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Non-Tech : Derivatives: Darth Vader's Revenge -- Ignore unavailable to you. Want to Upgrade?

To: axial who wrote (1285)	3/10/2009 12:20:12 AM
From: Hawkmoon	1 Recommendation Respond to of 2794

Great response.. I agree that the shadow banking system has been the "tail" wagging the dog, and now the dog it getting beaten because it's exuberance. Financial markets have to represent the underlying fundamentals and not create their own reality. Furthermore, we need to insure that real property is not treated in the same speculative manner as equities. Real Estate used to be a boring, but relatively safe manner in which to safeguard one's wealth, but no longer.. This is because of the flagrant securitization of mortgage bond and isolating the lender and the borrower. And as we know from history, the great crash of 1929 was caused by excessive use of margin (up to 90% margin threshold). Well.. when people are borrowing 100% of their home with no equity, that's NO DIFFERENT, especially when the loans are being packaged as securities and marked to market. And then the use of CDS's has literally pulled the rug out from under the real-estate markets. It sickens me to NO END when I hear bankers trying to blame borrowers for taking on debt they couldn't possibly afford. That might be applicable to a stock investor, but not to a home buyer. The bank's FIDUCIARY DUTY is to protect depositor's money by not lending to non-worthy borrowers. We need to get back to that immediately. Hawk