Praise be to the Federal Reserve

[wendigo100]

we cant just keep borrowing without repaying.

Quite. But you'd be surprised how many people believe that "it will be different this time", with "a soft landing"!

Also, debt is never "written off". Someone, somewhere has to pay for it.

[bobhope]

Bernanke (and our very own MPC) could do with looking up the definition of "moral hazard"

[Troll]

what I don't understand in this whole fiasco is why banks deliberately give mortgages to individuals who have no income or means to give it back. why would anyone want to lose money

which idiot gives these bad debts triple A ratings. why are they not being sacked for sheer incompetence.

They have targets to meet & they are given criteria for acceptance... lax criteria = more poor debt but it's only at the painfull end of the economic cycle that chickens come home to roost

[ElectricChair]

Fingers crossed a balancing act of tightening up lending rules, regrading debt instruments and cutting rates in the US will eventully sort things.

That will be enough this time. But eventually debt has to be paid back. People will have to stop spending. Or debt written off.

[Andy2]

what I don't understand in this whole fiasco is why banks deliberately give mortgages to individuals who have no income or means to give it back. why would anyone want to lose money

which idiot gives these bad debts triple A ratings. why are they not being sacked for sheer incompetence.

[Spartacus]

As far as CDOs go, it seems there's always someone prepared to believe that high return does not signify increased risk. 'Twas always thus, 'twill always be so.

[milanbenes]

the Fed kept things going in Sept '98 when there was the last big financial problems, Russian devaluation and LTCM going under.

fingers crossed they keep things afloat until I'm 40 :-)

All the best,

Milan.

[GreenerGrass]

Its not so much the level of the interest rates themselves thats led to the market problems, its a combination of ridiculously lax lending requirements, and the packaging of all these CDO thingies as being far safer investments than they actually are. And no one knowing the full exposure to them.
Fingers crossed a balancing act of tightening up lending rules, regrading debt instruments and cutting rates in the US will eventully sort things.

The lenders see the central banks as being like rich parents who bale out their spoilt kids when their attempts at playing "business owner" in West London go tits up.
"There, there, we'll cut interest rates this time, but don't do it again".

Being an optimist I reckon the FTSE will be over 6300 by Christmas, but it could go down to 5700 or lower in the next month or two.

[ElectricChair]

Yes we can, it's different this time. House price increases in perpetuity will keep everything revving along nicely. Best get that BTL property while they're still cheap.

Most of those buying now are criminals. Banks will lose all their money. Then there will be a real credit crunch. depression.

I hope that cheered you all up.

[Spartacus]

You cant just abolish the normal ewconomic cycle and we cant just keep borrowing without repaying.

Yes we can, it's different this time. House price increases in perpetuity will keep everything revving along nicely. Best get that BTL property while they're still cheap.

[ElectricChair]

wendigo,

it doesn't hurt to have a little understanding of what they do

fingers crossed they can keep the ship afloat

Milan.

Well they kept ship afloat in 2001 by cutting interest rates - causing the current issues. I guess they will do the same this time and we will survive. One day interest rates will go to zero and nothing will happen - it will be depression.

You cant just abolish the normal ewconomic cycle and we cant just keep borrowing without repaying.

[milanbenes]

wendigo,

it doesn't hurt to have a little understanding of what they do

fingers crossed they can keep the ship afloat

Milan.

[wendigo100]

Their central bank seems to have done something that has got us out of the sh1t, but I don't understand all that high finance stuff so I don't know what. So bravo indeed!

[milanbenes]

bravo !!

Milan.

[BlasterBates]

Our Bernanke which art in the Federal reserve
Hallowed be thy name
Thy kingdom come
Thine will be done
In none-US countries as in the US.
Give us this day a reasonable discount rate
Forgive us for our defaults, as we forgive those who default against us.
and lead us not into temptation but deliver us from falsely rated mortgage backed securities
For thine is the kingdom, the power and the glory for the duration of a 30 year mortgage agreement.

Amen