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Ash4781

The Fed's Role In The Bear Stearns Meltdown

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http://www.counterpunch.org/whitney06302007.html

Fed-chairman Bernanke knows what's going on. He was given a full rundown by "John Burns Real Estate Consulting that the national sales information for both new and existing homes, is "misleading and covering up a deep plunge of the housing sector." The housing market is freefalling. Existing-home sales are down 22% in May and mortgage applications have fallen a whopping 18%....In Florida home sales are down 34%, not 28% as NAR reported; Arizona sales are down 38%, not 28%; and California's down 37%, not 24% as NAR reports."

Is this accurate ?

Edited by Ash4781

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To large extent, the housing bubble has concealed the systematic destruction of America's industrial and manufacturing base. Low interest rates have lulled the public to sleep while millions of high-paying jobs have been outsourced. The rise in housing prices has created the illusion of prosperity but, in truth, we are only selling houses to each other and are not making anything that the rest of the world wants. The $11 trillion dollars that was pumped into the real estate market is probably the greatest waste of capital investment in the nations' history. It hasn't produced a single asset that will add to our collective wealth or industrial competitiveness. It's been a total bust.

.....this sounds identical to the scenario in the UK!

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The $11 trillion dollars that was pumped into the real estate market is probably the greatest waste of capital investment in the nations' history. It hasn't produced a single asset that will add to our collective wealth or industrial competitiveness. It's been a total bust.

No, it's worse than that. It's made America _less_ competitive by pushing up the cost of living so Americans need higher wages to live there.

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No, it's worse than that. It's made America _less_ competitive by pushing up the cost of living so Americans need higher wages to live there.

Poor Americans. Lucky for us we have a miracle economy so no direct comparisons can drawn.

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Poor Americans. Lucky for us we have a miracle economy so no direct comparisons can drawn.

Indeed. We can all work in the city and get our million-pound annual bonuses.

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Indeed. We can all work in the city and get our million-pound annual bonuses.

touche !

we are only selling houses to each other and are not making anything that the rest of the world want

i just don't get it, the people posting here aren't part of some education elite, we come from all walks of life, yet every man / women on here understands if you don't add value to things you suffer. I get the concept theres more to an economy than just basic manufactoring but i just can't see how we add to the world economy.

how come our westminster sees it different

what the ****** do they know that we don't!

Edited by slurms mackenzie

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i just don't get it, the people posting here aren't part of some education elite, we come from all walks of life, yet every man / women on here understands if you don't add value to things you suffer.

Does refurbishing count as value-added? :lol:

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Quote from this:

.....this sounds identical to the scenario in the UK!

Both of our central banks moved in concert in the 90's to "salvage" our non productive economies by promoting the "debt is wealth" theme. Or anyway, that's my understanding of what happened. At least you guys had a Central banker who had the guts to come out and publicly admit that that's what they did. Remember that article? It was a month or two ago and I believe I read it on this forum.

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Both of our central banks moved in concert in the 90's to "salvage" our non productive economies by promoting the "debt is wealth" theme. Or anyway, that's my understanding of what happened. At least you guys had a Central banker who had the guts to come out and publicly admit that that's what they did. Remember that article? It was a month or two ago and I believe I read it on this forum.

Yes. Eddie George admitted they created a credit bubble to foster consumption, and he left that problem for his successor to sort out.

I saw the video. It is sort of unbelievable. People just don't understand - this is why they can admit this kind of stuff publicly without

getting jailed instantly.

But then, Greenspan admitted in public that he is in favour of a gold standard. That was in 1997.

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i just don't get it, the people posting here aren't part of some education elite, we come from all walks of life, yet every man / women on here understands if you don't add value to things you suffer. I get the concept theres more to an economy than just basic manufactoring but i just can't see how we add to the world economy.

