Please elaborate! Thanks.
We don’t know how many ‘toxic mortgages’ are ‘out there’. Even the banks that bought them don’t know which is which, there is simply no way to tell.
The entire system is based on property values, and ‘confidence’ in the stockmarkets, not the same thing but irrevocably linked, as siblings. ONe catches a cold, the other begins to sneeze. ONe gets a deadly illness, the other begins to die as well.
Once you shake an entire nation’s confidence in its own banking and economic systems, it takes years if not decades to rebuild that trust. Think about our grandparents that NEVER AGAIN trusted a bank after living through the 1930’s, for example. Then consider the children of those seniors, who are going to live with what happend to their parents for the rest of their lives, and pass THAT on to their kids.
We’ve NEVER had this before. In 1929,we knew what the problem was, but the FDR programs and more importantly the actions of the Federal Reserve made it WORSE, extended the depression for years beyond what it could have been. The 1920 Depression (yes, we had a DEPRESSION in 1920 folks, bet you didn’t know that eh?) recovered because the Federal Government and the Fed Reserve Stayed Out of IT. Busienss brought about the recovery from that, and we don’t hear about because it undermines the liberal myth FDR saved us from the ‘Great Depression’.
Bottom line: Nobody knows what will result from this recession. Our new administration is playing the historical odds that say it will last around 18 months, with an eye on the 2010 mid terms.
The problem is this isn’t you ‘usual historical recession’.