Then on Nov. 12, 1999 democratic President Bill Clinton signed the Gram-Leach-Bliley Act which repealed the sections of the Glass-Steagall Act that lifted barriers and allowed banks and securities firms and insurance companies to merge and sell each other's products, and also allowed underwriting. This opened the flood-gates for mortgage-backed bonds and collateralized debt obligations.
These two Democratic policy mistakes created the current situation from years of socially engineered housing policy (the Community Reinvestment Act, Fannie Mae and Freddie Mac, H.U.D.s no-money down mortgages) resulting in years of negative real interest rates in a growing economy which resulted in a housing bubble in 2007 bursting into recession.
When Countrywide Home Loans defaulted in 2007, that event caused a 'chain-reaction' of interconnected defaults, bank failures, run-on-the-banks (bank withdrawals), loan defaults, money/cash shortages, loss of confidence in stocks, which spread throughout the finance community, continuing right into 2008 and possibly into 2009.
The Democrats created the mess and the Republicans are trying to fix it with billion dollar bailout programs which should inject cash directly into banking/loan system and bring confidence back to the money market, commercial paper, and inter-banking loans.
But the fix will take time to take. It took time to make the mess, and it takes time to fix the mess. what is actually happening in stock market?What is the reason for this inter national level collapse?There are many reasons to file bankruptcy – large medical bills, loss of a job, unsecured debt, etc. These debts can get very large, very quickly if not properly managed.
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what is actually happening in stock market?What is the reason for this inter national level collapse?There are many reasons to file bankruptcy – large medical bills, loss of a job, unsecured debt, etc. These debts can get very large, very quickly if not properly managed.[url=http://finance.bizoppju… Loans[/url]
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what is actually happening in stock market?What is the reason for this inter national level collapse?mortgage brokers began to offer to many unqualified people mortgages at “unbelievable deals”, with the hope of home prices going up, and promising these home buyers that they would make some money on the home appreciation. There are complex scenarios that end up to the same end of unqualified buyers buying homes, and mortgage lenders issuing out the mortgages.
Mortgages are packed up, or the jargon used is “collateralized” into investment products that wall street calls “structured investment vehicles” or “SIV”, then the top investment banks, buy them and further collateralize these instruments and sell them at marked up prices. No one at the end of the days knows what is really in these packages.
Majority of the banks who invested in this SIVs were over leveraged, actually banks were operating on a six times leverage, so for every loss in a dollar, two-thirds of their assets tied to that dollar was lost, explaining why we saw huge write downs buy the banks a few months ago. All of this just had a domino effect on the market and that’s why we have witnessed a major collapse as we know it today
watch this video http://futurescafe.com/blog/2008/10/how-did-the-us-get-into-this-mess/
Though humorous, it represents the truth.....
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