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Politics : GOPwinger Lies/Distortions/Omissions/Perversions of Truth
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To: Kevin Rose who wrote (138584)9/25/2008 3:23:15 PM
From: Lizzie Tudor  Read Replies (2) of 173976
 
well, if you want my opinion, low interest rates didn't cause this.

What these Mortgage backed securities are, is basically derivatives again, and it seems to me derivatives eventually collapse in almost all cases- LCTM, societe generale etc.

After the dot com bubble, the great bull market and the bush spending spree, the markets entered a secular bear for the first time in 30 years. Had Bush not spent like a drunken sailor to crash our dollar, we might have just had a correction and recovered in the markets, instead a number of factors but mostly bad fiscal mgmt from our government pushed us into a secular bear. That meant wall street needed to contract by 50% or more because with no bull market, no wall street business. There haven't been any IPOs or anything.

Instead the industry jumped on these MBSs which are basically derivatives to save themselves. As the bubble inflated, the Bush admin who were concerned about reelection let it go on, because we stopped being able to create jobs at the same time this was occurring.

So my belief is that whatever interest rates were, these derivatives would have still been created. Low rates just added fuel to the fire. Now the firms on WS are collapsing like they should have done in 2002. There have been ZERO venture backed IPOs this year.
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