Jump to content

Stock Market Meltdown!


Recommended Posts

You just explained the reasons I HATE most of this corporate crapola.

Seems so many who support an unregulated, free market, let business carry on

just dont understand the corporate body. They can and often are so evil. As given rights like an individual, but not held accountable.

And others will still continue to FULLY support their existence, unconditionally !!! :lol:

Link to post
Share on other sites
  • Replies 581
  • Created
  • Last Reply

Top Posters In This Topic

By the way, when's the last time the federal reserve had to step in like this? Not having a go, I really don't know.
Apparently the swap lines began in 1962, and the Treasury started to conduct foreign exchange market intervention transactions in 1934 and 1935.

Swap lines between the Federal Reserve Bank and other central banks are temporary credit lines that enable the Fed to draw foreign exchange and the other monetary authorities simultaneously to acquire dollars. The FRS swap network has been around since 1962, when the post-world war II system of fixed dollar exchange rates and dollar/gold convertibility still existed. The purpose of the swap lines both initially and after the dollar floated in March 1973 was to generate resources that central banks could then use to finance foreign exchange intervention. Swap lines drawings are intended to be paid up within three months, although outstanding swap debt can be rolled over if that is not possible. The predominant user of swap lines was the Fed. Whereas other governments routinely hold dollar reserves that can be used for intervention, it has been U.S. policy to keep none or very few holdings of foreign currency. So while most countries intervened with assets they owned, the United States historically used borrowed assets to fund its intervention. This created two unique distinctions for U.S. intervention. If the U.S. wanted to support the dollar by selling marks, for example, U.S. officials would need to contact their counterparts in Germany to discuss why they wanted to draw on their reciprocal swap line and negotiate parameters over how much could be drawn down without requiring further consultation. The other factor of importance is that intervention funded with swap drawings generate foreign exchange risk if the dollar is at a different level when the drawing is repaid. When I did my first tour at the New York Fed intervention desk in 1975, the United States was still paying back swap loans, which had been converted to longer-term facilities, dating back to the week to August 13, 1971. That was the final week before President Nixon severed dollar/gold convertibility, temporarily suspended fixed dollar parities, and imposed wage-price controls. The U.S. had run up huge losses, borrowing and then selling foreign currency in a vain effort to defend unsupportable dollar parities, and it cost considerably more to buy those dollars back in 1975.

http://www.actionforex.com/fundamental-ana...-2008091860691/

The ESF began to conduct foreign exchange market intervention transactions in 1934 and 1935. Also, it entered into credit arrangements, starting in 1936. From 1936 to the present, the ESF has participated in over a hundred credit or loan arrangements with foreign governments or central banks. After World War II, the ESF conducted Treasury's monetary gold transactions and widened its participation in credit arrangements. Tables presenting data on all ESF intervention operations since 1973 and all ESF credit arrangements since 1936 can be accessed through the links above. Researchers should note that these data are for the ESF only and do not cover the operations of the Federal Reserve’s System Open Market Account (SOMA). Historically, U.S. intervention has been jointly financed by both the ESF and SOMA, and the financing has been equally shared between the two accounts.

***************************************

The Federal Reserve eliminated almost all of its swap lines after years of disuse and in connection with the advent of the European Central Bank on January 1, 2000 and now has swap lines only with Mexico and Canada under the 1994 North American Framework Agreement.*

http://www.ustreas.gov/offices/internation...rs/esf/history/

Edited by eternal light
Link to post
Share on other sites
If people are willing spend to money on something, why should a company not make as much off the people as it can? Why can the government just come in and say no? That's anti-growith, that does nothing but decrease the flow of money and decrease the number of jobs.

People hate the big corporations but without them, we'd have nothing right now

oooh, come on now, do you really mean that? Again, I'm not against corporations, but you have to count the cost, and I don't only mean financially, which is myopic, and because it ignores all other consequences, is destructive. You don't have a problem with the government stepping in with law enforcement when someone is abused, killed, robbed, right? Why is it ok for corporations to get away with that? The only difference is that is happens on a larger scale and away from our eyes. I'm not anti-corporate, I'm pro-corporate responsibility. If they have the same rights people have, they ought to be held accountable to the same degree.

