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He contributed to the current situation by encouraging excessive leverage in the financial sector and failing to regulate lending and financial derivatives.
Because it is a world wide problem and they are not able to get everyone to do the right thing until it is a crisis.
Hello Refugee56,
I hope you handle is not prophetic. Indeed its true and there are several problems. The Russian central bank just opened up a loan window to their big banks.
However the problem I see is even if banks have money to loan, with tighter credit standard who will be approved? American banks may lend to anyone. By injecting money into banks they may simply loan money internationally and it will be trickle down reflation after an offshore purchases your deflated assets. Naturally this will still be a nice blood filled interest artery for the bank to suck on after they just gave us their junk.
I wish I were making it up but this has all been done before. You will even see it on travel shows on PBS when they casually mention during the Argentinian crisis how foreign capital bought up all the wineries for cheap. It was mentioned with a positive spin that the wine had improved in quality. It was probably so good the average Argentinian can't afford the wine that is grown on their own land. They get to work the wine bar now.
I just read an article about Bernake's testimony on Capitol Hill and this statement just blew me away.
The government's biggest economic bailout since the Great Depression is aimed not at relieving unemployment or reforming questionable business practices, but at resuscitating financial markets debilitated by lousy bets on the housing market.
Ok, so maybe it's not aimed at relieving unemployment, which is a symptom of the problems, but NOT REFORMING QUESTIONABLE BUSINESS PRACTICES? Can someone please explain to me then how we got into this mess? To me, the above statement is like shutting the barn door after the horses are out.
Well, I'm no apologist for Bernanke, but events were already moving in this direction when he became chairman of the Fed in 2006. No matter what, he'd be dealing with a tough situation right now.
What I'm stupefied by is his failure, along with that of the Treasury, to come up with some serious contingency plans over a year ago when the cracks really began to show.
true the problems are deep and from a long time ago but hes made them way worse
if that's the case, why are we on the verge of another plausible total market crash?
You're confusing the market with the economy.
The market can crash without having any effect whatsoever on the economy.
Some examples: The 2000 Tech Crash, the 1998 Dot.com Crash, the 1987 Crash, the 1973 Crash, the 1962 Crash, and the 1929 Crash.
Some other notable market crashes that didn't effect the economy were 1939, 1937, 1932, and 1919.
The 1939 Crash was hilarious because it lasted until the end of 1942, and during that time, the US GDP grew a whopping 55%, with an average growth rate of 12+% per year.
I don't know what your major malfunction is, but you need to learn the difference between the market and the economy. They are not synonymous.
yes, this is a financial meltdown, don't say it's not. anyone in defense to this statement is either ignorant, in denial, or too optimistic.
anyway, some people have told me that ben bernanke is a great depression scholar and therefore, is the perfect man for the job he has. now, if that's the case, why are we on the verge of another plausible total market crash? did he not foresee it when he took over for greenspan? he was silent then, what was he hiding? or better yet, is he the great depression scholar he thinks he is?
some people say he's doing a great job.... at what? because i don't agree at all! he's only treating the symptom, not the disease. it will get worse. why did he not catch the coming credit crunch at an earlier time to help mend markets proactively rather then reactively?
First problem with Bazooka Ben is, he is a scholar of the depression of the 20s/30s. This economic whirl wind we are presently in resembles the Depression of 1873 more so than anything else.
Lastly, what ever they try to do, its not a magic pill. They wont do it and poof things will magically get better. We are going to have some serious problems for awhile.
The market can crash without having any effect whatsoever on the economy.
Some examples: The 2000 Tech Crash, the 1998 Dot.com Crash, the 1987 Crash, the 1973 Crash, the 1962 Crash, and the 1929 Crash.
Some other notable market crashes that didn't effect the economy were 1939, 1937, 1932, and 1919.
The 1939 Crash was hilarious because it lasted until the end of 1942, and during that time, the US GDP grew a whopping 55%, with an average growth rate of 12+% per year.
I don't know what your major malfunction is, but you need to learn the difference between the market and the economy. They are not synonymous.
do you not understand that when people's 401K's are being diminished due to a crashing stock market, and when homes plummet in value, these two factors have a profound effect on the economy? retirement accounts are losing value, and babyboomers are at the age of cashing out their 401K's. for those that don't need to cash out now, they have the psychological feel of being poorer, so they spend less. do you not realize that 70% of our economy is consumer spending? in america, no money to spend = bad economy. it's a bad system in the long run, but the point is, to say that the market has no effect on the economy is irrational! long term fundamantals in the market are a byproduct of the economic situation we're facing. one follows the other, with direct correlation!
The "market" is very much entwined into the economy today via mortgage backed securities, 401k's, pension funds and a greater majority of Americans actually investing in the market rather then in bank savings/CD's.
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