[Roccland]

link "The United States faces a severe credit crunch as mounting losses on risky forms of debt catch up with the banks and force them to curb lending and call in existing loans, according to a report by Lombard Street Research.

Bear Stearns headquarters in New York
The group said the fast-moving crisis at two Bear Stearns hedge funds had exposed the underlying rot in the US sub-prime mortgage market, and the vast nexus of collateralised debt obligations known as CDOs.

"Excess liquidity in the global system will be slashed," it said. "Banks' capital is about to be decimated, which will require calling in a swathe of loans. This is going to aggravate the US hard landing."

[dukey]

this is by design (by the banks)
do we have to post the money masters link again or have we all seen it ?

Put some money into gold, or land.

[emersonbiggins]

Still, there's no shortage of people who feel overly secure in their 30-year, fixed-rate mortgages and show no restraint in announcing it to the rest of us. Well, I got news for them; I hope they like where they are, because they are going to be there for awhile, at least until they are kicked out after losing their jobs and going into default. These events have a way of getting out of control.

[skiwi]

Banks' banker warns of downturn

$this->bbcode_second_pass_quote('', 'T')HE risk of a 1930s-style economic slump has been heightened by "euphoric" markets tapping cheap global credit, one of the world's pre-eminent financial institutions has said.

In its annual report, the Bank for International Settlements noted that the conditions that led to the Great Depression of the 1930s and the Asian crises in the 1990s reflected the current environment.The BIS, the ultimate bank of central bankers, pointed to a confluence of worrying signs, citing mass issuance of new-fangled credit instruments, soaring levels of household debt, extreme appetite for risk shown by investors, and entrenched imbalances in the world currency system...

[ColossalContrarian]

$this->bbcode_second_pass_quote('emersonbiggins', '.').. These events have a way of getting out of control.

[AirlinePilot]

If there is some form of huge economic collapse (which right now i doubt) do you think its going to be prudent for hundreds of thousands or millions of homes to be foreclosed on? Why not allow homeowners the ability to "pay what they can" and at least remain in the property and maintain it? I think If there is some form of huge collapse coming who is going to repo your home when none of the banks remain?

Repo'ing homes will be somewhere way down the priority list for remaining financial institutions and the local police.

[wisconsin_cur]

$this->bbcode_second_pass_quote('emersonbiggins', 'S')till, there's no shortage of people who feel overly secure in their 30-year, fixed-rate mortgages and show no restraint in announcing it to the rest of us. Well, I got news for them; I hope they like where they are, because they are going to be there for awhile, at least until they are kicked out after losing their jobs and going into default. These events have a way of getting out of control.

[max_power29]

$this->bbcode_second_pass_quote('skiwi', '[')url=http://www.theage.com.au/news/business/great-depression-fall-looms/2007/06/25/1182623821820.html]Banks' banker warns of downturn[/url]

$this->bbcode_second_pass_quote('', 'T')HE risk of a 1930s-style economic slump has been heightened by "euphoric" markets tapping cheap global credit, one of the world's pre-eminent financial institutions has said.

In its annual report, the Bank for International Settlements noted that the conditions that led to the Great Depression of the 1930s and the Asian crises in the 1990s reflected the current environment.The BIS, the ultimate bank of central bankers, pointed to a confluence of worrying signs, citing mass issuance of new-fangled credit instruments, soaring levels of household debt, extreme appetite for risk shown by investors, and entrenched imbalances in the world currency system...

[Aaron]

$this->bbcode_second_pass_quote('', 'c')ollateralized debt obligations known as CDOs.

[Cloud9]

Sadibaby, how we long for European solutions to social unrest and mass poverty? We only need to look at the enlightened social programs of Uncle Joe and Adolph. If those two fail to inspire, we can always look east to Mao. When it comes time to enforce social order, an unarmed citizenry is usually more cooperative when it comes time to load the trains and fire up the ovens.

