by Hortensia 15 Replies latest social current
The Watchtower has taught us to keep a nice supply of food and water and medicine, stop worrying about Cyprus and do something about it by getting some dried food, fuel and a "sun stove and sunoven" the Organization is helping us get read for "Doomsday" by giving the best wisdom.
Cyprus is used by good rich people to hide their income, protecting the rich are the key to safeguarding everyone's future.
aunt connie, you are a card!
Britain next?
http://www.moneyweek.com/endofbritain
Debt getting bigger, economy won't grow, and the best idea the chancellor can come up with is to create another housing boom that caused the problem in the first place. We could be in serious trouble.
I follow these people
http://anotherangryvoice.blogspot.co.uk/2013/01/moneyweek-and-their-end-of-britain.html
I love this guy too. he is fun. http://www.lawfulrebellion.org/2013/03/19/an-empire-built-on-lies-si-spaniard-takes-on-the-banks/
The global collapse started with the banks - it should end with the banks. They are responsible for the mess - along with government relaxing rules or making up new ones and so what should happen is that the banks themselves collapse. The top guys should be charged. A lot of the mess points directly back to the USA as the starting point - the finger should point directly back at the USA for allowing it to destroy the rest of the world economically. Governments are in deeper crud because now they are spending trillions in taxpayer dollars around the world, handing money over to those banks so they don't collapse. Governments are paying more to keep their population from starving as the economic collapse shut down jobs and increased unemployment. We could start at the beginning and looking at what started the problem and why today, 6 years later, not much of anything has been solved. Nobody has paid for destroying the lives of millions of people. If the banks in Cyprus made bad investments - then the bank should take the fall. If the banks in Spain made bad investments, they need to fall. If they all made bad investments as part of a global Goldman Sachs enterprise - then Goldman should be sued or if that isn't the case, then when the bank fails and the investments are part of bankruptcy, then they don't get anything back either. This has been so much nonsense. People have been manipulated into putting all their money into investments, run by the banks and originated by banks, as a way for banks to have more money to play with - they did it by eliminating interest on savings to shifting it to interest on investments. Once in an investment banking sector, your funds are not your own but become the inventory of the investment bank to do as they will. Are all those tax free accounts the government sets up for you all a good thing? Maybe not. This is a test case - there are other ways of stealing your money - all they need to do is take all the private pensions in those investment accounts and divert those trillions into a new improved government pension plan. They reduce their debt by 10 trillion by taking that money, reset the rules and pay you an annuity at the end of it all. It's still stealing but with a pretty bow on it. sammieswife
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Without the spread of toxic mortgage-related assets to investors throughout the U.S. and the world, it is unlikely that the U.S. subprime mortgage crisis in 2007 would have evolved into a global financial crisis. The financial sector created derivative securities based on American mortgages that financial institutions sold to investors around the world. These included the simplest mortgage-backed securities (MBSs), through which investors received returns from an underlying pool of mortgages, including both prime and subprime loans. They also included more complicated resecuritized instruments and derivatives like credit default swaps (CDSs), a sort of insurance contract on the risk of holding mortgage loans. These instruments spread the risk of mortgage defaults throughout the global economy, and in many cases were so complex that the actual risk associated with them was not known until massive defaults did occur.
In 2007, the housing bubble burst—there were too many homes available with no one left to buy them, and existing mortgages were going into default and foreclosure at rising rates. Home sales dropped and housing prices crashed, meaning that the value of homes being held as collateral went down. This encouraged homeowners carrying mortgages worth more than the home itself to default, which in turn meant that the asset values of the securities based on those mortgages fell, to the detriment of investors. Furthermore, the massive scale of defaults and the complicated nature of the mortgage-related financial instruments made it difficult to determine the value of these assets once the crisis hit. The safeguards that earned these instruments high credit ratings and lulled investors into a false sense of security no longer offered sufficient protection for investors when defaults occurred on such a huge scale. The global financial crisis resulted in staggering losses. For instance, in April 2009, the International Monetary Fund estimated that banks and other financial institutions would bear US$4.05 trillion in losses.
But why did investors turn towards mortgage-related instruments in the first place? One major reason that applied to both U.S. and global investors was the yield hunt theory. The premise underlying the yield hunt theory is that U.S. commercial banks and global investors wanted to invest in assets that were very safe and at the same time produced high yields. Banks had an incentive to seek low-risk assets because they needed to meet the capital adequacy requirements set forth by the Basel Committee on Banking Regulation. To meet these requirements, banks must keep a certain amount of capital on their books to guard against the risk that is attached to the assets they hold. The less risky the asset, the less capital the bank has to keep to meet regulations. Commercial banks in the U.S. and worldwide thus had an incentive to purchase assets that entailed little risk and would not require them to keep large amounts of capital on hand.
Along with seeking assets that were low-risk, banks also sought assets that produced high “yields,” or returns on their investment, in order to increase profit. The securitization process described in Part B produced financial instruments that seemingly allowed banks to meet both of these needs. Through securitization and resecuritization, U.S. investment banks and other financial institutions pooled many different types of assets, including risky subprime mortgages, to make assets that were “safer” and would thus appeal to commercial banks. Many mortgage-backed securities received AAA credit ratings, meaning that they were considered among the safest assets on the market. Although the underlying asset pool included risky subprime mortgages, a few defaults in the pool would not greatly affect the overall security, allowing for the high rating. Additional checks in the system were also supposed to keep the security safe and its rating high. These assets produced higher yields than other types of assets, such as U.S. Treasury bonds, with comparable credit ratings. As a result, banks invested heavily in subprime mortgage-backed securities to get a greater yield for the same amount of risk.
Ultimately, yield hunting was a global phenomenon. European banks became involved when they invested in AAA-rated asset-backed securities (i.e., subprime mortgage-backed securities) produced in the United States. The figure below illustrates the extent to which commercial banks invested in asset-backed securities:
