| Jandre002 said: In a sense that's true, but if CDO's regulated at all from the get go this never would have happened. It was when people discovered the actual worth of CDO's that companies started to crash. Sub-prime mortgages on their own aren't the major cause IMO. People investing in CDO's that are composed 50% of subprime loans is the problem. Low interest rates alone or subprime lending alone would never have caused this whole issue if banks weren't overestimating their reliability and overvaluing them. CDO's created a huge market for subprime loans the the market just adjusted. It was a win-win for EVERYONE at the time, but you should always prepare for the worst case scenario. Subprime backed security is contradictory in itself. What the fed set out to do was expand the market and allow for more American home owners. The goal was achieved just as they planned, but the government didn't have enoug control over it. I mean, lets say subprime loans and fed rates were never cut, where do you tihnk we would be right now? I highly doubt we would all be enjoying laptops, HDTVs, wireless internet, etc if America wasn't allowed to prosper as quickly as it was. The housing market drove everything for over 10 years, we just didn't prepare for the peak well enough. |
The problem is the Fed's duty is not to expand the markets. It is to maintain a sound money supply and it has been woefully inept in that regard. To be honest, if congress had more control over the Fed, the problem would be exacerbated. Can you imagine the congresspeople setting the interest rates? I would not mind the Fed if competing currencies were allowed. Unfortunately, that is no longer the case.