Link to post
Share on other sites
Apparently the swap lines began in 1962, and the Treasury began to conduct foreign exchange market intervention transactions in 1934 and 1935.

Thanks, that's informative. Interesting dates of when swaps actually occurred, and that U.S. now only swaps with Canada and Mexico.

Link to post
Share on other sites
Im not anti-corporate, Im pro-corporate responsibility. If they have the same rights people have, they ought to be held accountable to the same degree.

Besides the corporate entity, the CEOs should be hammered in the cases such as these of late. Not just the occasional ENRONers like Skilling and whatshisface, but ALL OF THEM.

Link to post
Share on other sites
Thanks, that's informative. Interesting dates of when swaps actually occurred, and that U.S. now only swaps with Canada and Mexico.

Well, sort of. Modernly, they appear to have evolved in regard to other central banks.

Release Date: September 18, 2008

For release at 3:00 a.m. EDT

Today, the Bank of Canada, the Bank of England, the European Central Bank (ECB), the Federal Reserve, the Bank of Japan, and the Swiss National Bank are announcing coordinated measures designed to address the continued elevated pressures in U.S. dollar short-term funding markets. These measures, together with other actions taken in the last few days by individual central banks, are designed to improve the liquidity conditions in global financial markets. The central banks continue to work together closely and will take appropriate steps to address the ongoing pressures.

Federal Reserve and other central banks announce further measures to address elevated pressures in funding markets

September 18, 2008

Link to post
Share on other sites
You just explained the reasons I HATE most of this corporate crapola.

Seems so many who support an unregulated, free market, let business carry on

just dont understand the corporate body. They can and often are so evil. As given rights like an individual, but not held accountable.

And others will still continue to FULLY support their existence, unconditionally !!! :lol:

We're not as adversely affected here compared to other places in the world where corporations could pillage and plunder with wanton abandon (and in our neck of the woods, just not to such an obvious extent). Let's face it, some people don't care what happens to some strangers somewhere else. But make no mistake, the wind's blowing the boomerang this way. Hence this thread to begin with, for starters. Guess things are catching up to the corporations after all. Maybe people will connect the dots better after a little suffering.

Link to post
Share on other sites

Stable markets are less often seen in revolution-prone parts of the world. The government steps in when it believes the markets cannot support commerce adequately without oversight. A country with too much instability in its markets and trade is more difficult to govern. The government likes to see a healthy exchange of goods and services.

Paulson Outlines Comprehensive Approach to Market Developments

Treasury Secretary Paulson outlined a comprehensive approach to relieving the stresses on financial institutions and markets Friday. "Right now, our focus is restoring the strength of our financial system so it can again finance economic growth. The financial security of all Americans – their retirement savings, their home values, their ability to borrow for college, and the opportunities for more and higher-paying jobs – depends on our ability to restore our financial institutions to a sound footing," said Paulson.

ustreas.gov

Edited by eternal light
Link to post
Share on other sites
Well, sort of. Modernly, they appear to have evolved in regard to other central banks.

Yep, but again, that's done to offset what's been happening, right? The international banks lend to each other to keep things from grinding to a halt? Then when things stabilize it'll be back to agreements your sources outlined? Good sources, by the way, thanks. :)

Link to post
Share on other sites
Besides the corporate entity, the CEOs should be hammered in the cases such as these of late. Not just the occasional ENRONers like Skilling and whatshisface, but ALL OF THEM.

That these people walk away with huge severance packages earned in knowingly ripping people off is a travesty. How can contractual agreements trump illegal profit? If a crime has been committed and they're tried and charged, these contracts should be voided as part of the punishment. That and make them go work for their corporation in a some sweatshop on the other side of the world :D

Link to post
Share on other sites

I guess yesterday and today's market close was bad news for the Obama campaign and of course the doom and gloom Democrat leaders in congress.

