Thread Depression: By the numbers...

[b_sinning]

Greece is having problems with olive oil exports or something. I don't know, I wasn't really listening. They're doing something.

Instead of repaying their loans they all are sitting around going "Mama Mia!"

 

[b_sinning]

I would go as far as to say that bank lending didn't get us in this mess. It's the proprietary trading using those deposits that gets them in hot water.

Creating money on paper that didn't actually existed in the real world. By the nature of them all ponzi schemes eventually fail.

 

[Casper]

Too big to fail was a concept created by people whose companies were about to fail.

It's a conspiracy involving credit defaults swaps, whereby smart and afflicted institutions poisoned all the others. When the assets on each banks balance sheet depend on the performance of the others, that is too big to fail.

 

[b_sinning]

What do you expect considering they regulate themselves?

 

[Casper]

My expectations are very low at this point.

 

[ZRH]

Banks are hard to regulate because they innovate in the securities market to create obscure instruments to bet with. Regulations will probably always be a step behind, because regulation is enacted in response to failures, never ahead of them. If regulation was innovative and proactive Wall Street would call the regulations overbearing causing investor angst with the government. Regulatory agencies also don't attract the brightest folks, since that's not where the money is.

I would go as far as to say that bank lending didn't get us in this mess. It's the proprietary trading using those deposits that gets them in hot water.

You answered yourself When you are implicitly guaranteed you don't have to take on the actual risk involved in 'obscure' investments. If they bore the full cost of risk it wouldn't be advisable to overextend themselves unless they were institutionally suicidal.

 

[ZRH]

Creating money on paper that didn't actually existed in the real world.

That is what banking is

 

[JAXvillain]

Instead of repaying their loans they all are sitting around going "Mama Mia!"

fungool, that's italiano

 

[b_sinning]

fungool, that's italiano

Opps. You're right.

 

[Casper]

You answered yourself When you are implicitly guaranteed you don't have to take on the actual risk involved in 'obscure' investments. If they bore the full cost of risk it wouldn't be advisable to overextend themselves unless they were institutionally suicidal.

But few of them understood the risk -- I reckon those were the sellers. Certainly the buyers of the toxic assets didn't know.

 

[Casper]

Creating money on paper that didn't actually existed in the real world. By the nature of them all ponzi schemes eventually fail.

Banking is not a ponzi scheme. Banking is the only mechanism for creating wealth.

 

[Casper]

And by banking, I mean lending. Not trading. Banks have no business trading, imo.

 

[Duke]

And by banking, I mean lending. Not trading. Banks have no business trading, imo.

Yet that is what they do with your money.

 

[ZRH]

But few of them understood the risk -- I reckon those were the sellers. Certainly the buyers of the toxic assets didn't know.

and buy side is supposed to be the "smart" side

 

[Casper]

Yet that is what they do with your money.

Unfortunately. Trading is just too lucrative to resist.

 

[ZRH]

And by banking, I mean lending. Not trading. Banks have no business trading, imo.

Depends on if you mean investment banks or retail banks. Market making is how they do business which by definition involves buying and selling.

 

[Casper]

Investment banking is not traditional banking. That's exactly what I'm talking about.

 

[ZRH]

People say banking, I think investment banking. I've always been pro-credit union for personal stuff

 

[fly]

Tell that to The Federal Reserve Board of Governors. They think they are smart enough to out wit normal economic cycles.

w00t, we agree for once!

 

[Atan Nolme]

This morning I woke up and the markets were doing well. Then EOD, QUICKLY EVERYONE BACK TO YOUR BUNKERS. RECESSION IS BACK ON!

The markets have always done this. Hell, during the "Great:" depression, the markets were up and down more than a 2 dollar whore.