Economic Collapse in September?

321 Gold.com ^ | May 19th, 2008

[MarkL]

You know, I rarely see anyone talking (so far) about the fact that Congress pressured banks to make home loans to people who should have never had home loans. I have also wondered if another piece of the puzzle was the fact that they could make the loan and then move it on to Fannie Mae etc? That way, they didn’t CARE if it had a chance in hades of being paid back.

susie

I've seen that discussed A LOT right here, ever since the bill was passed. Of course you never see it in the MSM, or CSPAN. Pelosi claims that Congress had nothing to do with this. It's just the republican's fault.

Only the government could come up with a business model to loan money to people who can't pay it off, and expect it to survive, financially. Of course, this is the same government that can't run their own restaurant for 100 people (the senate). They've had to get emergency "loans" to cover expenses over and over again! And this is the same government that's going to save the financial markets, and provide out health care.

"Dear Lord, please save me from these people who want to help me!"

Mark

[LS]

It is an important distinction in definitions: "Investment"=something that generates growth apart from changes in prices. A company that is working correctly will be worth more next year than this because it is increasing value.

"Speculation"=taking advantage of different price differentials. But in speculation, the only way you can ever make money is to sell. Period. No amount of silver or gold in the world is worth anything if you don't sell. Nor will it pay pay a dime of dividends or ever split. So, sure, you can sell silver because of inflation, and you can buy and sell oil. But at some point, you have to BUY BACK or you can't do it again. Not true with an investment.

[brytlea]

Yes, I know what Fannie and Freddie were for. But, the fact that they never have to worry about collecting the loans has to make them feel pretty safe.
susie

[brytlea]

I don’t recall the name of it, it’s been too long ago, but I do remember all of the cries about how it would cause problems, and at the time, even me with zero financial experience thought it sounded like a recipe for eventual disaster.
susie

[brytlea]

Sorry I wasn’t clear, I did mean in the MSM.
susie

[ovrtaxt]

I also own a business which generates a respectable ROI, so I get your point.

Precious metals are a good hedge against drops in value, though. They’re an excellent place to park savings, because Federal Reserve Notes are going to devalue now. Converting a doomed commodity (dollars) into a stable commodity is a smart move, even if you don’t want to technically define it as investment.

[ovrtaxt]

http://en.wikipedia.org/wiki/Community_Reinvestment_Act

Here it is. The PC government response to ‘redlining’, considered a discriminatory practice back in the day- now obvious that it was just sound business. Check the history of it.

There’s also the effect of the Glass-Steagall Act being repealed. An interesting debate over it’s role here: http://agonist.org/sean_paul_kelley/20080918/why_glass_steagall_mattered

[LS]

Yah, tell me about it: I bought Kruggerrs back in 1970 or so at $180, figuring they would never ever go above $450, when I sold. Two years later they were $800!