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View Full Version : Washington Post: A Real Wall Street Bank Run




FrankRep
02-23-2008, 02:03 PM
Wall Street Bank Run


Washington Post
Feb. 21, 2008


It doesn't look like an old-fashioned bank run because it involves the biggest financial institutions trading paper assets so complicated that even top executives don't fully understand the transactions. But that's what it is -- a spreading fear among financial institutions that their brethren can't be trusted to honor their obligations.

Frightened financiers are pulling back from credit markets -- going on strike, if you will -- to escape the unraveling daisy chain of securitized assets and promissory notes that binds the global financial system. As each financier tries to protect against the next one's mistakes, the whole system begins to sag. That's what we're seeing now, as credit market troubles spread from bundles of subprime residential mortgages to bundles of other kinds of debt -- from student loans to retailers' receivables to municipal bonds.

Investors are nervous because they aren't sure how to value these bundles of securitized assets. So buyers stay away, prices fall further, and the damage spreads.

The public, fortunately, doesn't understand how bad the situation is. If it did, we might have a real panic on our hands. And there would be more pressure for bad policies -- ones that try to freeze the damage, rather than letting prices fall to levels where buyers will return and the markets will clear. Hillary Clinton's proposed moratorium on home foreclosures, in that respect, is one of the truly bad ideas of our time. It would make the situation worse by increasing even more the illiquidity and inflexibility of the housing market.

....

Full Story:
http://www.washingtonpost.com/wp-dyn/content/article/2008/02/20/AR2008022002270.html

The One
02-23-2008, 02:24 PM
We are so fucked.:(

CountryboyRonPaul
02-23-2008, 04:28 PM
We are so fucked.:(

The sooner the system fails, the sooner we can begin rebuilding it.

kyleAF
02-23-2008, 04:36 PM
The sooner the system fails, the sooner we can begin rebuilding it.

The system failing is not a good thing. The arcane derivatives market system numbers in the hundreds of trillions of dollars worldwide, while the world GDP is just around 60 trillion.

That's too much to fail.

CountryboyRonPaul
02-23-2008, 06:42 PM
The system failing is not a good thing. The arcane derivatives market system numbers in the hundreds of trillions of dollars worldwide, while the world GDP is just around 60 trillion.

That's too much to fail.

This is why I support Ron Paul. I believe he is the only one with the policies to actually correct our mistakes.

However, the only thing I can see happening with either Obama or McCain is economic crisis.

I'm sure they will continue to apply bandages to our bleeding economy, meanwhile creating new wounds as they implement their policies, just as Bush has done.

And, the American people seem completely oblivious to this, and perfectly willing to allow it to occur. I fear it will take a huge shakeup to actually wake people up to our massive economic blunders.

Cowlesy
02-23-2008, 06:44 PM
Deutsche Bank Agriculture PowerShares (DBA) --- I've been making a killing on it since Jan 1 --- ETF that is (25% Corn, 25% Sugar, 25% Soy Beans, 25% Wheat)

just a simple ETF indexed to commodity prices.

Lois
02-23-2008, 06:48 PM
Thanks, Cowlsey, good to know about that. I like the ProShares ETF's.

kyleAF
02-23-2008, 07:14 PM
Deutsche Bank Agriculture PowerShares (DBA) --- I've been making a killing on it since Jan 1 --- ETF that is (25% Corn, 25% Sugar, 25% Soy Beans, 25% Wheat)

just a simple ETF indexed to commodity prices.

Make sure that Deutsch Bank isn't one of the banks in Germany that they're having to bail out... Their system is being hit rather hard by all of this.