to say it this a natural market reaction to previous deregulation. the booms experienced in recent years are a direct result of the Gramm-Leach Financial Services Modernization Act and accordingly this painful *****slap is the result of it as well.

now that's not to say that deregulation is a bad thing, but for any complex system (see: the environment, financial market) sudden , sweeping changes (good bad, or ones that seem to have no short term effect) cause serious ripples down the road.

 

Hello political section.. oh wait..

 

no wai its SRiC specific

 

besides i only lost 31k, not a /wrist thread yet

 

hahaha...
http://money.cnn.com/2008/09/29/mark...ion=2008092917

im no mathematician...... but lolz