Democrats are another Republican Party.

[Mr Khan]

Kasz216 said:

whatever said:

Kasz216 said:

Except... it's not the minority viewpoint.  I just don't think you understand the arguements of the people who blame the derititives market primarily.

Which is, if it wasn't for the derivititives market then real estate downturns wouldn't of caused as big a crash.

It's the exact same viewpoint.  It just depends on if you want to put the blame on the first few dominoes or the rest that fell.

Considering the first few provide no benefit... while the rest (the deritivitives market) are repsonsible for most of the wealth in the world....

 

Ask anyone, and they'll tell you the derivitives crash was caused by real estate being down in all sectors which is virtually unheard of, and never really happened in the history of real estate.  Derivities are build and balanced so that there will always be something in each one that will back up the failures even a vast majority in each one fails.  However when they ALL fail.   Nothing in the world is going to stop that.

Blaming the derivitives market would be like blaming a company from protecting itself from fire burning down some it's factories, but not protecting itself from fire burning down all 8 factories across the country simaltaniously.

 

People blaming the derivitives market are really blaming them for not factoring in the governments incompetance and inability to not damage the country in knew and unthought of ways.

 

Derivitives CAN NOT crash by themselves.

Derivitives are basically like playing Roullette where you have 3-1 odds on Red and Black.

So you bet on Red and Black and for every 100 you bet you get 300.

The ONLY way you lose is if 0 or 00 comes up in a very statistically unlikely number of chances.  Like 100 times in a row.  Basically something that's never happened before... without a rigged system.

Which is why you want to avoid rigged systems.

People and least of all governments don't have perfect insights... so fixing it so it's all black now, might lead to problems in the future.

As was the case with the real estate market.

That's not the argument at all.  The argument is that this market grew to a value which was many times larger than the assets covered by the derivatives.  It became a gambling casino with no limits.  We know it's value is at least 600 trillions dollars.  The subprime mortgage market is estimated in the hundred of billions.  The derivatives market should not be fragile enough that a loss of less than 0.1% should bring the whole thing down, which is what would have happened without the bailout.

As for it being government intervention in the housing market (through the CRA), that caused the "bad" loans, that has also been debated and most agree that was not the case.  Most of the bad loans weren't even from banks covered by the CRA.  I can dig up the analysis, but I'm at work and don't have time to do it now.

It's not fragile though.  To upset the derivitives market, it took something that has never happened before.

As for the analysis done on the CRA.  Your misreading it... it's not JUST the loans failing, but how those loans effected the housing market in general.

The CRA caused a huge country wide housing bubble crashing.  The housing bubble was caused by the CRA.

Well the CRA and the Fed keeping interest rates so low.

 

Heck in some ways this recession is the cause of attempts to prevent a recession with the Dot.com bust.

Somewhat of an abuse of the CRA, though. I imagine that was meant for lower-income people (not too low, but lower than the median) to be able to buy a home, not for middle-income people to flip houses, which was part of the bubble