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Strategies & Market Trends : The Financial Collapse of 2001 Unwinding -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (8)

3/8/2017 12:24:25 PM

From: ggersh

1 Recommendation

Recommended By
bart13

Read Replies (1) | Respond to of 13803

somewhat correct but many errors

here's one that's huge

"The regulators’ most dramatic error was to let Lehman Brothers go bankrupt. This multiplied the panic in markets. Suddenly, nobody trusted anybody, so nobody would lend. Non-financial companies, unable to rely on being able to borrow to pay suppliers or workers, froze spending in order to hoard cash, causing a seizure in the real economy. Ironically, the decision to stand back and allow Lehman to go bankrupt resulted in more government intervention, not less. To stem the consequent panic, regulators had to rescue scores of other companies."

so basically by making money available to the zombies trust reemerged.......-vbg-

the most dramatic error is the one not stated, the big 6 on WS all shoulda gone BK

Low interest rates created an incentive for banks, hedge funds and other investors to hunt for riskier assets that offered higher returns. They also made it profitable for such outfits to borrow and use the extra cash to amplify their investments, on the assumption that the returns would exceed the cost of borrowing. The low volatility of the Great Moderation increased the temptation to “leverage” in this way. If short-term interest rates are low but unstable, investors will hesitate before leveraging their bets. But if rates appear stable, investors will take the risk of borrowing in the money markets to buy longer-dated, higher-yielding securities. That is indeed what happened."

they didn't hunt they, created riskier assets, also WS don't care if rates are stable...

To: elmatador who wrote (8)	3/10/2017 6:17:59 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 13803

The Economic Depression of 2008 was much larger than the Great Depression, but governments took different choices this time. But these different choices don't make the asset destruction, which resulted in the economic depression, go away. That asset destruction result in reduced incomes, even though we've now spread that out over a longer number of years. The fact that the banking system was spared much deeper declines in real estate prices have left home prices, in California at least, at uninvestible prices which will be revealed as much slower price appreciation over the coming years as interest rates slowly rise. These lingering effects will be compounded by the effect of aging populations in most nations of the world, including China, and an older population stops working and spends less. We still have the opportunity to shut down global trade with a tariff regime like Smoot-Hawley which would make the economy much worse everywhere.