Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Book Nook -- Ignore unavailable to you. Want to Upgrade?

To: Ilaine who wrote (422)	2/18/2002 2:07:47 PM
From: GraceZ	Read Replies (1) \| Respond to of 443

You know how distorted the news is today in the WSJ and NYT, why do you think it was any different back then? If you pull up a historic record of the interest rates from a reliable source you can see where the Fed tightened. It didn't last long, it didn't have to. The public had just as much misunderstanding back then as they do now as to how stocks are priced "at the margin". So why would the articles about the crash mention the role of margin in the crash? Maybe people weren't forced to liquidate the same way they are forced to liquidate today when the value fell below margin requirements and back then you could have almost 90% margin. Problem was, that like today, some stocks fell 95%! The reason the debts weren't paid back is that people weren't able to pay them back. They lost multiples of what they had in the market. Imagine you buy a house for 200k and put 20k down and something happens where the house is now worth 20k.....are you going to pay the bank the remaining 180k over the next thirty years or walk away? At least you can live in a house.