economic question

I don't think it was a percent or 2, but I'll offer a guess.

The U.S. is a major consumer of goods from around the world (notice that trade deficeit lately?) and many countries have invested in our treasury bonds.

So....as the U.S. goes (especially if it's bad economic news) so goes the world.

peace to youraying:

 

Well then, you have to wonder if this was a manufactured crisis...now why would anyone manufactor a "crisis" in 2008? hummmm What could be the motivation? hummmmmm

peace to youraying:

 

In the last year home prices in many places like California, Florida and Nevada went down by 50%. I wouldn't call that a drop by "a % or 2."

 

Here is an excellent flow chart to explain what happened.

www.quickencommunity.com/quickenOnlineBlog/The-Financial-and-Credit-Crisis---How-Did-It-Happen/cmd.233/enclosure..59b60dbf

 

Or the same (sort of) crooks were stealing stuff in Europe as the US.

 

Bill..ugh.

Ken's chart is somewhat informative. What is missing is the historical timeline of the Fed interest rates, and it appears that the chart would have you believe that CMO/MBS are relatively new. They aren't really. Also, fear has played a huge role in this. A relatively small number of foreclosures and bank failures have occured. However, fears for the CMO/MBS owners have forced them to bail, sight unseen. That's critical. We still don't know what we don't know. It could be that the situation is not as bad and that there are not as many toxic assets as we think. Or it could be worse. No one will know until these MBO/CMOs are exposed for what they are.

It's like the grab bag at the county fair. You may have gotten one with an IPOD. Your friend may have gotten one with a Blackberry Curve. But what about the guy who opens his up and finds a busted egg? The next guy isn't so eager to buy, let alone open, his grab bag. It's just not worth the risk. So the money stops flowing into investment markets, and thus the trickle down effect is that the money stops flowing into credit applicants.

Remember the banks got burned too, thanks to Big Brother's invtervention and the stupidity of the banks themselves.

 

MAJOR investments were fixed on growth and only growth. The entire monetary system is doomed to fail. Growth is derived from debt, without debt there would be no money. If that was not bad enough, the federal government is printing money and spending it. This is called borrowing but is in fact a hidden tax called inflation; it steals directly from the value of the money in circulation.