Financial Meltdown Not Only In the USA
@whiteheather39 (24403)
United States
September 29, 2008 7:13pm CST
Does this make you feel any better?
For now, stock markets around the world are reacting very negatively to the U.S. rescue package at this very moment.
Yes, we could say that we are back “once again” to the real risk of a total systemic financial collapse.
It shouldn’t come as a surprise when financial institutions in the United States and other advanced economies are going bust. Last week, in the United States we had Washington Mutual, the largest of the savings & loans in the United States ,and now, Monday, we have Wachovia, which is the sixth-largest bank in the United States.
In the U.K. we had Northern Rock and HBOS, which were acquired by Lloyds TSB. This weekend in the U.K. we had also the bust and rescue of Bradford & Bingley.
In Belgium, also this weekend, Fortis went bust and was rescued by the National Banks of Belgium, the Netherlands, and Luxemburg. In Germany, Hypo Real Estate, a major financial institution, is also near bust and in urgent need of a government-orchestrated rescue.
As you can see, this financial crisis is not limited to the United States but rather is a global, developing financial crisis hammering all financial institutions in all of the “advanced economies.”
There is no more room for denial. We all have to admit that we are in a full-blown solvency and credit crisis where no one trusts anybody anymore. Hoarding liquidity that is injected by central banks has become the only game in town.
In plain English, this means that all this central bank liquidity is going practically exclusively to banks and major broker dealers. The rest of the so-called “shadow banking system” is freezing to death as the credit transmission mechanism is blocked.
It seems now that investors have abandoned their trust most of the financial institutions — even Morgan Stanley and Goldman Sachs aren’t spared.
When an unprecedented $700 billion rescue plan isn’t able to rally or even calm stock markets worldwide, then you should know we have a serious global crisis of confidence in the financial system on our hands.
And if all that bad news wasn’t enough, the actual situation is the mother of all nightmare bank runs because it is a silent, cross-border bank run that is now under way. Foreign banks are worried about the solvency of U.S. banks and therefore are reducing their exposure.
I don’t want to sound pessimistic. I only want to be realistic, but if this stealth (“stealth,” that is, for Main Street) bank run accelerates, a total meltdown of the U.S. financial system could occur.
http://moneynews.newsmax.com/hans_parisis/economic_meltdown/2008/09/29/135576.html
5 people like this
12 responses
@dizzblnd (3073)
• United States
30 Sep 08
It is a very scary situation, unfortunately there is no easy or "right" fix.
I am not sure how I feel about it.. I caught the sarcasm in your question, but I am not sure if "better" is how I feel. I do know that this domino effect scares the sh!t out of me. Our foreign lenders no longer trust us and we don't trust each other. I fear that this is only part of a much bigger picture... what else is being hidden from us ready to come crashing down....
All we can do is just stick it out and hope that whatever is done, it IS in the best interest of the global economy and not just Washington's pockets 
2 people like this
@danishcanadian (28953)
• Canada
30 Sep 08
I'm not sure how to feel. I've been listening to it on the BBC World Service to keep up with everything. Between this, and the U S Election next month, I'm almost sick of the news at all. I can't wait till after it's all over when the BBC will be running more non-political, non-financial, non-AMERICAN programming once again. I'm sick of the whole mess!!
2 people like this
@winterose (39887)
• Canada
30 Sep 08
yes I know it is terrible it is going to bring all the western world down too, it is really scary.
1 person likes this
@Lakota12 (42600)
• United States
30 Sep 08
From what hear on newa and what you say here its getting very bad.
one thing I read was Wall Street backed Obama and gave him millions if not billions for his campaigne he needs to give it back!
some of these CEOs that took millions away from the crash of thier bank need to give it back! Wa Mu feller took away @0 million package when they got bought out and he had only been there 3 weeks!
DOnt ya think if all gave back most of these big hand outs that they could put the &00 million back in no time and get all running smother again.?
@dlbruce85 (110)
• United States
30 Sep 08
The central bank has done it again. Read my other posts to understand what I mean by that.
@sumofalltears (3988)
• United States
30 Sep 08
The financial situation is very dire. I do not see any way out of a meltdown, because it has gone too far already. The banks have been steadily increasing their fees and robbing the middle class people to try and stay solvent. I consider this the fault of the agency that governs banking practices. Someone had to see the danger that poor lending practices was creating. The really disgusting part is the fact that it will be the middle class that suffers the most.
1 person likes this
@jend80 (2071)
• United Kingdom
30 Sep 08
and the existing poor won't be suffering at all will they?
@Eskimo (2315)
•
30 Sep 08
Everything seems to go in cycles, however these problems, both in U.K. and U.S. seem to have been caused by the greed of some bankers, doing everything they can to increase profits at the expense of ordinary people. Surley they should have employed advisors to inform them of potential problems in giving loans to people who can't afford them.
Part of the problem has been accelerated by other greedy bankers selling shares they don't have in the hope that shares drop, then buying the shares cheaply to make a fast profit.
These actions are an attack on the banking system. Attacks on the banking system could be classed as an attack on the countries economy. An attack on a countries economy may just be classed as treason, with all the penalties that should ensue for that.
