Originally posted by Bicnarok
Banks can lend 9 X as much as they have in gold, if we did that we´d get locked up.
Again, stop tying money to gold or anything physical. It is all on confidence. If you had a good credit rating, you could borrow money and then lend it. That's basically how banks stretch beyond their literal means; interst takes care of the rest.
This crisis is centred around the point that banks can ni longer borrow money; that is what has cut the system out. But it's actually no different for any one of us as far as boerrowing is concerned- if your entire financial situation relied on borrowing money and you could no longer borrow, you'd be stuffed the same way the banks are.
It is ridiculous to try and remove the responsibility from those who borrowed beyond their means, and a heck of a lot of 'normal' people did that to buy stuff they did not need. It was simple greed and hedonism. Yes, the banks encouraged it, but it takes two to tango.
Originally posted by Ushgarak
It is ridiculous to try and remove the responsibility from those who borrowed beyond their means, and a heck of a lot of 'normal' people did that to buy stuff they did not need. It was simple greed and hedonism. Yes, the banks encouraged it, but it takes two to tango.
The banks lent money to people whom they should have known were in danger of default. People making $50,000 a year should not be able to get a loan for a $400,000 to $500,000 house but just a few years ago that was commonplace here in Las Vegas. We now have the highest forclosure rate in the US and as a result a housing crash of almost biblical proportions.
Along the same line people making $30,000 a year, or even less, should not have multiple credit cards with a combine credit limit higher than their annual salary, yet this is commonplace also.
Now with the economy bad and people ubable to pay the banks a crying foul and running to the government for a taxpayer funded bailout which will eventually spur hyperinflation and peobably crash the US dollar as well while doing nothing to spur the economy which is continuing to degrade.
So...who's the real villian here? As you say, it takes two to tango but the larger blame has to lie with the banks, who should be allowed to fail for their bad risk.
Originally posted by The Dark Cloud
The banks lent money to people whom they should have known were in danger of default. People making $50,000 a year should not be able to get a loan for a $400,000 to $500,000 house but just a few years ago that was commonplace here in Las Vegas. We now have the highest forclosure rate in the US and as a result a housing crash of almost biblical proportions.Along the same line people making $30,000 a year, or even less, should not have multiple credit cards with a combine credit limit higher than their annual salary, yet this is commonplace also.
Now with the economy bad and people ubable to pay the banks a crying foul and running to the government for a taxpayer funded bailout which will eventually spur hyperinflation and peobably crash the US dollar as well while doing nothing to spur the economy which is continuing to degrade.
So...who's the real villian here? As you say, it takes two to tango but the larger blame has to lie with the banks, who should be allowed to fail for their bad risk.
Relax, Obama's gonna fix it up right.