in need of explanation.
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fuchtifano
- Posts: 2
- Joined: Sat Jan 30, 2010 1:05 pm
in need of explanation.
can anyone explain to me in simple english what has recently happened with the banks? I was led to believe that several major banks had made bad bets in the market and were,in all of our interests, bailed out.My question is, if the banks lost that money, who won it? who has the money now?
in need of explanation.
I'm fuchtifano.
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Oscar Namechange
- Posts: 31840
- Joined: Wed Jul 30, 2008 9:26 am
in need of explanation.
abbey;1286939 wrote: I'm fuchtifano. Me too. :yh_rotfl gmc will know or gmc will think he knows.
At the going down of the sun and in the morning, we will remember them. R.L. Binyon
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fuchtifano
- Posts: 2
- Joined: Sat Jan 30, 2010 1:05 pm
in need of explanation.
abbey;1286939 wrote: I'm fuchtifano.
no i,m spartacus.
no i,m spartacus.
in need of explanation.
fuchtifano;1286934 wrote: can anyone explain to me in simple english what has recently happened with the banks? I was led to believe that several major banks had made bad bets in the market and were,in all of our interests, bailed out.My question is, if the banks lost that money, who won it? who has the money now?
To get a good understanding of what happened requires a little bit of an explanation. First there is no real major manufacturing in the U.S. anymore, it has slowly been outsourced to India, Japan, Mexico and China, etc. Manufacturing was the way money was made and dispersed in the U.S. economy. When we made more goods and exported more goods than we imported the dollar and our economy was strong. A good indication of this is the cost of gold on the global market. In the 1960’s gold cost $32 an ounce and the value of the greenback was $1.00. The United States had the strongest economy in the world and its value against gold reflected that.
There has always been an ongoing battle between corporations and unions. The unions fought for more money and better benefits and the corporations fought for more profits, along comes the Corporate Lobbyist. In short, the lobbyist makes big $$ donations to a political candidate to have new laws favor them rather than the unions. One of these laws was NAFTA which was sold to the common person as helping the economy by reducing tariffs making it cheaper for American manufacturers to buy raw material and therefore creating more jobs. In fact what it actually did was throw the balance of power in the corporations favor and was the beginning of more laws that made it easier for corporations to outsource jobs. The corporate lobbyists made bigger and bigger donations to both political parties ensuring legislation always went in their favor no matter who was in office.
It got to the point in it 1990’s and early 2000’s that there were literally almost no decent paying jobs in the U.S. with the exception of computers and selling foreign cars and goods. We were importing so much foreign manufactured goods and exporting so little that the value of the dollar started to nose dive rather quickly causing the price of gold to skyrocket. It went from $32 an ounce to $600 an ounce. The only industry making money was the housing industry and the banks jumped on the bandwagon big time. The banks became some of the biggest political lobbyists pressuring our legislators to pass bills favoring them rather than their constituents (you and me). New laws were passed ‘forcing’ Fanny Mae and other government back financing to loosen their requirements for getting a mortgage until it evolved to the ‘sub prime’ status. The banks manipulated the loans so they were knowingly giving out mortgages that they knew were bad. But good ole American greed them going despite the fact everyone involved knew that in the long run it was bad for the economy. Some of these loans were interest only for the first 5 years then a balloon payment of tens of thousands of dollars needed to be paid. Others were interest only for a length of time and then the principal had to be paid with each monthly payment sometimes doubling the size of the mortgage payment. Most of these sub prime mortgages had missed payment clauses that drastically raised the interest rate if even one monthly payment was late or missed. None of this was outwardly disclosed to the person buying the house and these mortgages targeted people that were so happy to get a house they didn’t ask too many questions.
As the banks were making so many of these ‘bad’ loans that they had to sell them to other banks and places like China so that they could have more money to make more loans. The problem was that the value of the dollar against the cost of gold was depreciating. When gold hit $900 per ounce the value of the dollar on the foreign market was worth only about 3-1/2 cents. Our greenback dollar was all but worthless; it was our credit that kept our economy alive. In the past the U.S. economy has always bounced back so foreign countries had faith in us as a global market economy.
