USA Just Gone Bust

[DaveB]

Any viable alternatives for them?

Not really no. The two institutions are so closely bound to the rest of the banking system that if they failed they'd take down most of the worlds finaincial institutions with them. Even rumours of problems with them are enough to seriously affect the world economy.

They don't actually lend money for mortgages themselves, they buy mortgages from other banks, effectly underwriting the lending and sell them on to investors. The interest repayments they make to the banks are more than the UK GDP. If they defaulted on those payments it would not be a Good Thing(tm).

[oracleslave]

Not really no. The two institutions are so closely bound to the rest of the banking system that if they failed they'd take down most of the worlds finaincial institutions with them. Even rumours of problems with them are enough to seriously affect the world economy.

They don't actually lend money for mortgages themselves, they buy mortgages from other banks, effectly underwriting the lending and sell them on to investors. The interest repayments they make to the banks are more than the UK GDP. If they defaulted on those payments it would not be a Good Thing(tm).

I knew this, I was really after the unique insight of our daily mail crustacean.

[TimberWolf]

Oh, and the USA pumping money in like this will just delay the inevitable crash of world economies and make the crash when it comes, bigger and harder to cope with.

Doomed++

I was thinking much the same. If house prices recover, I'll be selling.

[Andy2]

Excess liquidity got us into this mess and created all these bubbles.
Ironically US is finding its way out by printing trillions of dollars to create more liquidity.
Economy is more complicated than rocket science

[DimPrawn]

I knew this, I was really after the unique insight of our daily mail crustacean.

The unique insight is this. Supporting failed business models through public money only delays the eventual collapse.

The markets might boom for a while, maybe even house prices in the USA and UK will rebound back to the peak again.

But the failure of the system will happen sooner or later. If things go back to boom, sell everything at the top and sit on cash, for the bust will follow and the USA will be bankrupt.

[oracleslave]

The unique insight is this. Supporting failed business models through public money only delays the eventual collapse.

The markets might boom for a while, maybe even house prices in the USA and UK will rebound back to the peak again.

But the failure of the system will happen sooner or later. If things go back to boom, sell everything at the top and sit on cash, for the bust will follow and the USA will be bankrupt.

So your unique insight is economies have peaks and troughs.

[sasguru]

So your unique insight is economies have peaks and troughs.

The Millionaire Dim Prawn (TM) didn't become so by being stupid you know

[DimPrawn]

So your unique insight is economies have peaks and troughs.

No, my insight is that what looks like a rescue plan and a solution to the sub-prime credit crunch is infact just delaying and intensifying the crash that is in the near future.

But hey, I'm just here for the Aygo driving permie to laugh at.

[Diver]

The Millionaire Dim Prawn (TM) didn't become so by being stupid you know

I'm psychic!

I read Oracle's post and said to myself "Sas will be along next, he smells blood in the water like a piranha"

[DimPrawn]

I'm psychic!

I read Oracle's post and said to myself "Sas will be along next, he smells blood in the water like a piranha"

Halibut.