It was interesting seeing Herbert Hoover talk about the economy today and how the "fundamentals are strong". Oh wait...Hoover died years ago, I guess that was John McCain. Maybe if he's elected we'll start calling hovels for people who lost their job and can't afford housing or anything else McCainvilles.

As several newspapers put it, this is the culmination of 28 years of Republican led deregulation. When taken out of a regulatory framework these fat cats chase easy fast money with no real consideration of the long term repercussions. They made a few extra billion in the housing bubble, and now their 50 billion dollar corporations are going flat broke, I can't say that I feel bad for the traders that made it happen, but it sucks that deregulation let them take the rest of us with them.

What regulation did the Republicans take out that caused this to happen.

Really... I wanna know.  Or are you full of it and just want to make shit up?

I mean... the lending crisis.  Wasn't that a Clinton problem?

That's when Sub Prime morgaging started booming.

He's the one who deregulated the Banks.  Nice job blaming the republicans out of ignorance though.

If you want to blame someone for bank deregulation.  Blame Clinton.  He's the one who let it pass and he's the one who announced it was a good idea.

It's not the bank regulation that's the problem however.  It's the fact that so many people took the Sub Prime morgages when they should of known they wouldn't be able to pay them.

American culture is the problem.  The consumer culture that led to the good economic times too... when a nation spends more then it earns... that's going to bite you in the ass eventually.

It didn't bite those people in the ass... Those were people who had nothing, defaulted on loans and still have nothing. What did they lose? Nothing... That's why regulations are needed. If bankers and lenders aren't responsible enough to prevent these loans from happening, the government has to step in and regulate the market.

But it's too late now and that's academic at this point. The shit has hit the fan, let's just wait to see how much shit there was and how far it gets tossed.

Still, loans will become more expensive for them as well, so they surely will notice it. 

In that respect, I think only Sony would get hurt. I don't think Microsoft or Nintendo take loans (Microsoft has huge cash reserves, Nintendo is very fiscally conservative and just doesn't spend much money).

The deregulation began in the 1980s soon after reagan took office (as he had run on a platform of deregulation among other things). The first change was Depository institutions deregulation and monetary control act which allowed banks mergers, removed some oversight and increased the ammount of bank investments the Federal government would insure from 40k to 100k raising moral hazard significantly. This was in 1980

The second change was in 1982 with the Depository Institutions act further deregulated both banks AND savings and loan institutions, it relaxed one borrower loan limits, added money market accounts as authorized forms of deposit (where instead of straight interest investor money is put into a semi risky portfolio tied to the stock market). It also encouraged heavy often speculative real estate lending at a time when the real estate market was collapsing. in 1983 49 banks failed in large parts due to risky investments encouraged by deregulation. This almost included Continental Illinois bank and trust which was the 8th biggest bank at the time, but the government was forced to bail them out to avoid a larger banking collapse.

How did the conservative hero help solve this problem in 1982? By cutting taxes? Quite the contrary, he RAISED taxes on corporations in 1982 to help raise the money the fed needed to deal with the recession. Yes Ronald Reagan, hero of the conservative movement, raised taxes because it was outrageously irresponsible not to given the huge ballooning deficit. George HW Bush did the same when it became necesary, only George W refused the course of action and continued outrageous deficit spending which has helped greatly in leading us to the point we are at today.

Of course every time the Republicans started again they went right back to more and more deregulation. The gas crisis has a lot to do with the so called "Enron loophole" created by Phil Graham in large part, McCains economic advisor, from when he was working on behalf of Enron. This deregulated large fund investment in comodities and that effect can best be seen when huge funds sold 40 billion worth of oil dropping the price from 140 to 100 where it continues to remain more or less. There was a 40 dollar a barrel price premium purely from the speculation deregulation had allowed to thrive.

Deregulation encourages risky investments and short term strategy. It creates better returns in good times, but in bad times the failures and economic meltdowns those good time returns net are just not worth it. Is a 10% increase in profit one year worth the bank failing a few years later as a result of the kinds of investments that brought that 10% increase? I certainly don't think so.

Deregulation let the irresponsible consumers you point to get loans they didn't fully understand. Lack of regulation let banks give 2% intro rates to let customers quality that went up 4 points a month later and 10 points a year later. Lack of regulation of lending practices and banks in general are the number one cause of the current problems, and those problems are what McCain helped create (he voted with the so called "Reagan revolution" republicans on many of the deregulation missteps from the 1980s through today in the house then the senate).

American History Pop Quiz, anyone know what caused the Great Depression? That's right! speculative mortgages and lack of stock market regulation! Almost all the regulations that the republicans have tried to deregulate were put in place after the depression to try and stop another one from happening. Smart move removing those safeguards, I was hoping we wouldn't go 100 years without another great depression, thanks Republicans.

Most companies take loans, irrespective of their capital, because it can be cheaper than using your own money.

How can that be? I've never seen Microsoft or Nintendo in debt. Sony, yes.

How can that be? Are you saying the banks give away money to these companies?

I've never seen Microsoft or Nintendo in debt. I remember talk about the possibility of Microsoft going into a small amoutn of debt to buy Yahoo, but that was it (and it ended up not happening).

Évery company has some debt, but being in debt doesn't mean you have a negative result. Those are two different things.

That borrowing money can be cheaper than using your own capital has to do with the discount at which you invest your money. Discount being the value you generate with a certain amount of investment. A discount of 0.4 means that you'll make 40cts with every dollar you invest.

Companies don't have endless amounts of money, so they can decide to borrow money for something and use there own capital for something else at a higher discount. Sorry this is a very bad explanation, but I'm still a bit jet-lagged. I'll look up a better one.

Edit: saw your edit: no, banks don't give away money, but if you can use your own capital at a higher discount it can compensate for the rent.