A Visual Guide to the Financial Crisis
WallStats.com
Nov 13, 2008
http://blog.mint.com/blog/finance-core/
a-visual-guide-to-the-financial-crisis/
Almost overnight, the talking heads went from perpetuating the euphoria of investors to rushing to pronounce the economy dead. Last year, when lenders started dropping like flies as foreclosures rose and margins were called, the problems of Wall Street became more and more apparent, and lending guidelines were tightened to the point that many individuals were stuck in their time-bomb loans, and thus began a vicious cycle. But what led to this? Here is a visual guide to help you understand the events leading up to the bailout.
Click here for the Source Article
Showing posts with label financial crisis. Show all posts
Showing posts with label financial crisis. Show all posts
Saturday, November 15, 2008
Sunday, September 28, 2008
Mark Cuban on the Financial Crisis
Mark Cuban on the Financial Crisis
Greta Van Susteren
Sep 25, 2008
http://www.foxnews.com/story/0,2933,427644,00.html
Self-made billionaire and entrepreneur Mark Cuban went "On the Record" about the economic crisis facing the nation.
VAN SUSTEREN: All right, Mark, I want to start at the end and work backwards. What happens after the bail out?
MARK CUBAN, DALLAS MAVERICKS OWNER: Boy, that's a good question.
Let's just say we put $700 billion into the economy, we increase liquidity, and it all goes according to plan--except there's one problem. The people who will do the lending after the money is injected were the ones that were doing the lending before. These were guys who don't know how to bank the right way.
Related
So my guess is that they are going to be afraid to lend money. You're not going to see the effect of anybody being able to walk in, even with good credit, to borrow money for a house, to borrow money for a car.
VAN SUSTEREN: Does this financial crisis, for lack of a better word, that we're in--I know how it affects people who are lower income and middle income, but how about the rich guys? Does this have really any impact on you?
CUBAN: Oh, of course it has an impact, but we can rebound a lot more quickly. I had money in Lehman, and it's just gone.
VAN SUSTEREN: One of the things that sort of bothers people is it seems like the people that have a lot of responsibility in this are getting the bailout. Is there any other alternative that see instead of a bailout?
CUBAN: No. You're going to have to bailout, you're going to have to inject liquidity, you're going to have to take the bad loans and all the bad instruments off people's balance sheets.
All the social networking we talk about--we need to make sure that every transaction that takes place, wherever there is money injected, wherever there is a purchase made, all that is made available for all the citizens of the country to see.
Because it's not going to be an oversight board that catches problems. It's going to be the citizens of this country that go online and on a second by second basis that catch problems.
Because, I have to tell you, Wall Street is too smart. They can stay ahead of any board that any political entity appoints, but you are not going to be able to stay ahead of pure transparency, because the people of this country will get involved, pay attention, will realize $700 billion is at stake. And they'll also want to see if they're making money, because I think the second part of the fear is, yes, we may make money, but just like we don't know exactly where our tax money goes today, this money will go right in to the Treasury and somebody will earmark it, and it will be gone.
Greta Van Susteren
Sep 25, 2008
http://www.foxnews.com/story/0,2933,427644,00.html
Self-made billionaire and entrepreneur Mark Cuban went "On the Record" about the economic crisis facing the nation.
VAN SUSTEREN: All right, Mark, I want to start at the end and work backwards. What happens after the bail out?
MARK CUBAN, DALLAS MAVERICKS OWNER: Boy, that's a good question.
Let's just say we put $700 billion into the economy, we increase liquidity, and it all goes according to plan--except there's one problem. The people who will do the lending after the money is injected were the ones that were doing the lending before. These were guys who don't know how to bank the right way.
Related
So my guess is that they are going to be afraid to lend money. You're not going to see the effect of anybody being able to walk in, even with good credit, to borrow money for a house, to borrow money for a car.
VAN SUSTEREN: Does this financial crisis, for lack of a better word, that we're in--I know how it affects people who are lower income and middle income, but how about the rich guys? Does this have really any impact on you?
CUBAN: Oh, of course it has an impact, but we can rebound a lot more quickly. I had money in Lehman, and it's just gone.
VAN SUSTEREN: One of the things that sort of bothers people is it seems like the people that have a lot of responsibility in this are getting the bailout. Is there any other alternative that see instead of a bailout?
CUBAN: No. You're going to have to bailout, you're going to have to inject liquidity, you're going to have to take the bad loans and all the bad instruments off people's balance sheets.
All the social networking we talk about--we need to make sure that every transaction that takes place, wherever there is money injected, wherever there is a purchase made, all that is made available for all the citizens of the country to see.
Because it's not going to be an oversight board that catches problems. It's going to be the citizens of this country that go online and on a second by second basis that catch problems.
Because, I have to tell you, Wall Street is too smart. They can stay ahead of any board that any political entity appoints, but you are not going to be able to stay ahead of pure transparency, because the people of this country will get involved, pay attention, will realize $700 billion is at stake. And they'll also want to see if they're making money, because I think the second part of the fear is, yes, we may make money, but just like we don't know exactly where our tax money goes today, this money will go right in to the Treasury and somebody will earmark it, and it will be gone.
