Economics: The sub prime market
One of the most complicated structures of the human race and the most esoteric to me. One of the only signs that we are an intelligent life form, and something truly more complicated than rocket science. This is a topic I cannot hope to understand.
Governments are pumping in money to stabilize the economy. I understand global economics even less so than local economics, but I find it interesting that
insomnia asks how it can be that: While lenders got rich lending to irresponsible people (who should have never been allowed to get into debts for homes they cannot own), the tax money of innocent earners are going into the markets to bail them out. In other words - if I run up my credit card bill super high due to irresponsible spending, the govt. will bail me (and my lender) out by handing me YOUR tax money.
The underlying reason for the sub prime loaners includes a variety of factors including ignorant loaners and predatory lending. It seems to me that the system allows any entrepreneur to loan out a payment in exchange for a very high risk situation - then pass on that high risk to the world economy and come out rich and with no scratches. The system itself appears inadequate and incorrect. Perhaps there should be government regulations on the risk level allowable in the market at any given period. Especially
- if the govt. is going to bail out the supposed free market system
- when the risk is so evident i.e. loaners who can evidently never afford to pay back.
insomnia even argues that the Govt. should be focusing on more public housing and affordable rentals for people who cannot afford housing in any other other way but through these sub-prime loans.
But back to the idea of risk - it appears that there is simply too much risk in the world economy. “Too much” is defined as more risk than anyone has the capital to back. This is basic financial responsibility - don’t risk too much more than you can actually pay for - definitely not in multiples of your entire savings. Risk is a magical intangible commodity has been used for great profit but apparently very irresponsibly.
http://www.financialsense.com/editorials/weiss/2007/0813.html
Other than the fact that I would actually understand it somewhat, there seems to be value in going back to Gold instead of the Federal Reserve. It's the only reality check that the bizarre concept of paper money ever had.
Or perhaps we should all move to the new currencies that are being created - “Miles” (from Airlines) and “Points” (from credit cards). There is already an entire sub-economy based on these conceptual commodities with small print rules. It’s hard enough for me to keep up with the U.S. dollar even in the internet information age.
On other news: It appears that the “Walmart Retail Index” is a better indicator of the American economy than the Dow.
Governments are pumping in money to stabilize the economy. I understand global economics even less so than local economics, but I find it interesting that
insomnia asks how it can be that: While lenders got rich lending to irresponsible people (who should have never been allowed to get into debts for homes they cannot own), the tax money of innocent earners are going into the markets to bail them out. In other words - if I run up my credit card bill super high due to irresponsible spending, the govt. will bail me (and my lender) out by handing me YOUR tax money.
The underlying reason for the sub prime loaners includes a variety of factors including ignorant loaners and predatory lending. It seems to me that the system allows any entrepreneur to loan out a payment in exchange for a very high risk situation - then pass on that high risk to the world economy and come out rich and with no scratches. The system itself appears inadequate and incorrect. Perhaps there should be government regulations on the risk level allowable in the market at any given period. Especially
- if the govt. is going to bail out the supposed free market system
- when the risk is so evident i.e. loaners who can evidently never afford to pay back.
insomnia even argues that the Govt. should be focusing on more public housing and affordable rentals for people who cannot afford housing in any other other way but through these sub-prime loans.
But back to the idea of risk - it appears that there is simply too much risk in the world economy. “Too much” is defined as more risk than anyone has the capital to back. This is basic financial responsibility - don’t risk too much more than you can actually pay for - definitely not in multiples of your entire savings. Risk is a magical intangible commodity has been used for great profit but apparently very irresponsibly.
http://www.financialsense.com/editorials/weiss/2007/0813.html
Other than the fact that I would actually understand it somewhat, there seems to be value in going back to Gold instead of the Federal Reserve. It's the only reality check that the bizarre concept of paper money ever had.
Or perhaps we should all move to the new currencies that are being created - “Miles” (from Airlines) and “Points” (from credit cards). There is already an entire sub-economy based on these conceptual commodities with small print rules. It’s hard enough for me to keep up with the U.S. dollar even in the internet information age.
On other news: It appears that the “Walmart Retail Index” is a better indicator of the American economy than the Dow.