Welcome to the Brave New world of economic chaos. Let's see what happens when you have true believers in an unregulated economy match up with a bunch of whiz kids on Wall Street? Economic meltdown.
So what hits the fan next? We already have the Federal Reserve doing something that is basically not within its mission statement. Something appears to have happened to the wall between the banking system and the stock exchange -- or are things just getting too blurry, or is it too bleary eyed to tell the difference anymore between "banks" and "investment banks?"
So we now have an agency charged with oversight of banks opening its lending window to entities it has no or minimal jurisdiction over? Where is this tunnel going to lead?
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Comments: 14
Since the lending organizations realized that they could rely on the government to bail them out, they pushed borrowers into over maximizing debt. The resulting higher mortgage rates drove speculative housing prices higher and more people began to borrow more just in order to have a roof over their head.
Now that the bubble the institutions inflated has burst, they lean on the government to keep their institutions from losing the profits they made.
The only real losers in all this are the people who were leveraged, and who now have to give up their homes.
People that I know in the financial sector say that more banks and companies will fail before we reach the bottom of this recession.