The 2007 Subprime Mortgage crisis

Discussion in 'Economics & Trade' started by stan1990, Mar 7, 2019.

?

Do you think that the stimulus package was the right step to save the global economy from the recess

Poll closed Apr 6, 2019.
  1. Yes

    33.3%
  2. No

    50.0%
  3. Maybe

    16.7%
  1. kazenatsu

    kazenatsu Well-Known Member Donor

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    Those are controversial subjects and you're changing the topic.

    That's why people will and should ignore you when you bring up subjects like that in a thread like this.
     
    Last edited: Jun 10, 2019
  2. LafayetteBis

    LafayetteBis Well-Known Member Donor

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    These are Prime Subjects, central to a decent lifestyle. You've got your values bottom-to-top when they should be top-to-bottom.

    Happiness is a personal condition heavily influenced by the market-economy in which we ALL live and to which we contribute (by means of our work and consumption). Key to that existence is a fair-and-decent sharing of the communal wealth we ALL help generate.

    Repeat that simple notion a thousand times until you finally understand it ... !
     
    Last edited: Jun 11, 2019
  3. Robert

    Robert Banned Donor

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    you don't understand this topic.
     
  4. Robert

    Robert Banned Donor

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    wealthy people understand this topic. You do not.
     
  5. Robert

    Robert Banned Donor

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    Lesson one.

     
  6. LafayetteBis

    LafayetteBis Well-Known Member Donor

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    This is a debate forum.

    Or, perhaps, you haven't noticed ... ?
     
  7. Kode

    Kode Well-Known Member

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    Of course you know that's ridiculous, given the power of the Fed and it's member commercial banks, the shadow banks, and the FOMC.
     
  8. LafayetteBis

    LafayetteBis Well-Known Member Donor

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    Then explain it to me.

    You can't - so you are reduced to one-liner sarcasm in a debate forum!

    Your comments are useless ...
     
    Kode likes this.
  9. LafayetteBis

    LafayetteBis Well-Known Member Donor

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    Blah, blah, blah.

    Stating a point is NOT SUFFICIENT IN A DEBATE FORUM

    "F" for effort .. !
     
  10. Kode

    Kode Well-Known Member

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    "One of the most important jobs of the Fed is to manage U.S. monetary policy by modifying interest rates, buying and selling government bonds, and adjusting the amount of reserves banks are required to maintain."
    https://www.bankrate.com/glossary/t/the-fed/

    "The target federal funds rate, which is set by the Federal Reserve Board, serves as the basis for the prime rate. The federal funds rate is the interest rate commercial banks charge each other for overnight lending. Generally, the prime rate is about 3 percent higher than the federal funds rate. That means that when the Fed raises interest rates, the prime rate also goes up."
    https://www.bankrate.com/glossary/p/prime-rate/
     
  11. kazenatsu

    kazenatsu Well-Known Member Donor

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    I don't think you understood what I wrote then.

    I don't think you even understand exactly what those statements quoted from those links actually means.

    The Fed doesn't have the legal power to set rates in the market.
    They try to do this, however, by making loans or borrowing money.
     
    Last edited: Jun 11, 2019
  12. kazenatsu

    kazenatsu Well-Known Member Donor

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    That statement is worded kind of ambiguously, pertaining to the context of our discussion.

    A more accurate rendition of that statement would be 'modifying interest rates by buying and selling government bonds'.

    But we're not talking about the "federal funds rate", we're talking about the market interest rates (i.e. interest rates in the economy).
    So bringing that up is kind of a non-sequitur.

    Nothing I had previously posted is inconsistent with any of those two statements you posted. I just wanted to make sure none of these statements were being used in a misleading way.

    I could be wrong, but those things you brought up simply seem to be obfuscating this, due to your lack of understanding of how it works.

    When someone says the Fed sets interest rates, I think you have to be careful of what that actually means and the context you actually use it in.

    Maybe better to avoid it in the discussion here since we don't want to turn this into an argument of semantics.

    The Fed is NOT legally allowed to set interest rates (in general).
    They do generally have the ability to and do attempt to set interest rates.

    It hinges on the semantic meaning of "set". So as long as you understand HOW they set those interest rates, we're good.

    There could be potential situations in the future where they are NOT able to set interest rates to what they want, due to economic factors.
     
    Last edited: Jun 11, 2019
  13. Kode

    Kode Well-Known Member

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    And I think if you reread my post you'll see that's what I said. The Fed changes the federal funds interest rate. I know that's not "the market". That is what commercial banks charge each other on overnight rates but the prime rate is kept at about 3% more than the federal funds rate and the rates we pay hinges on the prime. There is no direct assignment of the prime interest rate by the Fed.
     
  14. kazenatsu

    kazenatsu Well-Known Member Donor

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    And I think that if you waited at least 5 minutes before immediately responding to my posts when you get an alert, we'd all be better off.

    It's common for me to still be typing out my post after I have already initially submitted the new post. (I do this to be able to immediately respond in a post right below your post)

    Ok, thanks for clarifying that. Maybe we simply had a misunderstand then.
     
    Last edited: Jun 11, 2019
  15. Kode

    Kode Well-Known Member

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    This is your thread. Do you feel that my post takes the thread off-topic? If so I'll be happy to take it to a new thread.
     
  16. kazenatsu

    kazenatsu Well-Known Member Donor

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    I just don't see what your post was trying to get at, or how whatever point you were trying to make had anything to do with the Subprime Mortgage crisis.
     
  17. Kode

    Kode Well-Known Member

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    I do that too, but I just happened to come back and check my alerts after being away for a while. If that coincidence bothers you, maybe you should think of a different way of managing the risk, because it happens. It has happened to me too but I understood it was a risk and didn't gripe.
     
  18. Kode

    Kode Well-Known Member

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    It was in my post that you objected to. I didn't change anything.
     
  19. james M

    james M Well-Known Member

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    The Fed has absolute 100% power which is why inflation/deflation is not 1000000% or 275% or 5%. Do you understand??
     
  20. LafayetteBis

    LafayetteBis Well-Known Member Donor

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    Wow! Have you got that one wrong, wrong, wrong .... !

    From here:
     
  21. kazenatsu

    kazenatsu Well-Known Member Donor

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    Are you bright enough to realize that what you posted doesn't contradict what I stated?

    Once again, you're playing a semantics game. I don't think you understand how the words "determine" or "set" can have more than one meaning in this context.

    The Fed has to lend or borrow money to try to change the market rates. That's what it comes down to.
    So it can be very expensive to do that.
     
    Last edited: Jun 11, 2019
  22. Kode

    Kode Well-Known Member

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    Yeah, the Fed has to lend money at rates they set and that changes the market rates. YOU are the one playing a semantics game.
     
  23. kazenatsu

    kazenatsu Well-Known Member Donor

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    It's hard for me to tell whether we're on the same page.

    You agree that the Fed can't always lend money at whatever rates they want, right?
    They are faced with certain constraints in the economy.
     
    Last edited: Jun 11, 2019
  24. LafayetteBis

    LafayetteBis Well-Known Member Donor

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    Learn proper English ...
     
  25. LafayetteBis

    LafayetteBis Well-Known Member Donor

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    Nope. Never said that.. Never believed it either.

    Raising and lowering rates is the key-component of the Fed to control a key economic variable - the cost of money (market interest-rates). Especially when an economy capsizes ...

    Legally, they are not "forced". They are independent of the Federal Government. Though a president gets to name their head. In fact, they are a "community" of national Fed-Heads around the country. Which is why it is called the FRB (Federal Reserve Board) ...
     
    Last edited: Jun 12, 2019

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