When all of these loans started going bad, a lot of our economic allies held billions of dollars worth of these defaulted loans. China had the largest amount in the hundreds of billions dollars worth. In an effort to avoid a major international disaster Pres. Bush gave $375 billion of the TARP money to the banks, no questions asked. The assumption was that these loans would be bought back from our economic allies and banks and the banks would then start lending money again kick starting the economy. But what actually happened is the banks bought back the loans from China and other places and hoarded the rest. Some of them giving $millions in bonuses to their workers, I am sure you heard about the outage over that.
To get a good understanding of what happened requires a little bit of an explanation. First there is no real major manufacturing in the U.S. anymore, it has slowly been outsourced to India, Japan, Mexico and China, etc. Manufacturing was the way money was made and dispersed in the U.S. economy. When we made more goods and exported more goods than we imported the dollar and our economy was strong. A good indication of this is the cost of gold on the global market. In the 1960’s gold cost $32 an ounce and the value of the greenback was $1.00. The United States had the strongest economy in the world and its value against gold reflected that.
There has always been an ongoing battle between corporations and unions. The unions fought for more money and better benefits and the corporations fought for more profits, along comes the Corporate Lobbyist. In short, the lobbyist makes big $$ donations to a political candidate to have new laws favor them rather than the unions. One of these laws was NAFTA which was sold to the common person as helping the economy by reducing tariffs making it cheaper for American manufacturers to buy raw material and therefore creating more jobs. In fact what it actually did was throw the balance of power in the corporations favor and was the beginning of more laws that made it easier for corporations to outsource jobs. The corporate lobbyists made bigger and bigger donations to both political parties ensuring legislation always went in their favor no matter who was in office.
It got to the point in it 1990’s and early 2000’s that there were literally almost no decent paying jobs in the U.S. with the exception of computers and selling foreign cars and goods. We were importing so much foreign manufactured goods and exporting so little that the value of the dollar started to nose dive rather quickly causing the price of gold to skyrocket. It went from $32 an ounce to $600 an ounce. The only industry making money was the housing industry and the banks jumped on the bandwagon big time. The banks became some of the biggest political lobbyists pressuring our legislators to pass bills favoring them rather than their constituents (you and me). New laws were passed ‘forcing’ Fanny Mae and other government back financing to loosen their requirements for getting a mortgage until it evolved to the ‘sub prime’ status. The banks manipulated the loans so they were knowingly giving out mortgages that they knew were bad. But good ole American greed them going despite the fact everyone involved knew that in the long run it was bad for the economy. Some of these loans were interest only for the first 5 years then a balloon payment of tens of thousands of dollars needed to be paid. Others were interest only for a length of time and then the principal had to be paid with each monthly payment sometimes doubling the size of the mortgage payment. Most of these sub prime mortgages had missed payment clauses that drastically raised the interest rate if even one monthly payment was late or missed. None of this was outwardly disclosed to the person buying the house and these mortgages targeted people that were so happy to get a house they didn’t ask too many questions.
As the banks were making so many of these ‘bad’ loans that they had to sell them to other banks and places like China so that they could have more money to make more loans. The problem was that the value of the dollar against the cost of gold was depreciating. When gold hit $900 per ounce the value of the dollar on the foreign market was worth only about 3-1/2 cents. Our greenback dollar was all but worthless; it was our credit that kept our economy alive. In the past the U.S. economy has always bounced back so foreign countries had faith in us as a global market economy.
When all of these loans started going bad, a lot of our economic allies held billions of dollars worth of these defaulted loans. China had the largest amount in the hundreds of billions dollars worth. In an effort to avoid a major international disaster Pres. Bush gave $375 billion of the TARP money to the banks, no questions asked. The assumption was that these loans would be bought back from our economic allies and banks and the banks would then start lending money again kick starting the economy. But what actually happened is the banks bought back the loans from China and other places and hoarded the rest. Some of them giving $millions in bonuses to their workers, I am sure you heard about the outage over that.