Fat Arby

Just Another Credit Crunch?

You really are way off in your calculations. If I've taken out loans, I have to repay them, one way or another. These things don't just disappear. Do you really understand leverage? Think about options.
I buy a contract, cost one hundred. The underlying security goes down 10 percent - and doesn't come back. As time passes, I'm down 20 30 40 50 percent, and then, one fine day, voosh! 100 percent loss.
This is LEVERAGE. BAnks are overly LEVERAGED and it's JUST BEGINNING to become apparent. So, please, do a little research into the credit equation. Don't mean to be mean but it's a mean market. Lots of mean people.

Just Another Credit Crunch?

Typically, maybe, but once in a blue moon it goes ka-boom!
This year we had 2 lunar eclipses- red moon.

Personally, I want to see a big correction. why? I want wealth! Once upon a time I had plenty of it but it was yanked from me. Now, I want it back. It's my birthright.

Just Another Credit Crunch?

You're overlooking something. When a bank has , say, 100 dollars, it only needs to keep , say, 20 dollars cash and can loan out the other 80 bucks. So, it keeps loaning and loaning and so then a whole lot of money is going out. If, say, that 100 is not 100 but 100 billion, they've loaned out 80 billion. Out of that, they also take out DEBT, redeposit it, and then loan out another 80percent of that debt, say 40 BILLION. cAN you see the path?
When their collateral fails, that being mortgages, they're bound by the terms of that debt, ie, collateral. They still have to pay it, so what they do is take it off the books. It doesn't matter that 90% of the money is still coming in; what matters is that that 10% has grown to to 40% of a certain CDO or whatnot. See? this is our 'credit creation machine'. It has taken down markets in the past and will likely take this one down too.

Just Another Credit Crunch?

CORRECTION
mortgage rates have not been rising in the past 6 months, just lately, this year, due to tightening of lending standards.
If you have a lot of dough, a good credit rating, you can refinance and save even more money. But if you don't it doesn't matter to you because your credit cards and other loans won't drop. These discount rate cuts are meant to stimulate the economny long-term; trickle down...