It's pretty funny when the Obama campaign's only hope left of winning is to take a page from the Clinton/Carvell playbook of "it's the economy stupid."

What a shame that the Democrats WANT Americans to suffer with a bad economy in hopes that they can turn that into possible votes/power.

:lol:

McCain wins!

Link to post
Share on other sites
Yep, but again, that's done to offset what's been happening, right? The international banks lend to each other to keep things from grinding to a halt? Then when things stabilize it'll be back to agreements your sources outlined? Good sources, by the way, thanks. :)

You're welcome. Market integrity is important.

Link to post
Share on other sites
I guess yesterday and today's market close was bad news for the Obama campaign and of course the doom and gloom Democrat leaders in congress.

It's pretty funny when the Obama campaign's only hope left of winning is to take a page from the Clinton/Carvell playbook of "it's the economy stupid."

What a shame that the Democrats WANT Americans to suffer with a bad economy in hopes that they can turn that into possible votes/power.

:lol:

McCain wins!

Just curious if you've read some of the attached sources people have posted? That power may mean less than people think at the end of the day, no thanks in part to the stellar contributions of your current leadership. No sense in gloating or goading, it's affecting maaaaany more people than those in the U.S.

Link to post
Share on other sites
Just curious if you've read some of the attached sources people have posted? That power may mean less than people think at the end of the day, no thanks in part to the stellar contributions of your current leadership. No sense in gloating or goading, it's affecting maaaaany more people than those in the U.S.

My point was that the Obama campaign would love for the economy to get even worse before Nov 4th. My personal thoughts on what has been going on with the subprime crisis is that this is the consequence of believing that everyone deserves to own a home without moral consequences. Consequences for both the borrowers and the lenders.

When I bought my first home, the general lending guidelines for a 30 year fixed mortgage were that your monthly mortgage payment could not excede more that 25% of our gross monthy income. And you had to put 20% down as well.

I have no sympathy for people who are loosing their homes due to stupidity. And I have even more outrage for the lenders who want the tax payers to bail them out for lending money to those stupid people.

Link to post
Share on other sites
My point was that the Obama campaign would love for the economy to get even worse before Nov 4th. My personal thoughts on what has been going on with the subprime crisis is that this is the consequence of believing that everyone deserves to own a home without moral consequences. Consequences for both the borrowers and the lenders.

When I bought my first home, the general lending guidelines for a 30 year fixed mortgage were that your monthly mortgage payment could not excede more that 25% of our gross monthy income. And you had to put 20% down as well.

I have no sympathy for people who are loosing their homes due to stupidity. And I have even more outrage for the lenders who want the tax payers to bail them out for lending money to those stupid people.

But couldn't one say the same for McCain's camp?

The rules here in Canada incidentally have changed so that you must have at least 5% down, and the mortgage has a max term of (I think) 35 years. Your mortgage can't be more than around 40% of your income. I think I'm writing that right, but if not, give or take. The point is, there are checks in place.

I basically agree with what you've said about the subprime mess, except I feel bad for people who are losing their homes. I don't blame people for trying, it's not a crime, but it is essentially a crime to give mortgages to unqualified people. Some just want to get out of their shit holes and this probably offered a ray of hope for home ownership they'd otherwise not get. That's not excusing their responsibility, but I just think lenders who are far more knowledgeable about how things work had no qualms about taking advantage of a- the system and b- people who were ripe for the picking. That said, adhering to basic principles of don't spend more than what you earn, try to save a bit is always prudent. You don't need to be a financial whiz to follow these, just disciplined. People always think they can get away with it, but it always catches up with you. It's a very painful lesson to learn, but makes you appreciate what you have.

Edited by Patrycja
Link to post
Share on other sites
But couldn't one say the same for McCain's camp?

The rules here in Canada incidentally have changed so that you must have at least 5% down, and the mortgage has a max term of (I think) 35 years. Your mortgage can't be more than around 40% of your income. I think I'm writing that right, but if not, give or take. The point is, there are checks in place.

