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Absolutely not true. It seems that a lot Wall Street allocated the money where THEY would make the most profits. And this happen to be the housing mania. For

by ardit33 18y ago

Absolutely not true. It seems that a lot Wall Street allocated the money where THEY would make the most profits. And this happen to be the housing mania. For few years the profit from housing was so juicy, that they decided to ignore the fundamentals, and their myopia brought us to this situation. In a good scenario, wall street will be allocating money to where it is more efficient, in our case, they just shuffled money around in esoteric papers, and pinched a bit of it every time it changed hand, which contributed nothing to the economy, except their own pockets. Now the music has stopped, and a lot of these banks are left with hot potatoes in their hand, and brought us to this mess.

gruseom 18y ago
Now the music has stopped, and a lot of these banks are left with hot potatoes in their hand Now that you mention it, hot potato and musical chairs at the same time could make a pretty good game. :)
newt0311 18y ago
Actually this offers an interesting case study. Lets look at the results of this crisis. Three major financial institutions (Lehman, Bear Stearns, and Merryl Lynch) had their shareholders loose most of their assets and are no longer operational or independent. The remaining two investment banks Morgan Stanley and Goldman Sachs abandoned this business models and are now on their way to become bank holding companies. In all cases, shareholders have seen massive (>50%) declines in the value of their shares due to excessive risk taking. Do you seriously think that any institution except for Hedge Funds will ever leverage themselves 30:1 based on shaky opaque assets in the near future (I say near because every ~10 years, wall street goes haywire). Furthermore, you are happy bashing wall street but have you ever taken a look at the balance sheet of the US government? Look at your own last paragraph: "lot of these banks are left with hot potatoes in their hand, and brought us to this mess." Capitalism at work. These banks took foolish bets and now they are paying for it. The biggest blot in this picture is the $700 billion bailout which is sponsored by ... the US government.

by ardit33 18y ago

gruseom 18y ago

Now the music has stopped, and a lot of these banks are left with hot potatoes in their hand Now that you mention it, hot potato and musical chairs at the same time could make a pretty good game. :)

newt0311 18y ago

Actually this offers an interesting case study. Lets look at the results of this crisis. Three major financial institutions (Lehman, Bear Stearns, and Merryl Lynch) had their shareholders loose most of their assets and are no longer operational or independent. The remaining two investment banks Morgan Stanley and Goldman Sachs abandoned this business models and are now on their way to become bank holding companies. In all cases, shareholders have seen massive (>50%) declines in the value of their shares due to excessive risk taking. Do you seriously think that any institution except for Hedge Funds will ever leverage themselves 30:1 based on shaky opaque assets in the near future (I say near because every ~10 years, wall street goes haywire). Furthermore, you are happy bashing wall street but have you ever taken a look at the balance sheet of the US government? Look at your own last paragraph: "lot of these banks are left with hot potatoes in their hand, and brought us to this mess." Capitalism at work. These banks took foolish bets and now they are paying for it. The biggest blot in this picture is the $700 billion bailout which is sponsored by ... the US government.