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Derivatives Are The Root Of The Credit Crunch

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LONDON!!!:
from my understanding, the main root of the problems the world is in now is because of the relaxing of banking rules during the reagan and thatcher era's

banks were basically running similar ponzi type schemes madoff is being locked up for, like basically selling peoples mortgages(on a worldwide level big boy level) to finance other banking operations and schemes witout telling anyone through hedge funds and so on and so on, to the point were, witout real money bankrolling these operations, just paper mortgages to the point were banks were left witout no liquidity. These schemes were called MBS

we're in these problems because of greedy, short sighted rich bankers not because of banks letting human beings buy mortgages they couldn't afford, even though thats a tiny part of it, but its not the major part, what i have broke down already, on a worldwide, big boy level is what is the real cause, truss me on that

virtuoso:

Sorry but you are wrong on this, you can thank Alan Greenspan and Bill Clinton, during Bill Clinton's reign he repealed the Glass Steagalz Act and as for Alan Greenspan, a very easy to kill a currency is to slash interest rates when the manufacturing base has been taken away. Now clearly anyone who points at the dollar at the moment is barking up the wrong tree, look how much value the dollar has lost and clearly before this recovery it was losing huge chunks of value also. The only reason why it's being propped up is because it's the reserve world currency and so the debt continues to be monetised by the chinese buying more treasury bonds.

However note that even right now derivatives continue unimpeded, derivatives have brought the entire world to it's knees and will they restore the Glass Steagaz Act? will they fuck!. I notice how it's acceptable to approve warantless wiretapping against the domestic population and yet they can't do this, something which would abolish this financial weapon of mass destruction.

LONDON!!!:

--- Quote from: virtuoso on April 14, 2009, 04:40:51 AM ---


derivatives continue unimpeded, derivatives have brought the entire world to it's knees

--- End quote ---

i'd definetly co-sign this

RETURN OF THE OVERFIEND!:

--- Quote from: virtuoso on April 14, 2009, 04:40:51 AM --- The only reason why it's being propped up is because it's the reserve world currency and so the debt continues to be monetised by the chinese buying more treasury bonds.


--- End quote ---


I'm interested to know what effect that can have. Apparently China  holds about US$490 billion in U.S. Treasury securities and has foreign exchanges reserves totaling more than US$1.5 trillion.


Apart from future generations having to deal with the debt, what else is the effect?

Can China, I don't know, use it's US Treasury securities somehow against the US?


And does it really matter at all? People are resigned to paying taxes anyway, its just part of life...

It dosn't seem to be stopping the US military from running. Maybe the debt is like MAGIC, if the government stops worrying about it so much publicly and believing in it so much, it won't matter so much...after all, the only reason money has power is because people take it seriously...

virtuoso:

The effect of it in practical terms is that China holds a gun to America's head and therefore means that yes potentially they would acquire vast areas of real estate. The second line of thinking is that the chinese are puppets of the anglo elite and this therefore explains why they continue to buy more treasury bonds. However even if the latter is true, this represents a very dangerous game because at some point the said puppet government could be overthrown and the next government could indeed call in the debt.

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