Comments on: My Confrontation With Ben Bernanke: The One Question He Refused to Answer http://moneymorning.com/2010/01/28/bernanke-financial-crisis/ Global Investment News Tue, 14 Feb 2012 12:31:04 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Mike http://moneymorning.com/2010/01/28/bernanke-financial-crisis/comment-page-1/#comment-12282 Mike Fri, 29 Jan 2010 14:14:14 +0000 http://moneymorning.com/?p=16137#comment-12282 Dear Hartmut, Actually the financial collapse had everything to do with the removal of Glass-Steagal. Once this act was removed billions of dollars worth of A and B loans where bundled together and rated AAA. Before the removal this didn't happen. Banks and other financial institutions where making billions selling these very risky instruments that paid a little higher interest rate, but where rated AAA. When real estate topped and those B loans began to go bad, the value of those supposed AAA instruments began to fall and the banks and many othr organizations that where charted to only buy A-AAA instruments had a huge problem. The banks quit lending because they didn't know which banks had enough of these instruments to cause them to collapse. Reinstate Glass-Steagal and this riskiy behavior will end. Pretty simple except that some of the biggest Investment banks are again making millions selling these fisky investments. No Glass-Steagal? In my opinion, will bring on another, even bigger, meltdown followed by the next Depression. Also, if the Chinese cause a collapse by selling their U.S. Bonds, they will only be stabbing themselves in the foot because th U.S. is their biggest customer. Mike Dear Hartmut,
Actually the financial collapse had everything to do with the removal of Glass-Steagal. Once this act was removed billions of dollars worth of A and B loans where bundled together and rated AAA. Before the removal this didn't happen. Banks and other financial institutions where making billions selling these very risky instruments that paid a little higher interest rate, but where rated AAA. When real estate topped and those B loans began to go bad, the value of those supposed AAA instruments began to fall and the banks and many othr organizations that where charted to only buy A-AAA instruments had a huge problem. The banks quit lending because they didn't know which banks had enough of these instruments to cause them to collapse. Reinstate Glass-Steagal and this riskiy behavior will end. Pretty simple except that some of the biggest Investment banks are again making millions selling these fisky investments. No Glass-Steagal? In my opinion, will bring on another, even bigger, meltdown followed by the next Depression. Also, if the Chinese cause a collapse by selling their U.S. Bonds, they will only be stabbing themselves in the foot because th U.S. is their biggest customer.
Mike

]]> By: Hartmut Rast http://moneymorning.com/2010/01/28/bernanke-financial-crisis/comment-page-1/#comment-12264 Hartmut Rast Fri, 29 Jan 2010 09:43:26 +0000 http://moneymorning.com/?p=16137#comment-12264 The crash of 2008 has nothing in common with the great depression period of 1929 / 1930s when banks had a liquidity problem. 2008 was the result of Mr Greenspans policy of cheap money and his reaction on every crisis with even more money to keep the economy afloat but producing an even bigger crisis as we have seen now. In 2008 banks did not trust each other because they knew that some banks had such bad portfoilios they could not longer survive till the Fed has brought them alive with fresh money to pay the bonuses. This all is not over and worst is still to come with this brainless indebtedness heading towards a national deficit by 3,000 trillion USD. Mr Bernanke is using the methods which would have been useful in the great depression according to Anna Schwartz who analysed with Nobel laureate Milton Friedman on 900 pages and over nearly her whole life the disastrous events of the 1930s. What makes it even worst for the worldwide economy is that the European Federal Bank can not increase the interest rates within the Eurozone because this would make the Euro even stronger and would be in no interest of export oriented nations like Germany. So the whole world will face inflation rates in double diggits very soon because the U.S. has no other possibility to get rid of their bailout loans and stimulus packages for failed industries and products as to print further money. Therefore, hands off of US Dollar bonds or whatsoever investments, before China starts to sell their 1,2 trillion USD share and let crash the markets again but this time in a scenario we would better not think about. The crash of 2008 has nothing in common with the great depression period of 1929 / 1930s when banks had a liquidity problem. 2008 was the result of Mr Greenspans policy of cheap money and his reaction on every crisis with even more money to keep the economy afloat but producing an even bigger crisis as we have seen now. In 2008 banks did not trust each other because they knew that some banks had such bad portfoilios they could not longer survive till the Fed has brought them alive with fresh money to pay the bonuses.

This all is not over and worst is still to come with this brainless indebtedness heading towards a national deficit by 3,000 trillion USD. Mr Bernanke is using the methods which would have been useful in the great depression according to Anna Schwartz who analysed with Nobel laureate Milton Friedman on 900 pages and over nearly her whole life the disastrous events of the 1930s.

What makes it even worst for the worldwide economy is that the European Federal Bank can not increase the interest rates within the Eurozone because this would make the Euro even stronger and would be in no interest of export oriented nations like Germany. So the whole world will face inflation rates in double diggits very soon because the U.S. has no other possibility to get rid of their bailout loans and stimulus packages for failed industries and products as to print further money.

Therefore, hands off of US Dollar bonds or whatsoever investments, before China starts to sell their 1,2 trillion USD share and let crash the markets again but this time in a scenario we would better not think about.

]]> By: peter http://moneymorning.com/2010/01/28/bernanke-financial-crisis/comment-page-1/#comment-12245 peter Fri, 29 Jan 2010 01:42:59 +0000 http://moneymorning.com/?p=16137#comment-12245 Just wait until these ALT-A loan rate resets kick in later this year. Just wait until these ALT-A loan rate resets kick in later this year.

]]> By: Mike http://moneymorning.com/2010/01/28/bernanke-financial-crisis/comment-page-1/#comment-12188 Mike Thu, 28 Jan 2010 12:49:51 +0000 http://moneymorning.com/?p=16137#comment-12188 Dear Dr. Skousen, Aren't the current low interest rates simply an attempt at an antidote to try to reviive a badly damaged financial system? And, if this is the case, wouldn't the reinstatement of Glass-Steagal simply bring an end to the kind of risky financial behavior which almost caused the death of the patient? And secondly, why, in your opinion, are Sommers and Geitner so against reinstatement? To me this almost feels like 1933 all over again. Is it, perhaps, time for another round of Pecore Hearings to lay open, again, for the American public, what caused the crash of 2008? Mike Dear Dr. Skousen,
Aren't the current low interest rates simply an attempt at an antidote to try to reviive a badly damaged financial system? And, if this is the case, wouldn't the reinstatement of Glass-Steagal simply bring an end to the kind of risky financial behavior which almost caused the death of the patient? And secondly, why, in your opinion, are Sommers and Geitner so against reinstatement? To me this almost feels like 1933 all over again. Is it, perhaps, time for another round of Pecore Hearings to lay open, again, for the American public, what caused the crash of 2008?
Mike

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