A sub-prime credit cruch archeology

[BradK]

Hi

Subprime and credit crunch: it is enough to make your head spin, however, these words have become part of the idiom in the last few months.

Can I ask how the big banks have to pay so much for credit, when the rest of the world's interest rates are hovering, on average, closer to 5%?

Is there a case for starting a thread on the archeology of world credit? And the creation and destruction of credit, and the reasons for it. Or is it a simple case of Economics101 that I do not understand?

I think it would make for a fascinating discussion if anyone wants to contribute.

I can't help thinking 'boo-hoo' when banks whine about how the terms are tighter - even though I hold bank shares. So, I for one, as a shareholder am not interested in receiving a bigger dividend at the expense of my mortgage - or the other people who will be affected.

A point.

Can we please not go on about 'people who get over their heads get no sympathy from me!' - that one will be against the rules - ok?

So, the shovel is over to you all. How did we get into this mess and how can we get out of it?

Brad

 

[BradK]

No takers?

 

[BradK]

Going once, going twice... going three times....

 

[explod]

No takers?

There have been some very exact and educational threads on just this subject. One included a very good explanation of the real drive behind banks, their history and ownership. I think it is worth the reasearch to find them.

I do feel that the index searching on here leaves a lot to be desired but there is probably a thread on that too.

Of course the other problem is many start too many threads which probably makes it hard to find a thread one wants.

I am too tired from whatching the price of a busshel of wheat go up to go further than that.

Sorry BradK, auctions dont' seem to be the way to go at the moment.

 

[BradK]

thanks for that explod.

Can a mod help me out here with a link to a thread?

Brad

 

[tech/a]

Brad

Here is an example in generic/simplistic terminology.

Say Im an American bank.
I loan out at 3% to the Mortgage market.

I borrow Australian Money in 1998 cause Its cheap
Say I can get it a 4% but the US$ buys me twice as much due to the exchange rate.Say then 1 US$ to 2 USD$s Effectively 2%.

Now in 2008 that same money thats borrowed has increased to 6%
Exchange rate is now .9 to 1 so thats now COSTING the bank big bucks to finance and borrow new funds.

A great thread.

https://www.aussiestockforums.com/forums/showthread.php?t=6154&page=20&highlight=Subprime