Capitalism has finally done it - cross-post from GD

[silverlib]

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x2978035

With the following link - (posted by postman)

http://www.intelligencer.ca/ArticleDisplay.aspx?e=918803


Pretty scary.

Edited to correct link.

[Birthmark]

1. Is anyone actually surprised by this?

I'm not. I've been watching this unfold for a few years.

[Warpy]

5. Not at all. I first started hearing warnings about the

derivatives market in the late 80s, something that puts me a little behind the curve but I was an RN earning subsistence at the time and didn't own a computer yet. What they were saying then was that derivatives were so exotic that only a handful of people understood what they were and that they were soaking up a huge amount of wealth as they were traded back and forth.

Ravi Batra was alarmed enough about it to write about an upcoming crash, but his timing was off by about 18 years, so he's had to live down a considerable amount of ridicule.

When the LTCM crash happened in the late 90s, there was a little concern that it would spread to all the other funny money operations out there, but they managed to hold the scheme together for another 10 years.

Crashes always happen from the top down and it always happens because of speculative bubbles combined with deregulation. The housing bubble was just a blip. What it endangered was a lot of exotic securites (Structured Investment Vehicles) which were little than bad debts remarketed as assets by offshore hedge funds, outfits which located offshore to escape U.S. regulation and which have used the GOP government to successfully dodge regulation by the IMF.

All institutional lenders are topheavy with this worthless paper. This is why they've stopped lending. They are now insolvent, their assets turned to thin air. They're now playing a waiting game, hoping enough people pay loans off that they can stay in business.

It's not looking too good, though.

[Extend a Hand]

2. I sure hope my house sells this spring

:(

I can't see how this debt crisis can unwind without a devastating impact on the US and global economy.

[RaleighNCDUer]

3. Good luck with that. My mom's house sold, after sitting empty

for a year, for $27,000 less than her asking price but, as she'd had it for 15 years, it was still a good deal more than she bought it for. But had it been on the market a year earlier she'd have made the asking price and then some.

They say, location location location, but Timing matters, too.

[Extend a Hand]

4. thanks, I'm crossing my fingers.

We're getting ready to retire and need to move closer to my husbands parents to be available to help out.
Our house needed some work and our son wanted to finish high-school here but it looks like we should've gone ahead and sold earlier anyway. :(

We've been here 14 years and only have 4 years left on our loan so we're not underwater but it still sucks to be trying to sell in this market.