Current value add is via professional services interestingly enough derived predominately from the unholy trinity of mathematics, science and engineering disciplines. You can fill in rest as to why this is unsustainable in the future, lots of graduate quantity very little quality. One thing that is really noticeable to me is just how much poorer the educational standard of current graduates is against only five years ago let alone fifteen, much of the problem IMHO stems from unsuitable education pre university.

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Current value add is via professional services interestingly enough derived predominately from the unholy trinity of mathematics, science and engineering disciplines. You can fill in rest as to why this is unsustainable in the future, lots of graduate quantity very little quality. One thing that is really noticeable to me is just how much poorer the educational standard of current graduates is against only five years ago let alone fifteen, much of the problem IMHO stems from unsuitable education pre university.

I guess when the economy used to revolve around manufacturing and exports, it was important for people to have a good level of education and a deep understanding of the way things worked. Now our economy is based upon debt, imports and selling assets to a greater fool, the opposite is true. As long as there is always a greater fool, the economy will keep inflating growing.

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No, it's worse than that. It's made America _less_ competitive by pushing up the cost of living so Americans need higher wages to live there.

.......don't kid yourself......the same scenario pro rata is playing out here.....

Edited by South Lorne

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much of the problem IMHO stems from unsuitable education pre university.

.......there is actually little education pre university......just constant wind up, studying and practicing how to sit exam papers.......just to make sure the league table position is right.....stasi style government control.......demoralised staff...ineffectual students .....little discipline .....some with lots of stars.....bring back the 3R's and tawse....!

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.......don't kid yourself......the same scenario pro rata is playing out here.....

I think the scenario must be a lot worse here, because although US has its problems, when you look at their "inflated" property prices they look a bargain compared to the overpriced sh*tholes to be found in the UK (and increasingly overpriced sh*tholes built on an unprotected flood plains).

Still its good for the City (well for their bonuses) and the miracle economy and thats all that matters and who says we are not adding value by slapping in a B&Q kitchen and some cheap laminate flooring.

I think "debt is wealth" only works for hedge fund managers and if you are a private equity partner. For the rest of us its just debt, full stop.

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I think the scenario must be a lot worse here, because although US has its problems, when you look at their "inflated" property prices they look a bargain compared to the overpriced sh*tholes to be found in the UK (and increasingly overpriced sh*tholes built on an unprotected flood plains).

This will be corrected by a major Sterling collapse any time soon (give it 2 years). After that, property in the UK will be really crap cheap.

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I came across this (a little out of date so apologies if you have seen it before)

http://www.financialexpress.com/fe_full_st...ref=patrick.net

It does not paint a rosy picture but the last paragraph takes a step further in the possible scenario that I have seen mooted before in so may words.

"But perhaps the most worrying thing for financial institutions holding mortgage-backed paper is not the subprime market itself, but the unnerving parallels with an even bigger one to which they are also exposed: leveraged loans to companies. As Daniel Arbess of Xerion Capital Partners points out, corporate lending’s giddy leverage echoes the high loan-to-value ratios in subprime; the explosion of ‘covenant-lite’ deals and payment-in-kind notes mirrors that of interest-only and negative-amortisation mortgages; and leveraged buy-outs have their own form of mortgage refinancing in the so-called dividend recapitalisation. Subprime, says Mr Arbess, might well be “a dress rehearsal for something bigger and scarier.”

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Still its good for the City (well for their bonuses) and the miracle economy and thats all that matters and who says we are not adding value by slapping in a B&Q kitchen and some cheap laminate flooring.

Where is laminate flooring manufactured? How I wish I had set up a business manufacturing the stuff in the late 90s.

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Subprime, says Mr Arbess, might well be “a dress rehearsal for something bigger and scarier.

Ah, the joy of leverage. It's all lovely on the way up, and then bankrupts you on the way down.

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Where is laminate flooring manufactured? How I wish I had set up a business manufacturing the stuff in the late 90s.

China, Germany, Canada, Sweden...

BASF and DSM are by far the largest manufacturers of the base product used in laminate flooring production melamine resin, it's a plastic btw.

http://en.wikipedia.org/wiki/Melamine_resin

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