@suspenseful (40193)
• Canada
30 Sep 08
It does look dangerous, but there are ways to delete the danger. For instance, do not have a run on the bank to take out all your money. The money in the bank is to insure loans, etc. and once the money is out, the bank goes belly up. We also have to make sure that money is in a legitimate bank or credit union and that our deposits are ensured. Oh and saving, planting gardens budgeting, the things that people did in the thirties -but I do not think it will get that bad.
All right one of the reasons America got in this system is because the Democrats made a guilt trip and persuaded Fannie Mae and others to give sub prime loans to the those poor who could not afford to pay back because these poor were African American and Mexican American and of course, had been down trodden for so long, that we 'rich' white folks had to give them the loans. And now I read that the Democrats did not pass the bail out bill and the reason is that they are waiting until Obama is president and that is when they will pass a bail out.
Oh McCain and three other senators fought against this sub prime loan when it first was suggested --a note to the ones who blame the Republicans for everything gone wrong.
I also think that taking food out of production and putting in ethanol, raised the price of fuel also contributed to this mess. So it is a lot of things.
@whiteheather39 (24403)
• United States
30 Sep 08
It was partisan bickering that caused to bailout to fail. It was the Republicans not Democrats that caused it to fail! It was opposed by 133 Republicans – more than two-thirds of the GOP caucus – and 95 Democrats.
http://www.nationalpost.com/nationalpost/story.html?id=847967
@dlbruce85 (110)
• United States
2 Oct 08
This is a worldwide problem because the banks that cause it are international. They've been doing this since the 1700's. Look up the history of Rothschild's Banking companies, or the Rockefeller's (Chase,etc) or the Morgan's (now merged with Chase and the Rockefeller family) These banks have been playing these schemes repeatedly throughout history. Our forefathers even warned us about this long ago. Jefferson shut down the first central bank in the states, Andrew Jackson shut down the second. Then in 1913, Woodrow Wilson sold us to the 3rd.
@shoffman2000 (560)
• Alexandria, Virginia
30 Sep 08
You do not realize that this will more painful than you think total economic collapse for five year with total break down of law and order with massive unemployment police will be staying in their stations no gas to go out and patrol Most american auto companies will go by bye The salvation will be with the development of mixed use and metro systems which will generate wealth and jobs
@dlbruce85 (110)
• United States
30 Sep 08
Apparently, Kennyrose, you have never lived on the other side of the fence. From your comments you ensure me that you have always had the silver spoon, and have no idea that the welfare system in this country is not only a failure, it is a trap. It is a way to keep low income families in that bracket. The system teaches the people who use it to become dependant on government rather than helping them become better. It's like the old saying "Give a man a fish, he'll eat for a day. Teach a man to fish, and he'll eat for his entire life." All the government does is hand out the "fish" and keep you coming back to get it everyday instead of pushing people to be self sufficient. Certain types of welfare assistance prevent you from going to school or getting better job opportunities. For example, if a low income family is living in section 8 housing, and the person receiving the benefits decides to go to school, they're benefits will decrease. Scenario : You're born poor in a rough area, you're single parent works 2 full time jobs to support the family. Having only been in public schools and having never had a wealthy relative to get you into college, on top of living in an area where drive-by shootings and gang violence are a normal part of life, your options are pretty limited. You get a full time job when you graduate high school, if you can afford to wait that long, but 7$ an hour isn't enough to live off of. So you apply for section 8 housing because you can't afford to live on your own income. Then once you're there, that's it. You can't go to school or pursue a higher paying job because you will lose your benefits. You don't make enough $ to move or start school, and you won't have a roof without your welfare. What do you do? Having never experienced the side of life you pretend to know about, you wouldn't know what to do. You have never supported 3 people on $7/hr or had to live on the street.
@dlbruce85 (110)
• United States
30 Sep 08
When governments take tax money and give it to private institutions to cover up their problems, that's fascism. If a bank makes a bad decision, that's the bank's problem, not mine. I don't care if they have a new $100,000 car or a Million Dollar mansion. Maybe with all the record profits these CEOs are reaping in, they could save themselves by toning down their life styles. It is not the American taxpayers' obligation to pay for banks mistakes. Again that concept is fascism.
@wa2nlinux (179)
• Indonesia
30 Sep 08
I just believe ... this is beginning of the dark era of USA. They will not dominant enymore .. they get what the do .. suck oil, digg gold, killing everywhere, lying everywhere ..
@evanslf (484)
•
30 Sep 08
Congress needs to work in a bipartisan way to get things done. No one, particularly me, is happy with this bailout. But we are now staring into the abyss and things are getting very urgent. We need to restore confidence in the banking system so that banks start lending to each other. The problem is that banks don't trust each other because they fear what kind of bad debts they have on their books.
The bailout plan would have taken out the bad debt poison from the bank's books thus hopefully (not certainly) reinstilling confidence. Remember though that not all of this 'bad debt' is bad, in fact most of the IOUs will end up being repaid, though there will be some defaults. So this bailout, with proper strings attached to protect the taxpayer, could even end up in a small profit for the taxpayer once things have improved some years hence.
I understand why many people believe that we are caught between the devil and the deep blue sea, but on the other hand, another analogy might be jumping from the frying pan into the fire if Congress doesn't get something done quickly!
