The Banking Collapse of 2008

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The Banking Collapse of 2008

They say history repeats itself, but usually not this quick. The United States is in going through a huge banking collapse not seen since the banking collapse that gave rise to the Great Depression.

Stepping back to the first collapse, what do we find? Happy times! Americans were making big paper wealth gains. The market, unfortunately, corrected suddenly. The suddenness resulted in rumors of banking problems, a run occurred and the rest is history.

To say the change in fortunes was dramatic would be a minor understatement. We went from a period of great wealth to poverty for many. Even worse, it lasted for ten years from coast to coast. The Great Depression was such a difficult period that it took dramatic measures to turn things around. The social projects put together by the government to create jobs was one. The industrial output needed for World War II was the other. If you are getting a feeling of deja vu, you should. The current situation is similar. The biggest difference is the gains in question were stock in 1929. Today, the paper wealth gains are found in home equity. At least they were.

The world of banking and finance these days is shocking. Huge names like Merrill Lynch, Lehmans and AIG in dire straits. Freddie Mac and Fannie Mae, the backstops of the mortgage market, in government hands. It is simply shocking. Do not be confused about Merrill, AIG, Freddie Mac and Fannie Mae. They did not file for bankruptcy, but only because they were either saved by the government or snapped up for pennies on the dollar. For all intensive purposes, they failed as entities. Given the clear similarities, why have we not sunk into the throws of a complete banking collapse and another depression? It might still happen, but one man stands in the way. Ben Bernanke of the Federal Reserve is really earning his salary.

When the Great Depression hit, the Federal Reserve was not as active a player in the banking industry as it is now. To the extent it did have influence, it failed to bring home the bacon. Well, this time breakfast is being served.

The Federal Reserve is the bank of last resort. It lends money to banks and keeps liquidity in the market. Well, it has been doing this and more. Combined with the government, it has pumped over 900 billion dollars into the market.

The current situation is unique. Banks are failing right and left, yet nobody says much. Why? The Fed is coming taking them over and selling them over the weekend when the news reporting is none existent. Pretty slick, eh?

Unfortunately, the Federal Reserve can only do so much. All indications are we are in the early stages of the banking collapse. The Fed will try to get us through it, but there is much still to be determined.

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They say history repeats itself, but usually not this quick. The United States is in going through a huge banking collapse not seen since the banking collapse that gave rise to the Great Depression. 
Stepping back to the first collapse, what do we find? Happy times! Americans were making big paper wealth gains. The market, unfortunately, corrected suddenly. The suddenness resulted in rumors of banking problems, a run occurred and the rest is history. 
To say the change in fortunes was dramatic would be a minor understatement. We went from a period of great wealth to poverty for many. Even worse, it lasted for ten years from coast to coast. The Great Depression was such a difficult period that it took dramatic measures to turn things around. The social projects put together by the government to create jobs was one. The industrial output needed for World War II was the other.  If you are getting a feeling of deja vu, you should. The current situation is similar. The biggest difference is the gains in question were stock in 1929. Today, the paper wealth gains are found in home equity. At least they were. 
The world of banking and finance these days is shocking. Huge names like Merrill Lynch, Lehmans and AIG in dire straits. Freddie Mac and Fannie Mae, the backstops of the mortgage market, in government hands. It is simply shocking. Do not be confused about Merrill, AIG, Freddie Mac and Fannie Mae. They did not file for bankruptcy, but only because they were either saved by the government or snapped up for pennies on the dollar. For all intensive purposes, they failed as entities. Given the clear similarities, why have we not sunk into the throws of a complete banking collapse and another depression? It might still happen, but one man stands in the way. Ben Bernanke of the Federal Reserve is really earning his salary. 
When the Great Depression hit, the Federal Reserve was not as active a player in the banking industry as it is now. To the extent it did have influence, it failed to bring home the bacon. Well, this time breakfast is being served. 
The Federal Reserve is the bank of last resort. It lends money to banks and keeps liquidity in the market. Well, it has been doing this and more. Combined with the government, it has pumped over 900 billion dollars into the market. 
The current situation is unique. Banks are failing right and left, yet nobody says much. Why? The Fed is coming taking them over and selling them over the weekend when the news reporting is none existent. Pretty slick, eh? 
Unfortunately, the Federal Reserve can only do so much. All indications are we are in the early stages of the banking collapse. The Fed will try to get us through it, but there is much still to be determined. Article Source: <a href="http://www.allbestarticles.com" target="_blank">Credit Card Bad Credit People</a> About the Author: Get <a href="http://www.commercialloanstop.com/san-diego-hard-money-bridge-loans">San Diego hard money loans</a> today at CommercialLoanStop.com.