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Bailout Failure Will Cause One Of The Greatest Stock Market Crashes In U.S. History

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Eli Weiss

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The financial system could face a meltdown of 1929 proportions unless US politicians succeed in their efforts for a $700bn rescue scheme, experts added.

The warning came as Republicans and Democrats met in Washington for a rare weekend debating session to attempt to seal agreement on the contentious plan, aimed at preventing a long-lasting recession in the US.

One Republican said that the message from government officials is that “the economy is dropping into the john.” He added: “We could see falls of 3,000 or 4,000 points on the Dow [the New York market that currently trades at around 11,000]. That could happen in just a couple of days.

[highlight]“What’s being put around behind the scenes is that we’re looking at 1930s stuff. We’re looking at catastrophe, huge, amazing catastrophe. Everybody is extraordinarily scared. It’s going to be really, really nasty.”
[/highlight]

http://www.telegraph.co.uk/finance/...4318/Bailout-failure-will-cause-US-crash.html
 

Marcia Langley

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Eli,

Yes, the situation is grave. It's not behind the scenes so much as it is just being reported in nonsensational language.

The administration, congress, and the press can't use hysterical words like "the sky is falling" for fear of inciting panic.

But when the Sec. of the Treasury and the Charman of the Federal Reserve use language like they have been using and propose the unheard of, drastic, and urgent actions as they have this week, you can be assured that the sky is indeed falling.

And there is no guarantee that the bailout will in fact stop it.
 

Austin

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I heard on a discussion program last night on FoxBusiness someone quote something Bush was overheard saying: "This sucker is coming down."

This is a scare campaign solely for the purpose of putting this crisis off until after the election. This is for purely selfish reasons because politically the only thing at stack is who will preside over the bone yard.

If the Democrats win what are they going to do? A case in point: I live in Virginia and in our last state election we elected a Democratic governor who was not expected to win. What got him elected? He promised to give everything his constituents wanted. New roads, better health care, more growth, more for education funds etc. So where are we now? Three billion in debt, we have already had 10% budget cuts and now are going for another 15%, projects are being stopped, no new hiring, you name it and this is just the beginning. The trickle down effect has not kicked in yet. 10% + 15% =25% with much more to come. That 25% round of cutting is just in the last 4 months. Tax receipts are tanking like a rock. I say let the Democrats have it. Let them make our day.

So what has become of all those promises? The governor is presiding over the demise of state bureaucracy.
 
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Greg Bell

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"The Wall Street crash doesn't mean that there will be any general or serious business depression... For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game... Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before."
- Business Week, November 2, 1929

"...despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression such as would entail prolonged further liquidation..."
- Harvard Economic Society (HES), November 2, 1929


"... a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall."
- HES, November 10, 1929
"The end of the decline of the Stock Market will probably not be long, only a few more days at most."
- Irving Fisher, Professor of Economics at Yale University, November 14, 1929

"In most of the cities and towns of this country, this Wall Street panic will have no effect."
- Paul Block (President of the Block newspaper chain), editorial, November 15, 1929

"Financial storm definitely passed."
- Bernard Baruch, cablegram to Winston Churchill, November 15, 1929


"I see nothing in the present situation that is either menacing or warrants pessimism... I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress."
- Andrew W. Mellon, U.S. Secretary of the Treasury December 31, 1929
 

Greg Bell

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HERE IS THE CAUSE...............................

Clinton Administration Changes of 1995
In 1995, as a result of interest from President Bill Clinton's administration, the implementing regulations for the CRA were strengthened by focusing the financial regulators' attention on institutions' performance in helping to meet community credit needs.

These revisions[5] with an effective starting date of January 31, 1995 were credited with substantially increasing the number and aggregate amount of loans to small businesses and to low- and moderate-income borrowers for home loans. These changes were very controversial and as a result, the regulators agreed to revisit the rule after it had been fully implemented for seven years. Thus in 2002, the regulators opened up the regulation for review and potential revision.[citation needed]

Part of the increase in home loans was due to increased efficiency and the genesis of lenders, like Countrywide, that do not mitigate loan risk with savings deposits as do traditional banks using the new subprime authorization. This is known as the secondary market for mortgage loans. The first public securitization of CRA loans started in 1997 by Bear Stearns. [6] The number of CRA mortgage loans increased by 39 percent between 1993 and 1998, while other loans increased by only 17 percent. [7] [8]

Other rule changes gave Fannie and Freddie extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for banks. By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12 trillion U.S. mortgage market. [9]
 

Kevin Mc

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And there is more, The credit default swaps (derivitives) are massive with many of these lenders. Totally speculative, totally unregulated .From what I've been told their demise will cause massive financial damage.
 

DTB

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I heard on a discussion program last night on FoxBusiness someone quote something Bush was overheard saying: "This sucker is coming down."

Boy, that's some credible, supportable information, from a CG no less. :rof:
 

Eli Weiss

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Please don't turn this political, as the mods will close this tread....
Please, back to topic.....
 

Austin

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Please don't turn this political, as the mods will close this tread....
Please, back to topic.....

If someone can explain to me how you can separate a discussion on public policy and politics I would be interested in hearing it. :new_all_coholic: It only becomes an issue when an airhead gets zinged.

I say all of that to make my point that one political party has made a career of a particular policy (easy credit for their followers) that has led to the impending and unfolding crisis presently facing this nation which highly correlates with the subject of this thread. The depth of this crisis is illustrated by the picture I posted in my above post of Sister Nancy in prayer.:peace:
 
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