Wall Street Gambling, Price Manipulation, etc

I'm not a professional in the financial industry. In fact, I barely qualify as an amateur. But I'd say that without TARP, we might have seen a recession that would have made the Great Depression look like a practice run. And despite all the pontificating and post-game quarterbacking by 'internet experts,' most professional economists supported TARP at the time -- and most of them still believe it made a measurable difference.

In fact, I think one of their most common complaints is that it didn't go far enough.....

 

The changes in the secondary markets and the risk they represent to out financial system is the discussion of a secondary effect.

The question of interest to me are the changes in the primary asset class- how they occurred and finally how they change economies.

Wall street is one of the things in the cart- what feeds the horse?

 

The definition of a bubble is the trade in products or assets with inflated values.

Are you asking what caused these inflated prices.... ?

Study past policy decisions like the Greenspan Put , the Bernanke Put the chep money that was deployed each time a financial event occured.. ie a dot com bust.. , then add the massive leverage generated by those financial market players who are too big to challenge, to big to regulate and too big too fail and finally supercharge it on global markets.

 

If I understood Stockman correctly (his new book is "The Great Deformation: The Corruption of Capitalism in America) he says that the mortgage lenders gave lots of liar loans because the Investment Banks were pushing them to do so, so that they could securitize the mortgages and sell them off to the rest of the world.

And the Investment Banks had lots of money for the liar loans because they were gorging on cheap money provided by the Fed (Greenspan's policy). The Banks were having trouble figuring out how to put all the money to "good use" so they came up with securitizing mortgages -- and they needed lots of them -- good or bad it didn't matter -- because they were going to sell them off to someone else (and then the Investment Banks took out insurance on the ones they knew would default (using Credit Default Swaps, which AIG was dumb enough to sell them -- which is why the taxpayer had to bail out AIG -- so that Golden Sacks could get all of its insurance money from the bad mortgages it knowingly sold )).

And I've heard, though Stockman didn't say it, that the reason that the Fed was trying to "get rid of" a bunch of money was because the Chinese economy was booming and they had lots of money they wanted to invest, so the Chinese were buying lots of US Treasuries because they are considered the safest form of investment.

So there is a whole list people/banks/governments/institutions we can blame.

Stockman says that, in an ideal world, we need to reenact the Glass-Stegal Act, in fact make it even stronger (among other recommendations like repealing Bush's tax breaks, and cutting down on the Military budget by 33%, and reducing SS benefits to wealthier recipients, etc). But he also says he doesn't expect it to happen, because the Investment Banks "own" much of Congress.

 

No- I know what caused the price change:
It is the sum total of market participants.

Looking for the culpable agents- it is those participants active in the primary asset.

That would be you and me...

 

The whole concept of GDP growth is an unsustailable scam foisted on the ignorant by Wall Street and politicians.

GDP growth has never been sustained in the history of Mankind.

All these funny money corrections favored by the bankers are only ..." kicking the correction can down the road "

 

Get ME out of it. I have never borrowed a cent in my life. My pension fund, which is manditory for all responsible citizens , is a stock index tracker and Gov bonds..... ....

Dont include me in your world of speculation

 

Interest Rates too Low, too Long

Trouble is right now with the interest rates so low, there is nowhere else to earn anything on your savings,....except risk it on Wall Street with the Hedge Fund guys. Even the bond markets are not paying much. So all the managers of retirement funds, etc hook up with the 'gamblers' on Wall St. And the Wall street guys are loving it as it supplies them with huge resources to gamble with.

 

Yes indeed. " Money" and its supply and demand value has been distorted by low interest rates and runaway printing presses.

The Banksters win

 

If you want to think about a truly terrifying scenario favored by Republicans and Wall Street rent seekers consider the proposed Privatazation of the 2.7 trillion dollar Social security Trust Fund .

In the end the bankers will get it... a mega feeding frenzy....then its all over

 

Agreed there

 

As our population grows, the size of our economies grow.

It's hardly a trick foisted on the uniformed.

 

Growth is unsustainable.

Prove to me that its possible...show me an example

 

There's no need to 'prove' it, unless you're using your own private definition of growth. In the long run, the GDP of this country has consistently increased since the day it was founded.

 

I take this as the standard refrain when one is trying to implicate "easy money" as being the principle agent responsible for overheating the real estate market.

It's of interest to see the mechanics of how it occurs but the function remains a secondary event in what is a far larger cyclical distortion of economic activity.