Seems to be tremendous confusion out there re: Whom to blame, how to fix the next global recession.
Foolish Margin Lending policies (retail) and Hedge Fund lending (wholesale) blew up the equity market bubble in 2000/2001 after speculation was levered 5:1 or more.
The feds lowered rates and Walls Street shifted sales back over to the 'fixed income marketplace'. Wall Street 'fixed' that economic motor by going variable and inventing new products for old ideas (use a consumer credit card to purchase homes and/or trust people to convert their existing home into cash via a refi)
They got regulators to go on a long vacation (ignore all underwriting rules) and added more steroids with slick sales scripts.
The feds eventually raised interest rates in an effort to head off inflation. (debasing of the US Dollar amist of foreign markets)
ARMs (adjustable rate mortgages) have to reset based on current indexs---all of which were rising. In addition, and wholly independent of interest rates, liars who borrowed more principal than they could afford began defaulting.
These junk products had been stuffed into deceptively designed synthetic products (CDOs, CLOs, etc..) and were not found on most bank balance sheets, hence no loan loss requirements for the banks.
The underlying (lying) root cause of the loss of our credit markets was due to 'structured finance', aka: stealing free money, then hiding the crime by risk dumping into pensions, hedge funds or into secret private equity.
The Black Box syndrome. Much like the China Syndrome.
In any case---the world central banks will commence LOWERING interest rates over the next year in order to restore some life into a dead credit markplace. The market will return---on a smaller scale with fewer banks/brokers, hedge funds and less competition too. Less fraud.
Deflation of real estate values (trillions) will be an overriding theme, not rising prices for gasoline (blood for oil policies).
Inflation will follow eventually as this trauma medicine is just another cycle of yo-yo monetary policy which follows Wall Street around in the same way drug dealers follow elite athletes.
Monetary policies, fiscal policies, IMF policies, and capital (private & public)markets all work together in a most perverted way.
Let's enjoy the ride--and tap our reserves.
Foolish Margin Lending policies (retail) and Hedge Fund lending (wholesale) blew up the equity market bubble in 2000/2001 after speculation was levered 5:1 or more.
The feds lowered rates and Walls Street shifted sales back over to the 'fixed income marketplace'. Wall Street 'fixed' that economic motor by going variable and inventing new products for old ideas (use a consumer credit card to purchase homes and/or trust people to convert their existing home into cash via a refi)
They got regulators to go on a long vacation (ignore all underwriting rules) and added more steroids with slick sales scripts.
The feds eventually raised interest rates in an effort to head off inflation. (debasing of the US Dollar amist of foreign markets)
ARMs (adjustable rate mortgages) have to reset based on current indexs---all of which were rising. In addition, and wholly independent of interest rates, liars who borrowed more principal than they could afford began defaulting.
These junk products had been stuffed into deceptively designed synthetic products (CDOs, CLOs, etc..) and were not found on most bank balance sheets, hence no loan loss requirements for the banks.
The underlying (lying) root cause of the loss of our credit markets was due to 'structured finance', aka: stealing free money, then hiding the crime by risk dumping into pensions, hedge funds or into secret private equity.
The Black Box syndrome. Much like the China Syndrome.
In any case---the world central banks will commence LOWERING interest rates over the next year in order to restore some life into a dead credit markplace. The market will return---on a smaller scale with fewer banks/brokers, hedge funds and less competition too. Less fraud.
Deflation of real estate values (trillions) will be an overriding theme, not rising prices for gasoline (blood for oil policies).
Inflation will follow eventually as this trauma medicine is just another cycle of yo-yo monetary policy which follows Wall Street around in the same way drug dealers follow elite athletes.
Monetary policies, fiscal policies, IMF policies, and capital (private & public)markets all work together in a most perverted way.
Let's enjoy the ride--and tap our reserves.