Economic Crisis of 2008/2009

[Xellos-_^]

Originally Posted by Anh_Minh

Poor Lagarde keeps saying stuff that's later denied by the rest of the government. I don't know what's up with that.

As for our banks being in trouble... I doubt it. They're generalist banks, not pure investment banks.

if you notice it is not just the investment banks in the US that is having trouble. Wamu, wachovia and about a dozen smaller regional banks have gone under. It depends on how much crap they got on thier books how interconnected your banks are with the rest of European banks.

this credit mess is going to affect everybody, including Asia, So.Am, middle east and africa.

[Anh_Minh]

Yeah. Let me rephrase. I doubt our banks would be the first in Europe to be in "help I'm headed for bankruptcy" trouble. Losing money? Sure, like everyone. Having their stock price playing roller coaster? It's already happening. Actually going under? Wait until it happens to other people first.

[Xellos-_^]

Originally Posted by Anh_Minh

Yeah. Let me rephrase. I doubt our banks would be the first in Europe to be in "help I'm headed for bankruptcy" trouble. Losing money? Sure, like everyone. Having their stock price playing roller coaster? It's already happening. Actually going under? Wait until it happens to other people first.

i think Britian is going to feel it first, as their housing market is as bad as ours.

[Decagon]

Just got out of this panel about the economic crisis at my uni: http://igs.berkeley.edu/events/oct2econpanel.html

It should be available as a webcast, perhaps later today.

They brought up many interesting points about the nature of the problem in the US and comments on how the government is trying to treat it. My focus on economics isn't as strong as the more discerning posters here, but I think this panel gives a good bit of perspective and is a good summary in the first hour or so from mostly similar viewpoints: that the opaqueness of securities being traded through the number of pools that the debt was being repackaged and resold through, the reliance on feasibility of subprime loans on constantly rising housing prices, the failure of government oversight to keep pace with deregulation, the ease with which technology allowed people to trade in these securities thanks to improved technology, among other things, contributed to current affairs.

(Webcast is still not out at this posting time) If you watch past that into the open questions part, you'll get good questions and responses about policies and the bill coming through the Congress right now. They mention Europe a little at the end--about how it will be harder for them to deal with their banks since there is no centralized regulatory organization for the continent, and a quip about how the government of Switzerland doesn't have enough capital to save their bank by themselves. I thought Professor DeLong's suggestion that taking 300 billion to invest in the financials at Monday's 3pm prices would be a feasible way to recapitalize world financials to be interesting, but it's hard to tell when he's being facetious (taken a few of his classes).

I'd say more, but I don't have the time to double check what's been said in this thread between classes today.

[Realist_Classic]

^^^

Coolness, thanks for the link. Very nice panel, I so wish that I was still in Berkeley.

[Vexx]

The opaqueness of the "packaged securities of mortgages" works both ways.

Many of the home foreclosures are in a legal mess because its so damned hard to figure out what entity actually *owns* the house in question. its like connect the dots in the dark. Normally, one can work out deals or renegotiate the loan with a lien holder because an actual executed foreclosure is expensive, messy, and then the lien holder is in the home resale business. This becomes a total mess in the current "packaged" environment (as a couple of friends have discovered).

[Anh_Minh]

So... Are there businesses specializing in buying that kind of assets for dirt cheap, seizing the homes, and reselling them (or refinancing)?

[Xellos-_^]

Originally Posted by Anh_Minh

So... Are there businesses specializing in buying that kind of assets for dirt cheap, seizing the homes, and reselling them (or refinancing)?

i think they are call vulture funds.

[Anh_Minh]

So... Why aren't they buying the toxic assets right now? Can't borrow enough money?

[Xellos-_^]

they are waiting for the price to hit rock bottom. and some have bought, the company that bought all of merril lynch toxic mortgage securities, bought it for 20 cents on the dollars. i am pretty sure that company is going to make money on the deal.

[karasuma]

Originally Posted by Xellos-_^

they are waiting for the price to hit rock bottom. and some have bought, the company that bought all of merril lynch toxic mortgage securities, bought it for 20 cents on the dollars. i am pretty sure that company is going to make money on the deal.

You have one heck of an old avatar! You have to be under 10 years old when she was around..

[mg1942]

who is "she"?

[Xellos-_^]

Originally Posted by karasuma

You have one heck of an old avatar! You have to be under 10 years old when she was around..

i was 6, been watch a bunch of old hk martial arts shows. got nostalgic and decided to make a avie

Originally Posted by mg1942

who is "she"?

it is in my title

[Realist_Classic]

Originally Posted by Anh_Minh

So... Why aren't they buying the toxic assets right now? Can't borrow enough money?

Nobody wants to buy them and it's next to impossible to put a price tag on them. If I'm understanding things correctly, it's the toxic papers' underlying assets--the subprime mortgage loans--that makes the papers "toxic." The paper's worth nothing if the mortgage loans can't be paid.

[Xellos-_^]

Originally Posted by Realist_Classic

Nobody wants to buy them and it's next to impossible to put a price tag on them. If I'm understanding things correctly, it's the toxic papers' underlying assets--the subprime mortgage loans--that makes the papers "toxic." The paper's worth nothing if the mortgage loans can't be paid.

not entirely, these papers are still back by the house the mortgage for. if the borrow defaults there is still the company holding the paper still have the house. The problem is that no one knows what these papers are worth because market is still dropping. Once the house market stablize the company put a actual price on these papers they will sell.

Also it is not just sub-prime loans that are the cause of trouble, it is the variable loans and house flipper who walk away form thier mortgage because the house is worth less then the loan and people who refi thier house during the boom and now found there new mortgage is more then the actual value of the house.

[Kiggz]

sorry if this is off topic but xellos is your name chose after the proleague starcraft player ?

[Xellos-_^]

i had this nick before starcraft was even invented

[Squabler_Gr]

It looks like they just passed the new modified bailout bill.

[Quarkboy]

Originally Posted by Kiggz

sorry if this is off topic but xellos is your name chose after the proleague starcraft player ?

Xellos' name's origin "is a secret".

[Aquillion]

Originally Posted by Quarkboy

Xellos' name's origin "is a secret".

Isn't it a Slayers reference? That's what I assumed, anyway...