Dr. Housing Bubble 09/18/08

[Crewleader]

Washington Mutual: WaMu up to Bat. 11 Bank Failures for 2008. 8,430 Still out There. Southern California Housing to Ben Bernanke: Do we Qualify for a Bailout?

If you haven’t noticed, Wall Street is having a bad week. It would seem that the reality on Main Street is finally catching up to the Wall Street casino. Many Americans are only starting to pay attention to the economy. Why is this happening? What went wrong? To be honest, the current financial system is a mixture of loan sharking and legitimizing a Ponzi scheme as a true and stable system. Think how idiotic some of the new financial innovations are. If you are wondering why A.I.G. was bailed out it is because it would expose the world to a balance sheet that is completely exposed with these new products. You can add Bears Stears, Fannie Mae and Freddie Mac, and AIG to the now growing list of bailouts.

Let us simplify one aspect of this economic mess. You sell an insurance policy to your friend that should Generic X company go into default, he will receive $1 million. Your friend fearful of shady Generic X corporation decides to invest in the place (moral hazard time!) and would have not ventured to do so if he did not have insurance. Feeling confident he invests and, life goes on. Well as it turns out, Generic X is a very funny institution. It turns out they were giving loans to burger flippers for nice $500,000 McMansions. Generic X suddenly goes into a tailspin and defaults since those housing loans are defaulting in massive numbers. Your friend gives you a ring to redeem his policy and the conversation goes as follows:

http://www.doctorhousingbubble.com/washington-mutual-wamu-up-to-bat-11-bank-failures-for-2008-8430-still-out-there-southern-california-housing-to-ben-bernanke-do-we-qualify-for-a-bailout/