Sunday, September 21, 2008
How to prevent the next Wall Street crisis
How to prevent the next Wall Street crisis
Joseph Stiglitz
Sep 17, 2008
http://www.cnn.com/2008/POLITICS/09/17/stiglitz.crisis/index.html
Editor's note: Joseph E. Stiglitz, professor at Columbia University, was awarded the Nobel Prize in Economics in 2001.
This is not the first crisis in our financial system, not the first time that those who believe in free and unregulated markets have come running to the government for bail-outs. There is a pattern here, one that suggests deep systemic problems -- and a variety of solutions:
1. We need first to correct incentives for executives, reducing the scope for conflicts of interest and improving shareholder information about dilution in share value as a result of stock options.
2. Secondly, we need to create a financial product safety commission, to make sure that products bought and sold by banks, pension funds, etc. are safe for "human consumption." Consenting adults should be given great freedom to do whatever they want, but that does not mean they should gamble with other people's money.
3. We need to create a financial systems stability commission to take an overview of the entire financial system, recognizing the interrelations among the various parts, and to prevent the excessive systemic leveraging that we have just experienced.
4. We need to impose other regulations to improve the safety and soundness of our financial system, such as "speed bumps" to limit borrowing.
5. We need better consumer protection laws, including laws that prevent predatory lending.
6. We need better competition laws. The financial institutions have been able to prey on consumers through credit cards partly because of the absence of competition.
These reforms will not guarantee that we will not have another crisis. The ingenuity of those in the financial markets is impressive. Eventually, they will figure out how to circumvent whatever regulations are imposed. But these reforms will make another crisis of this kind less likely, and, should it occur, make it less severe than it otherwise would be.
Joseph Stiglitz
Sep 17, 2008
http://www.cnn.com/2008/POLITICS/09/17/stiglitz.crisis/index.html
Editor's note: Joseph E. Stiglitz, professor at Columbia University, was awarded the Nobel Prize in Economics in 2001.
This is not the first crisis in our financial system, not the first time that those who believe in free and unregulated markets have come running to the government for bail-outs. There is a pattern here, one that suggests deep systemic problems -- and a variety of solutions:
1. We need first to correct incentives for executives, reducing the scope for conflicts of interest and improving shareholder information about dilution in share value as a result of stock options.
2. Secondly, we need to create a financial product safety commission, to make sure that products bought and sold by banks, pension funds, etc. are safe for "human consumption." Consenting adults should be given great freedom to do whatever they want, but that does not mean they should gamble with other people's money.
3. We need to create a financial systems stability commission to take an overview of the entire financial system, recognizing the interrelations among the various parts, and to prevent the excessive systemic leveraging that we have just experienced.
4. We need to impose other regulations to improve the safety and soundness of our financial system, such as "speed bumps" to limit borrowing.
5. We need better consumer protection laws, including laws that prevent predatory lending.
6. We need better competition laws. The financial institutions have been able to prey on consumers through credit cards partly because of the absence of competition.
These reforms will not guarantee that we will not have another crisis. The ingenuity of those in the financial markets is impressive. Eventually, they will figure out how to circumvent whatever regulations are imposed. But these reforms will make another crisis of this kind less likely, and, should it occur, make it less severe than it otherwise would be.
Sunday, September 7, 2008
Once in 100 Year Crisis?
Once in 100 Year Crisis?
Joe Average
Sep 02, 2008
http://www.financialsense.com/fsu/editorials/swagell/2008/0902.html
Robert Prechter has long been a lone voice in the wilderness warning of an imminent deadly deflationary collapse into global recession/depression rather than an extended hyperinflationary blow-off (despite the frantic efforts of desperate central bankers to inflate money supply). Now it seems respected financial guru Richard Russell (Dow Theory Letters) has similar concerns;
"...the markets are telling us to prepare for hard times, and a global spate of the worst deflation to be seen in generations...sophisticated money is cashing out, raising cash, preparing for world deflation. This is why gold has been sinking...why stocks have been falling. What I see is a coming world deflation. What’s the best stance in a deflationary situation? Lots of cash...US Dollars and US Treasury paper".
Joe Average
Sep 02, 2008
http://www.financialsense.com/fsu/editorials/swagell/2008/0902.html
Robert Prechter has long been a lone voice in the wilderness warning of an imminent deadly deflationary collapse into global recession/depression rather than an extended hyperinflationary blow-off (despite the frantic efforts of desperate central bankers to inflate money supply). Now it seems respected financial guru Richard Russell (Dow Theory Letters) has similar concerns;
"...the markets are telling us to prepare for hard times, and a global spate of the worst deflation to be seen in generations...sophisticated money is cashing out, raising cash, preparing for world deflation. This is why gold has been sinking...why stocks have been falling. What I see is a coming world deflation. What’s the best stance in a deflationary situation? Lots of cash...US Dollars and US Treasury paper".
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