[fluffy]

$this->bbcode_second_pass_quote('Aaron', '')$this->bbcode_second_pass_quote('', 'c')ollateralized debt obligations known as CDOs.

[emersonbiggins]

$this->bbcode_second_pass_quote('AirlinePilot', 'I')f there is some form of huge economic collapse (which right now i doubt) do you think its going to be prudent for hundreds of thousands or millions of homes to be foreclosed on? Why not allow homeowners the ability to "pay what they can" and at least remain in the property and maintain it? I think If there is some form of huge collapse coming who is going to repo your home when none of the banks remain?

Repo'ing homes will be somewhere way down the priority list for remaining financial institutions and the local police.

[Eli]

The bigger problem for the banks is that the people they made the loans are sometimes better off just walking away.

The homes were the collateral for the loans, a lot of these loans were 0 money down or even loans made over the purchase price so people could afford to furnish them.

Why even negotiate with the bank on a home you cannot afford to heat and cool. People will often times be better off just walking away, they will only be out the payments they made and the banks will be left holding the bag.

The banks are going to get around this CDO issue by not selling them anymore. These are debt instruments of big banks, Meryl Lynch pulled their auction of there CDO's so they would not have to record a bigger loss. The banks are just going to hold these debts and not sell them.

But the problem will spread to something else, they are really playing whack a mole right now.

I think they will be able to cover everything up for awhile longer and the Fed is going to help them and encourage them to do just that.

What I think is going to happen is this problem keeps moving up the money supply chain. It will finally come apart at the very top when countries refuse to take American debt. China is already heading that way and this will just push them further in that direction. They are trying to buy hard assets instead of US paper.

[ColossalContrarian]

$this->bbcode_second_pass_quote('Cloud9', 'S')adibaby, how we long for European solutions to social unrest and mass poverty? We only need to look at the enlightened social programs of Uncle Joe and Adolph. If those two fail to inspire, we can always look east to Mao. When it comes time to enforce social order, an unarmed citizenry is usually more cooperative when it comes time to load the trains and fire up the ovens.

[I_Like_Plants]

A friend of mine tried to give me a pep talk about careers and all that - some of what he says is good and stuff I plan to follow, that I'd already figured out, like see if there's something Union I can get into and look for a field that's in demand like something in the medical field.

But, as I should have told him, to understand the future, you not only need to read William Gibson, but also Charles Dickens.

And it IS game over for me, let's hope they don't bring back debtors' prisons.

[threadbear]

$this->bbcode_second_pass_quote('dukey', 't')his is by design (by the banks)
do we have to post the money masters link again or have we all seen it ?

Put some money into gold, or land.

[threadbear]

$this->bbcode_second_pass_quote('I_Like_Plants', 'A') friend of mine tried to give me a pep talk about careers and all that - some of what he says is good and stuff I plan to follow, that I'd already figured out, like see if there's something Union I can get into and look for a field that's in demand like something in the medical field.

But, as I should have told him, to understand the future, you not only need to read William Gibson, but also Charles Dickens.

And it IS game over for me, let's hope they don't bring back debtors' prisons.

[mmasters]

$this->bbcode_second_pass_quote('max_power29', '
')There will not be a 1930's style deflation because the govenrment owes too much and spends too much to deflate. The government rarely had any deficits in the past. Now deflation is not an option. They must print money in order for the government to survive as long as possible. I have never heard of a government that would willingly cut off it own source of fundage thereby killing itself. Deflation is just not an option for the U.S. government folks. Stagflation or Hyperinflation are the only ways for the government to preserve itself as long as possible. Deflation= Bye Bye federal government.

[threadbear]

$this->bbcode_second_pass_quote('mmasters', '
')
I would guess it's gonna be more Argentina style with a bond crisis accompanied by mad inflation and possibly banks restricting access to people's accounts. I'm interested to see how well they keep the CDO toxic waste under control.