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Originally posted by Bravus:
The old British guys actually did a really nice job of describing it, but here's the version for the attention-span-challenged.

Here's what the US banking system has been doing, leading to a massive bubble in both housing and the stock market:

1. Give home loans to anybody who wants them without checking their capacity to pay, on property with insanely inflated valuations. Make the introductory interest rates tiny so they can pay them, but then have the interest rates 'reset' to exhorbitant and unaffordable in a couple of years.

2. Take all this extremely risky and bad quality debt and bundle it up. Sell it on to investors as though it was really good quality, low risk debt. They will reap large rewards while thinking they have low risk.

3. Rinse and repeat.

It all works, in a Rube Goldberg sort of fashion, until (as the old British guys said) some fool asks how much the properties are really worth - or until the interest rates reset and millions of people start defaulting on their mortgages and being foreclosed. Then the whole thing falls over. The banks discover it was all high risk debt and is now basically worthless, and start writing off hundreds of billions of dollars worth of investments.

And hello global credit crunch and meltdown - because all the cheap credit that came from this practice (exacerbated by Greenspan keeping US interest rates too low for too long) dries up and borrowing gets much more expensive. And the money for mergers and acquisitions dries up.

At the same time oil spikes to over $100 a barrel (not unrelated to Bush's Big Middle East Adventure) which also slows the economy and spikes inflation.

(sorry, not sure how short this is!)

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Originally posted by Trogdor:

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Why is the world going into an economic meltdown that will kill hundreds of thousands?

Bravus handled the reason for the meltdown perfectly.

Now... why is that going to kill hundreds of thousands? Poverty. Greatest killer in the modern age. War. We need oil, you have oil. Fucking give it here. War and poverty form a feedback loop. One of the outputs of that feedback loop is disease. Another is environmental ruin.

Costs money to live on a safe, clean, peaceful comfortable planet.

And this planet is out of money.

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Originally posted by Trogdor:

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Originally posted by BlueShift:
Prophets, demagogues and other shit-stirrers, mostly.

They should have degrees for that.

They probably do.

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“The market has this out-of-control feeling, and until the market sees some semblance of stability, it’s going to continue to be very volatile,” said Richard Sparks, senior equities analyst at Schaffer’s Investment Research.

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This GREAT idea is supported by our Cretin In Chief, as well as by our Congress... Republicans AND Democrats! Leave it to our government to not feel content in doing the wrong thing. They have to do EXACTLY the wrong thing.

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Better to walk than ride a murderous horse.

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Originally posted by m!sty:

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This GREAT idea is supported by our Cretin In Chief, as well as by our Congress... Republicans AND Democrats! Leave it to our government to not feel content in doing the wrong thing. They have to do EXACTLY the wrong thing.

you reckon there are a few campaign coffers nice and full now?

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Well this should help everything settle down, right?

Société Générale uncovers £3.7bn fraud by rogue trader