Who woulda thought 2 million poor Americans had so much power?

I never thought that. thats deep

Actually, it is very very questionable who is brought to their knees.

The American nation is dependent on loans and lines of credit more than anyone in this world. The government is bailing out (at least trying to) the system which creates all those loans, so it is bailing out itself and no one else (actually, the US never really gave a crap about anyone else). The problem is that the economy of this size cannot go down smoothly; everyone else will be moved by the waves and bubbles it creates while sinking. Some will stand strong (the favourite saying of the retard president G. W. Bush), some will sink along side. This obviously creates "panic" worldwide.

Now, why is it questionable who is on the knees? Where do you think the "bailout" money is coming from? Obviously, the government borrows it somewhere (or prints new, which essentially the same as borrowing). There is no problem with that except for the fact that it has to be paid back (with addition of the other debt, which is huge). Who is going to pay it back? Of course, tax payers, who are already in deep ... So who is really brought to "its knees"?

Interesting times we live in. After the years of the Great Depression, there was a "break through" in economic thought, when Keynes published his "The General Theory of Employment, Interest and Money". Lets hope that the present "crisis" will produce something usefull as well :-)

Greetings!

First, I don't think the sub-prime borrowers are totally at fault. There had to be lenders out there who were willing to give them the loan. They own at least 1/2 of the responsibility.

No, on second thought, the lenders actually own MORE than 1/2. I would suspect that many of these homeowners wouldn't be in this shape if the greedy banks / finance companies, etc... would have simply chosen to settle for a fixed-rate interest % over 30 years. NO...they set up ARM's where the payments escalated WELL-BEYOND the home-owner's ability to make the payment.

If you think THIS is a problem, go do research on "derivatives".

These are a type of investment that aren't really based on anything "tangible". They are used by "hedgers", "speculators" and "arbitrageurs". According to Warren Buffett, they are a "financial weapon of mass destruction." The TOTAL GDP of the world - ALL nations - is aprox. $50 Trillion. The total value of these highly-risky and speculative derivatives is estimated at $516 TRILLION dollars. That number doesn't include all of the private, company - company transactions.

While I'm not a big Bible-thumper, the quote, "the love of money is the root of all evil" is certainly starting to ring true here.

Peace

Those who are losing their homes are simply the unfortunate fallout of a huge yet simple problem. They are not the cause of AIG or anyone else failing. Our current administration has always believed in deregulation. That would work - in a perfect world - where honesty was the golden rule! We don't live in that world thus subprime loans were sold to folks who could not pay, bundled into packages along with other subprime investments, insured by the likes of AIG, etc. & sold abroad. Housing supply outgrew demand & the price of a house fell. Folks could not qualify for a better loan & lost their homes. The housing bubble burst & some lost their homes. 94% of all Americans with a mortgage are still paying their mortgages! The defaulters have not brought the country's economy to a grinding halt. While the FBI investigates fingers are starting to point toward WallStreet itself. They sold these rotten mortgage loan packages all over the world then entities like AIG insured them without having the funds of an insurance company to back up their policies of insurance because - you guessed it - they were unregulated since they weren't selling "insurance" they were selling "swaps". Clever, huh? Brought to you curtesy of - WallStreet!

It is due to the Wall Street magic of leverage, securitization, and credit swaps that can multiply profits and losses by large numbers, and spread the risk to the whole world. The dumb regulated people at Fannie and Freddy had half the market and only managed to lose 200 billion when the bubble in real estate prices deflated.

It has been a sad turn of events.

I don't think there is any scope for such thoughts.

"Profound", but true...