Policy and a Pint: Discuss the Economic Meltdown

Most of this has to do only with the value of the dollar, and politics as usual. The Bush administration gave more value do bankers in 2004 with the change from 12 to 1 to 40 to 1 leverage in the loaning that the banks did so they could loan more money to buy homes. That was not a good thing to do

As the value of the dollar went down 40+% between 2001 and 2007 the price of commodities, homes and Stock went up 40% or in most cases more as the people that saw the price rising thought that the prices would continue to go up and up.

However, when the value of the dollar started going up in 2007 there was an known panic as to why are the prices falling. However the dollar continued to go up in value, and is now up around 10 to 15% and the prices definitely fell in the commodities, homes and the stocks. However, as the prices went up more than was justified, the prices also have fell a bit more than should have been expected also.

Also of note is that the 40 to 1 leverage given to the banks in 2004 was used by some, but not all the banks, like Wells Fargo and JPMorgan Chase, which stayed around the lower leverage arena of 12 to 1, However, Bear Stearns was leveraged at over 100 to 1 when they failed, and Lehman brothers was said to be in the same ball park, however they also carried much more debt than Bear Stearns, and no one wanted to deal with that debt, so they just failed.

As the value of the dollar continues to rise the difficulty will continue. But the dollar being worth more now, also makes it well, while still being misunderstood, better overall.

These are always great events - I'll check my calendar!

I'm worried about worrying. I do not like to hear people talking themselves into a lack of confidence in the US or worldwide economy -- that will only make things worse and longer lasting. As a freelancer I do not have the sort of steady income or benefits many positions provide, and as some one who works in the arts things are even stranger for me right now than, say, for those freelancers who work in healthcare or finance. I think, though, it's important to keep my spirits up, keep looking for creative ways my work can serve and fit in, and work on encouraging positive, creative, and hopeful conversation and thinking.

I'm 44, what will be left of Social Security? No talk of that lately.

What about all the government pensions and union pensions of US legacy type corporations?

Will taxing more increase jobs? Or does it just feel good?

25 years ago in my Ecomonics classes they were teaching us that Keynesian Economics is flawed and not affective. Why will it work now?

Poor regulation got us into this, why would more regulation help?

The bailouts never addressed the primary factor of the deadly derivatives market in the international financial meldown. The big bankrupt banks are using the bailout money to create war chests for takeovers, consolidation of power of banks, and not for lending. Press release evidiences this:
Lies and Audiotape: Morgan Chase Exec Brags Bailout Is for Takeovers, Restructuring, Not Lending

Oct. 26, 2008 (EIRNS)—In an internal bank conference call last week, a JP Morgan Chase executive, unaware that his conversation would be heard and published by a reporter, confirmed exactly what Lyndon LaRouche has said about the Hank Paulson bail-out: It has nothing remotely to do with extending lending to the U.S. economy, but is concerned with the Mussolini-like corporatist restructuring of the U.S. banking system, turning over the "smaller banks" to the totally bankrupt big banks, so that they can digest the smaller banks' assets, and survive perhaps a few more weeks.

New York Times reporter Joe Nocera obtained the call-in phone number on which the Oct. 17 Morgan Chase conference call took place, only 4 days after JP Morgan CEO Jamie Dimon had agreed to take $25 billion in a U.S. government capital injection. In an article in the Oct. 25 Times, entitled "So When Will Banks Give Loans?" Nocera quoted the unnamed JP Morgan Chase executive who gave the conference call, as follows:

"Twenty-five billion dollars is obviously going to help the folks who are struggling more than Chase," he began. "What we do think it will help us do, is perhaps be a little bit more active on the acquisition side, or opportunistic side, for some banks who are still struggling. And I would not assume that we are done on the acquisition side, just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way. And obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop." [emphasis added]

Later during the call, the executive showed what a fig-leaf is Paulson's claim that the capital injection part of the bail-out plan would start up lending to the economy. The executive explained "loan dollars are down significantly." He added, "We would think that loan volume will continue to go down as we continue to tighten credit to fully reflect the high cost of pricing on the loan side."

Note to all: I'll see if the audio from this event is available.

Citizen Citizen, Please don't be alarmed that I removed one of your replies, it was a duplicate post.

Poor regulation got us into this, why would more regulation help?

winston: do you think better regulation would have helped, and do you think it will help in the future?