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| Re: The financial cirsis for dummies [message #354262 is a reply to message #354261] |
Mon, 13 October 2008 03:24   |
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EvilWhiteDragon
Messages: 3751
Registered: October 2005
Location: The Netherlands
Karma: 0
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General (3 Stars) |
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It's horribly flawed.
Because it doesn't depict the reality. The financial crisis started when people couldn't pay the interest of their mortgage. This was caused by two things:
1. banks giving out responsible high loans, thereby taking huge risks themselves.
2. decreasing growth of the (American) economy, which caused people to get fired or to have to pay more for food.
The result of that (and a lot of weird non-transparent ways of creating more money)* was that banks started to go bankrupt, if it wasn't for the money injections many governments age giving them.
Another cause of banks going bankrupt is that people are scared of their bank going bankrupt and decide to get their money of the bank. That will cause liquidity problems for the bank, and could indeed make it go bankrupt.
Basically the later thing is a "self-fulfilling prophesy". That is what happened to the Iceland bank "ICESAVE" it went bankrupt because UK and Spanish people decided to take their money of that bank. And by doing so indirectly screwing over the Dutch government which now needs to protect it's own citizen, by guaranteeing up to 100.000 Euro.
*Banks could loan 5 Million dollars with an outstanding 500.000 dollar mortgage. In that way they where basically creating money. That is also one of the reasons the USA has had a continues economic growth, which is basically build on fried air.
Another reason for the consistent growth is the increasing loans the USA has in foreign countries. Basically China and Europe (mainly) are paying for the "American way of living". This will stop at some point at which the USA will be not much more than a third world country.
I bet I will get flamed for saying that the USA economy is build on fried air.
BlackIntel admin/founder/PR dude (not a coder)
Please visit http://www.blackintel.org/
| V, V for Vendetta |
People should not be afraid of their governments.
Governments should be afraid of their people.
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[Updated on: Mon, 13 October 2008 03:26] Report message to a moderator |
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| Re: The financial cirsis for dummies [message #354266 is a reply to message #354261] |
Mon, 13 October 2008 04:34 |
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Goztow
Messages: 9731
Registered: March 2005
Location: Belgium
Karma: 13
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General (5 Stars)
Goztoe |
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| Quote: |
It's horribly flawed.
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It's a cartoon. And it's not flawed, it just doesn't show the complete crisis, only a small part of it.
You can find me in The KOSs2 (TK2) discord while I'm playing. Feel free to come and say hi! TK2 discord
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| Re: The financial cirsis for dummies [message #354272 is a reply to message #354269] |
Mon, 13 October 2008 07:19 |
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cheesesoda
Messages: 6507
Registered: March 2003
Location: Jackson, Michigan
Karma: 0
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General (5 Stars) |
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| EvilWhiteDragon wrote on Mon, 13 October 2008 08:01 |
| Goztow wrote on Mon, 13 October 2008 13:34 |
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It's horribly flawed.
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It's a cartoon. And it's not flawed, it just doesn't show the complete crisis, only a small part of it.
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It doesn't show any portion of it, and because of that it's flawed. Particularly when one would look at your topic title.
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It's not flawed... not for America, anyway.
Banks got screwed because they're stupid for giving out loans to people who couldn't be trusted, then they go bankrupt because of it. Since they're bankrupt, they can't give people their money, thus they need money. To get the money, they essentially steal it from the people via the government. Now that the banks are operating on the People's money, they can afford to loan the People money again.
That's essentially what the comic has shown...
This comic isn't denying that banks gave out bad loans. However, talking about the bad loans in the comic would ruin the joke.
My government's fiat money system is a train wreck and has been since shortly after its conception. The idea of a government printing money, letting banks essentially create money out of thin air, and borrowing from foreign banks at high interest rates has never been smart, and now it's biting us in the ass. Plus, the pressure from the government for banks to loan money to people who will obviously default didn't really help.
Edit: EWD, that "injection" of money that you talked about is exactly what the comic is talking about. The money is, essentially, coming out of the pocket of the people.
whoa.
[Updated on: Mon, 13 October 2008 07:26] Report message to a moderator |
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