The bank failures are due to the bogus credit default swaps that the banks were using for insurance instead of real insurance.
The sub-prime loans were carried on their books as assets without devaluing them as they lost value. Instead of being traded they were simply puffing the worth of the banks.
The banks would use their apparent worth to buy credit swaps without itemized security in order to insure another bank for for six months (charging a fee of course) and the bank they insured did the same with a third bank, and the third with a fourth and so on in a round robin fashion.
Of course when the first bank (Bears %26amp; Sterns) crashed it triggered a call on all of the swaps and Guess what...they were backed by worthless paper.
That is why the government have to bail them out. The reason that they are not all in jail is that it was all legal due to the :
Commodity Futures Modernization Act of 2000
{The act specifically banned regulation of credit default swaps. These unregulated instruments, insurance policies against default on risky investments like mortgage backed securities, necessitated the government bailout of insurer A.I.G.}Is the accleration of mortgage defaults and bank failures and bailouts tied to the high oil prices ?
Partially. The real problem in our economy has not been discussed except very briefly by Obama.
The problem is we've lost jobs, wages have decreased, people (and government) havbe been living on credit and loans - while COL (Cost of Living) has been going up. Result - eventually, people can no longer afford their payments so they loose their car, house, vaction, etc. Then that triggers al lthis credit crunch because all those loans were bundled into packages and sold as investments (debt sold as investment. Think about it) which were in turn repacked and resold over and over until they were selling thse packages for far more than the dept they covered (and that people couldn't pay).
Part of the reason people couldn't afford the COL was rising oil prices which were artiifically forced up by brokers likely acting in behalf of oil clients. Notice that they've gone back down even after opil produciton stopped in the Gulf and the value of the dollar dropped. Why? Likely the President who has close ties to the oil industry asked them to hold off before they kill this goose that's been laying their golden eggs.
But the damge has been done. Oilk just dint' affect the consumer - it affected all industry across the nation forcing them to raise prices. So gas becomes more expensive along with everything else. More peole can't pay their bills, can't buy all the goods and services and we see a downward spiral developing. Government calls for big money to freak the market into buying again but nobody's buying it because nobody wants to deal with the basic problem: Loss of jobs and lower wages and increased COL.
If you mean that the Republicans under George Bush are responsible for these things happening to us then the answer is yes. George let all his buddies get real rich on oil prices then told his banker buddies to let anyone that could mark an x on their paper work have a loan. Now after they made all this money they want us to bail them out ands they can go get a massage with the money that we give them. I just want you to know that after he leaves office George Bush is going to get jobs on the boards of both oil companies and banking companies and all he will have to do is sign his billion dollar check and laugh all the way to the bank! Ha Ha Ha
yes and no. the resetting of payments to what they should have been in the 1st place....had they been UNDERWRITTEN that way, before DEREGULATION at the behest of NEO-CONS, those people woouldnt be in over their heads now and bringing down the economy cuz greedy bankers set us all up for the fall!!
High gas prices just exacerbated the misery of the poor saps who got caught up in the ';feeding frenzy!';
They never mention it on the news, but they will have to soon as this accelerated crash will keep crashing and crashing for what will seem like forever as our money and wealth get swallowed into the black hole of derivatives that amount to a quadrillion of just phony speculation that has absolutely no real capital that was used.
Yes.
The economy was placed, precariously, on the backs of the consumer who ran out of money when cost of living got too high.
No, it's tied to the ballooning payments of ARM.
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