why?? it would be helpful to me if someone could explain what is going on ie big picture... I know Fred and Fannie started this but its confusing...
The crash of 1987 happened in part due to traders having a weekend after a bad week to contemplate how bad the market really was. On Monday, the bottom fell out.
“why?? it would be helpful to me if someone could explain what is going on ie big picture... I know Fred and Fannie started this but its confusing...”
Banks create money by lending. When the banks are scared, they don’t lend, and the money supply and the real economy contract. When people are scared enough they also worry that if government spends too much the dollar will become worthless, so they buy gold. There are a lot of financial institutions that are fatally compromised by the housing crisis, and unfortunately we are only half way through clearing away the dead wood. It could still get a lot uglier. I just hope that people don’t respond by electing a communist as president. That would be a lot worse than any financial crisis.