OK, can someone please explain this logic if there is any logic to it?

[Care4all]

In simple talk...

Just using rough figures, our economy is comprised of about 80% small business and 20% large....

20% of our businesses is traded on the stock market, I am presuming this is what that means...

if the Credit market is 20% of the total market or even 20-30% of the volume of the stock markets...

and only 20-25% of the subprime loans are failing while only 6% of the conventional loans are failing making it maybe 12% of all loans failing...

out of 20% sector of the market, the Credit market they've been calling it...

Then HOW IN THE WORLD could this wee bit of defaulting loans, when looking at the whole big picture, caused the whole stock market to crash in the manner that it did here and around the whole world, last week and why is everyone talking about our entire economy being in the tank?

The only thing that this means to me is that it seems that people defaulting on home mortgages might be the Fall guy for something much more complicated and sinister than we think, like it is all just crap shooting or really monopoly money handed out by the dealer when you pass go...

Again, this is all in just simple think....not discussing the devilish details but just the logic of how 12% defaulting loans in a 20% sector of the stock market, could really make humpty dumpty fall?

care

 

[dilloduck]

In simple talk...

Just using rough figures, our economy is comprised of about 80% small business and 20% large....

20% of our businesses is traded on the stock market, I am presuming this is what that means...

if the Credit market is 20% of the total market or even 20-30% of the volume of the stock markets...

and only 20-25% of the subprime loans are failing while only 6% of the conventional loans are failing making it maybe 12% of all loans failing...

out of 20% sector of the market, the Credit market they've been calling it...

Then HOW IN THE WORLD could this wee bit of defaulting loans, when looking at the whole big picture, caused the whole stock market to crash in the manner that it did here and around the whole world, last week and why is everyone talking about our entire economy being in the tank?

The only thing that this means to me is that it seems that people defaulting on home mortgages might be the Fall guy for something much more complicated and sinister than we think, like it is all just crap shooting or really monopoly money handed out by the dealer when you pass go...

Again, this is all in just simple think....not discussing the devilish details but just the logic of how 12% defaulting loans in a 20% sector of the stock market, could really make humpty dumpty fall?

care

It's not logical because the problem wasn't only mortgage defaults.

 

[Ravi]

Oh, Care...where have you been? It's not the fault of a handful of people defaulting on mortgages. They are just a convenient scapegoat.

 

[Care4all]

It's not logical because the problem wasn't only mortgage defaults.

it logically and mathematically can't be....

gawd, we got alot of stupid congressmen!

 

[editec]

NAKED DERIVATIVES.

Some banks were flat out gambling and lost.

We'd outlawed that kind of banking routlette but the the neo-con deregulator squads eroded the laws that would have prevented this meltdown.

Those would be the same voices now trying to convince us that the whole problem is caused by the Community reinvestment Act or by stupid consumers buying homes they cannot afford.

These party faithful notwits will look everywhere to find scapegoats but to the actual facts, I guess.

 

[dilloduck]

it logically and mathematically can't be....

gawd, we got alot of stupid congressmen!

Only the Republicans----the dems will handle this and you will be rich--just you watch !

 

[Andrew2382]

NAKED DERIVATIVES.

Some banks were flat out gambling and lost.

We'd outlawed that kind of banking routlette but the the neo-con deregulator squads eroded the laws that would have prevented this meltdown.

Those would be the same voices now trying to convince us that the whole problem is caused by the Community reinvestment Act or by stupid consumers buying homes they cannot afford.

These party faithful notwits will look everywhere to find scapegoats but to the actual facts, I guess.

yup, the CRA was great. Not like in 1999 when Clinton add provisions to it, that the housing market skyrocketd past inflation when prior it went up at a dead even pace.

Nah CRA was wonderful

 

[Ravi]

it logically and mathematically can't be....

gawd, we got alot of stupid congressmen!

To be fair, I don't think most congresscritters put forth the stupid idea that defaulting poor people brought down the economy.

 

[dilloduck]

To be fair, I don't think most congresscritters put forth the stupid idea that defaulting poor people brought down the economy.

A whole lot of things contributed to it and it wasn't any big surprise either. It was a total Republican plot to ruin America.

 

[Care4all]

To be fair, I don't think most congresscritters put forth the stupid idea that defaulting poor people brought down the economy.

i heard alot of republican congresscritters say it...still am... and just alot of every day folk, calling in to c-span's washington journal...

 

[Care4all]

What I do not understand, is that if the lack of transparency in these mortgage backed securities is what is scaring the pajezus out of all the banks and no one wants to trade credit with anyone because of it...why don't they just make them transparent, NOW...so ALL can see and properly evaluate what's in them.....follow the papertrail to where they began...if that's what it takes to make them more or less valuable?

 

[Richard-H]

The stock market is a weird economic entity. It only partially related to the rest of the economy and the value of the businesses represented by the stocks (though it ought to be directly related).

It more influenced by the mood of investors.

Paranoia was more to blame than any real economics.

 

[Ravi]

i heard alot of republican congresscritters say it...still am... and just alot of every day folk, calling in to c-span's washington journal...

Good point. They are more interested in pretending it is the fault of the Dems and scoring cheap political points than exploring what went wrong.