The Next Meltdown: Credit-Card Blowup Ahead

[Jayford]

Quote from ConsiderThis1:

The "fiasco" was not caused by the mortgages themselves but by the derivative trading.

depends on your definition of "fiasco".

The bubble, which was a record RE bubble BTW, WAS created by:

1) artificial rates

2) loose lending, encouraged by the Federal Gov.

this became a global nightmare due to the ridiculous risk taken on via derivatives. the underlying problem however, is the real estate bubble bursting, along with all the other bubbles at the same time, also created by loose money (equities and commodities).

derivatives trading per se, is not a bad thing. it serves a valuable purpose in decreasing risk actually, but completely unregulated can obviously be abused.

 

[ConsiderThis1]

Quote from Jayford:

depends on your definition of "fiasco".

The bubble, which was a record RE bubble BTW, WAS created by:

1) artificial rates

2) loose lending, encouraged by the Federal Gov.

this became a global nightmare due to the ridiculous risk taken on via derivatives. the underlying problem however, is the real estate bubble bursting, along with all the other bubbles at the same time, also created by loose money (equities and commodities).

derivatives trading per se, is not a bad thing. it serves a valuable purpose in decreasing risk actually, but completely unregulated can obviously be abused.

"per se" being the operative word(s).

The amount involved in the derivative trading dwarfed the underlying mortgages.

The nightmare was the difference between the small amount of mortgages on real property and the astronomical amount of derivative paper.

 

[Jayford]

Quote from ConsiderThis1:

"per se" being the operative word(s).

The amount involved in the derivative trading dwarfed the underlying mortgages.

The nightmare was the difference between the small amount of mortgages on real property and the astronomical amount of derivative paper.

You are saying that an amount of derivatives outstanding estimated to be worth 10 times the value of the entire Earth is too much?

yep, totally ridiculous (550 trillion est.). good this happened now however as it would have just continued to get more out of hand.

 

[Jayford]

my fear is that the next administration will go over board on regulation however. if they lump the retail futures and options crowd in with the swaps that caused the probs, I am out of biz! would have to go overseas, along with billions of other dollars.

 

[ConsiderThis1]

Quote from Jayford:

You are saying that an amount of derivatives outstanding estimated to be worth 10 times the value of the entire Earth is too much?

yep, totally ridiculous (550 trillion est.). good this happened now however as it would have just continued to get more out of hand.

lol

10 times is a joke, right?

 

[ConsiderThis1]

Quote from Jayford:

my fear is that the next administration will go over board on regulation however. if they lump the retail futures and options crowd in with the swaps that caused the probs, I am out of biz! would have to go overseas, along with billions of other dollars.

Oh, right, I forgot to mention swaps.

billions of other dollars... on welfare now with the bailout... maybe sooner would have been better.

 

[GermanTrader]

Quote from forex-forex:

Keep in mind the mortgage fiasco was caused by the sub-prime mortgages, low interest. Credit Cards are in the 20% range.

I don't think they will be hurt to much.

Alot of folks desperate to pay the mortgage after they lose their jobs will get cash advances from credit cards. Domino...

 

[ConsiderThis1]

Quote from GermanTrader:

Alot of folks desperate to pay the mortgage after they lose their jobs will get cash advances from credit cards. Domino...

the mortgages are a bait and switch

 

[Compulsive]

Quote from luckyluciano:

Man Southamerica! You are full of DOOM & GLOOM! You are the life of the party! Do you ever come up with anything constructive & positive? Such as methods to correct these problems rather than spending all your time fearmongering?

Statues are erected to visionaries NOT critical fearmongerers!

SOUTHAMERICA is from Colombia - too much coke

 

[Jayford]

Quote from ConsiderThis1:

lol

10 times is a joke, right?

According to Marketwatch, this is a fact. I guess the value of the earth is 55 trillion? Probably just RE and company values. I have no idea how they arrived at this figure.