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WHEEL

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The Indypendent » How to Wreck the Economy

News Type: Opinion — Seeded on Sun Oct 12, 2008 11:16 AM EDT
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From 1982 to 2000, the U.S. stock market went on the longest bull run ever, as share prices rose to dizzying heights. In the late 1990s, a combination of factors, which included the Federal Reserve lowering interest rates, created a huge price bubble in Internet stocks. A speculative bubble occurs when price far outstrips the fundamental worth of the asset. Bubbles have occurred in everything from real estate, stocks and railroads to tulips, beanie babies and comic books. As with all bubbles, it took more and more money to make a return*. This led to the Internet bubble popping in March 2000.

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{"commentId":3447559,"authorDomain":"Wheel"}
Wheel
But the contagion has not been contained. Whether the bailout plan can succeed is highly questionable. Many are skeptical as to whether the bailout will even restore confidence and credit to the banking system. As Reuters stated recently, Doubts remain as to how it [the bailout plan] could immediately thaw the frozen money and credit market. Even if the bailout revives the banking sector, few economists think it will jumpstart the consumer credit machine. For one, over-leveraged, money-strapped banks will eagerly dump nearworthless securities on taxpayers in exchange for cash to bulk up their reserves. Plus, with working hours and wages declining and unemployment, home foreclosures and inflation surging, banks are in no mood to give consumers more credit, so consumption and hence the economy will continue to contract.

This article is a bit long, but very educational and informative.

{"commentId":3447559,"threadId":"386539","contentId":"1989242","authorDomain":"Wheel"}
    Reply#1 - Sun Oct 12, 2008 11:17 AM EDT
    {"commentId":3448917,"authorDomain":"kelly-kane"}
    krounded

    Must read article for anyone that thinks defaulting borrowers are the sole cause of the ecomomic melt down.

    {"commentId":3448917,"threadId":"386539","contentId":"1989242","authorDomain":"kelly-kane"}
      Reply#2 - Sun Oct 12, 2008 1:28 PM EDT
      {"commentId":3449028,"authorDomain":"Wheel"}
      Wheel

      krounded,

      you're right. This mess was arranged at the very highest financial levels. They combined deregulation with creative packaging and ran the world's economy into the ground.

      {"commentId":3449028,"threadId":"386539","contentId":"1989242","authorDomain":"Wheel"}
        #2.1 - Sun Oct 12, 2008 1:39 PM EDT
        {"commentId":3449291,"authorDomain":"kelly-kane"}
        krounded

        I think the same people that engineered these fancy financial devices are going to have jobs creating the new regulations (and the ways to get around those regulations). It's pretty sad that the same people that created the mess are the ones that will be tapped to get us out of it.

        {"commentId":3449291,"threadId":"386539","contentId":"1989242","authorDomain":"kelly-kane"}
        • 1 vote
        #2.2 - Sun Oct 12, 2008 2:02 PM EDT
        {"commentId":3451411,"authorDomain":"energynet"}
        energynet

        I pretty much believe that the bloody democrats just bought themselve the presidency with their passage of the bailout.  Always looking to the elite to lick the paws of.

        The protests simply melted away thanks to a manipulative media that failed to mention the deal was done all in back rooms, no hearings... There is still no real detailed coverage of how that money is being used on a daily bases.

        10,000 homes a week are being forclosed.  How many little people's lives and savings are being bailed out?

        {"commentId":3451411,"threadId":"386539","contentId":"1989242","authorDomain":"energynet"}
          #2.3 - Sun Oct 12, 2008 5:45 PM EDT
          {"commentId":3451632,"authorDomain":"Wheel"}
          Wheel

          energynet,

          I'm not really sure how your comment relates to this seed, but I agree the bailout has many problems. Lack of oversight, lack of stated goals, lack of a plan to achieve goals...etc.

          This seed is really more about how we got into the mess than how we're failing to deal with it.

          {"commentId":3451632,"threadId":"386539","contentId":"1989242","authorDomain":"Wheel"}
          • 1 vote
          #2.4 - Sun Oct 12, 2008 6:06 PM EDT
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