INSIDE BUSINESS

How a Lack of Faith Pounded the Markets

Once-mighty Bear Stearns has become the latest victim of Wall Street's growing crisis of confidence.

By Daniel Gross | NEWSWEEK

Mar 31, 2008 Issue

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Discuss

Posted By: Holly Garfield @ 04/02/2008 12:07:22 PM

Comment: In the late 1990s Al Greenspan & Co created the seeds of today's crisis. Lack of regulation allowed lenders to create unprecedented amounts of bad mortgages and investors to buy packages of loans without proper documentation. You get more information on a $1 bag of potato chips than you do on a $1 billion CDO, thanks to government policy. We need much heavier government regulation because financials affect ALL business, and our economy absloutely requires a smooth, reliable financial industry to function. The financial industry has shown very clearly that it is totally incapable of acting reliably without regulation. They had their chance, they blew it totally on their own, they should take their medicine without any valid complaint.
I am sure that they will have complaints, but their own actions will invalidate the arguments.
Posted By: Ruddyp10 @ 03/26/2008 8:22:24 AM

Comment: To Interested American,

If we are going to speak about responsibility, then a lack of it has to be laid squarely at the feet of the lenders. What happened to the standards previously used to judge a borrowers fiscal worthiness? No, you can not blame the borrower if you know that they wouldn't be able to afford the loan. You are still ignoring the fact that America corporations (ie. the banking and brokerage industry) continues to finance their profits with debt.

R. Phillips
Posted By: Ruddyp10 @ 03/25/2008 12:25:01 PM

Comment: Excuse me, but how does a lack of faith cause the market to tank? I nthink the biggest problem is the American corporations unabiding affair wth greed. This time the formula betrayed the mad professors and now they have to pay the price. Ultimately the American tax payer, will in fact, be paying this price. Stop deluding yourself into thinking that it was alack of faith. That's the big lie.

R. Phillips
Mount Vernon, N.Y.
- Posted By: Interested American @ 03/25/2008 12:57:04
  
  Comment: R. Phillips, a large percentage of the market is based solely on faith and perception. For example, oil is at a $100 (give or take) a barrel, not because it is scare but because there is a perception that it could become scarce very quickly. I do agree with you that many of the loans should not have been made... especially to those poor disaffected people with crappy credit... they should never have been allowed to borrow so much money, when we knew they had bad credit because they couldn't manage their money. Oh wait, if we didn't loan money to them... I am pretty sure you would have screamed rascism, classism, sexism or any other screwy thought that comes into your reactionary mind. You can't have it both ways. Time to grown up and act like a responsible adult. Hmm, responsibilty.... now THERE is a concept I am sure will scare you.
Posted By: wildlifeusa @ 03/24/2008 6:22:09 PM

Comment: If MC Cain is elected, it will be a disaster because he will continue the Bush's agenda.
McCain will put the last nail in the coffin!
8 years of disaster is not enought for you???
Posted By: Cantabrigian @ 03/24/2008 3:06:22 PM

Comment: Eight years of GWBush's policies and deregulation to assist the likes of Cheney and Bush toadies has killed the United States economy! End of story. Also, the cost of the $RAQ war! Oh, by the way, did they ever find the WMD, or are we bringing democracy to Iraq, or are they still looking for the tall man with the beard who makes the strange videos?
- Posted By: Interested American @ 03/25/2008 13:03:15
  
  Comment: Canabrigian: An excellent idea... let's increase Government regulation! Why didn't I think of that. I am sure the Government would do a wonderful job of running the economy!! Let's see, France has gone from number 7 to number 17 economically in just a few short years! I am sure we can do better! What an excellent plan! Better yet, let's have the Government run our healthcare system... it has worked out wonderfully for the VA Hospitals. Do me a favor, don't let your hatred of the current administration blind you to the fact that the ideas and ideology that you cling to like a spoiled chiled have never worked in the real world (you know, that place we ignorant masses are forced to live in).
  
  It may be time for your mom to remedicate you... night, night.
Posted By: expatincebu @ 03/23/2008 7:29:15 PM

Comment: The writer is ignorant and stupid. The Federal Reserve, a private bank (btw JP Morgan is one of the biggest owners), headed by Greenspan CREATED this problem with super cheap credit, well below the inflation rate. This of course led to a flood of cheap money into highly speculative investments. Now the bubble burst and they are flooding again to try to create another bubble to take its place. That is not a productive economy, that is voodoo economics.

The dollar has lost 95% of its value since the creation of the fed. Now, with big ben at the wheel it will lose even more. Monetary inflation is over 16% last year and price inflation over 10%. Continued cheap money might save the US from a depression, but at the expense of stagflation and/or hyperinflation.

The Fed should be dissolved. Its owners arrested, killed for treason, and all their properties confiscated to pay of the countries debt. Bin Laden is a flea and 9/11 was a flea bite compared to the damage these central bankers are doing. They are public enemy number one.