I basically agree with what you've said about the subprime mess, except I feel bad for people who are losing their homes. I don't blame people for trying, it's not a crime, but it is essentially a crime to give mortgages to unqualified people. Some just want to get out of their shit holes and this probably offered a ray of hope for home ownership they'd otherwise not get. That's not excusing their responsibility, but I just think lenders who are far more knowledgeable about how things work had no qualms about taking advantage of a- the system and b- people who were ripe for the picking. That said, adhering to basic principles of don't spend more than what you earn, try to save a bit is always prudent. You don't need to be a financial whiz to follow these, just disciplined. People always think they can get away with it, but it always catches up with you. It's a very painful lesson to learn, but makes you appreciate what you have.

A very good lesson.

As P.T. Barnum once said, "there's a sucker born every minute."

Were the lenders greedy? Certainly. But nobody was holding a gun to these people's heads. A person needs to know their limitations. I put 99% of the blame on the consumers who were that stupid.

Stupid people are a hazzard. They ought to be forced to wear warning signs.

Link to post
Share on other sites
I have no sympathy for people who are loosing their homes due to stupidity. And I have even more outrage for the lenders who want the tax payers to bail them out for lending money to those stupid people.

The thing is, and I can't really talk for the States because I don't know exactly what the real estate issue is over there, apart from the fact that there has been a sustained rise in house prices

But the trouble, certainly here, is that you have an increasing shortage and over heated city rental market. It's becoming too costly for people to rent in the city, so now they're having to move way out past the outskirts of the city, which of course takes them miles and miles away from their jobs. It's too expensive to use a car regulalry these days and there's no underground railway system so public trasport isn't at it's most convenient, so people to be closer to work are taking out expensive mortgages, the re-payments of which they can negotiate with their lending institution which they wouldn't be able to do with a rental property.

Whether that's right or wrong is another thing, but that's why it's happening, certainly for here.

Link to post
Share on other sites
I suspect money will start to flowing into hard assets like oil and gold as prnting presses start rolling out the money

True enough, but God help Americans if they start printing more money, inflation will rocket, the US dollar will lose its value and goods and services will become more expensive. They'll be tough times for the average american.

Link to post
Share on other sites
A very good lesson.

As P.T. Barnum once said, "there's a sucker born every minute."

Were the lenders greedy? Certainly. But nobody was holding a gun to these people's heads. A person needs to know their limitations. I put 99% of the blame on the consumers who were that stupid.

Stupid people are a hazzard. They ought to be forced to wear warning signs.

And stupid lenders are even MORE hazzardous! HELLO!! Sure, take advantage of the stupid people knowing full well that these people were high risk but being greedy knowing they'd take their profits now and knowing that when the inevitable happens they are insured and won't lose a dime out of their pocket. Of course, all the while, not even giving consideration to their employees, the market, and how they would all be affected also.

And now what? Becuase they were soooo stupid they finally changed their lending habits and now, my sister tells me (she's a mortgage broker) she has to refuse loans to people that have 100,000 for a down payment!!! How is THAT affecting the market?

Link to post
Share on other sites
A very good lesson.

As P.T. Barnum once said, "there's a sucker born every minute."

Were the lenders greedy? Certainly. But nobody was holding a gun to these people's heads. A person needs to know their limitations. I put 99% of the blame on the consumers who were that stupid.

Stupid people are a hazzard. They ought to be forced to wear warning signs.

And stupid lenders are even MORE hazzardous! HELLO!! Sure, take advantage of the stupid people knowing full well that these people were high risk but being greedy knowing they'd take their profits now and knowing that when the inevitable happens they are insured and won't lose a dime out of their pocket. Of course, all the while, not even giving consideration to their employees, the market, and how they would all be affected also.

And now what? Becuase they were soooo stupid they finally changed their lending habits and now, my sister tells me (she's a mortgage broker) she has to refuse loans to people that have 100,000 for a down payment!!! How is THAT affecting the market?

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


×
×
  • Create New...