What were the main reasons for the US subprime loan issue that created world-wide financial market problems in recent time?

[David Waring]

Hello,

Thank you for your comment.

There is a good overview of the subprime crisis basics and main causes here.

Have a look at that and if there are any questions after that feel free to post them there.

Best Regards,
Dave

Hi David,

Thank you for your reply. Your article's been really helpful. May I please ask another question, what is the global impact of that issue giving examples from the Australian Financial Market (if you're familiar with that).

Regards

[David Waring]

Originally Posted by Unregistered

Hi David,

Thank you for your reply. Your article's been really helpful. May I please ask another question, what is the global impact of that issue giving examples from the Australian Financial Market (if you're familiar with that).

Regards

My Pleasure,

There are two main global impacts that result from this in my opinion which are:

1. Global liquidity drops as banks around the world are more skiddish about lending to each other which means it is harder for both badd and good companies and individuals to get loans.

2. When these mortgages were packaged up into debt instruments they were resold around the world so there are many financial institutions outside of the United States which had exposure to them.

I do not follow the Australian markets closely however I do know that Centro which is one of the worlds largest shopping mall owners had some problems several months ago which either put the company close to bankruptcy.

Best Regards,
Dave

Hi David,

Love your tutorials and commentary. He may be referring to the mises.org philosphy of economics, oh but that's Austrian, which you probably are familiar with...they follow your explanation of crisis to a 't'.

I think the solutions and resolutions to this crisis will, on a large part, be behind closed doors unless the will of the people for knowledge, which you are contributing nicely, and the desire of change for transparency, for better regulations, accountability and sensibility in spending and monetary abuses stop, politically and corporately.

The too big to fall attitude sounds like alot of ego, but may be necessary for the good of the whole. I have always been in mortgages and started during the S&L bailout. As this may not be similiar, many of the largest S&L's did the bailing, will the governments do the bailing now?? And just pass on the discounted debt to the taxpayers thru investment vehicles??

Thanks, again, for you videos. Looking forward to learning and spreading the word about your site.

Ruth

[David Waring]

Originally Posted by rcmtg

Hi David,

Love your tutorials and commentary. He may be referring to the mises.org philosphy of economics, oh but that's Austrian, which you probably are familiar with...they follow your explanation of crisis to a 't'.

I think the solutions and resolutions to this crisis will, on a large part, be behind closed doors unless the will of the people for knowledge, which you are contributing nicely, and the desire of change for transparency, for better regulations, accountability and sensibility in spending and monetary abuses stop, politically and corporately.

The too big to fall attitude sounds like alot of ego, but may be necessary for the good of the whole. I have always been in mortgages and started during the S&L bailout. As this may not be similiar, many of the largest S&L's did the bailing, will the governments do the bailing now?? And just pass on the discounted debt to the taxpayers thru investment vehicles??

Thanks, again, for you videos. Looking forward to learning and spreading the word about your site.

Ruth

Hi Ruth,

Thanks for the comment and for spreading the word about the site I appreciate it.

Yes I am familiar with the Austrian School of Economics and while I don't know it in depth I do like how it seems to emphasize the free market and individual rights, two things that I am a big proponent of.

Best Regards,
Dave

[David Waring]

Originally Posted by rcmtg

Hi David,

Love your tutorials and commentary. He may be referring to the mises.org philosphy of economics, oh but that's Austrian, which you probably are familiar with...they follow your explanation of crisis to a 't'.

I think the solutions and resolutions to this crisis will, on a large part, be behind closed doors unless the will of the people for knowledge, which you are contributing nicely, and the desire of change for transparency, for better regulations, accountability and sensibility in spending and monetary abuses stop, politically and corporately.

The too big to fall attitude sounds like alot of ego, but may be necessary for the good of the whole. I have always been in mortgages and started during the S&L bailout. As this may not be similiar, many of the largest S&L's did the bailing, will the governments do the bailing now?? And just pass on the discounted debt to the taxpayers thru investment vehicles??

Thanks, again, for you videos. Looking forward to learning and spreading the word about your site.

Ruth

As far as the too big to fail attitude goes I am back and forth on this one myself because as I stated in my last post I am a fan of the free market. Even with this in mind however I feel that it is possible that because Bear Stearns was such a large participant in the global financial markets, and because the global financial system was already under so much stress that had they let Bear fail there is a chance that the whole financial system may have crashed down upon itself.

As far as the government bailing out goes I think the Fed's move to open the discount window to allow investment banks to borrow directly should prevent another Bear Like incident in a major bank so I don't think we will see anything else there. On the individual level it is anyone's guess at this point though how much money the government is willing to throw at individuals who have taken on loans that they now cannot afford.

Best Regards,
Dave

[Miriam]

Hi David,

thank you very much for your very informative and educating website!
I am a student from eurpoe. Yesterday, I got a theme for my diploma thesis. It deals with the subprime-crisis and how it affects the u.s. american financial reporting system. Unfortunately, I have never been taught about the u.s. american reporting system (only IFRS). So, I am facing great problems... I already found some literature on the websites of the SEC, ASF and SAQ, but I do not know, which other groups deal with my thesis and I am also missing literature on the history of the subprime-crisis (part 1 of your video).
It would be great!, if you could give me some hints, where I can find adequate literature, which I can use as souces for my diploma-thesis.


Best regards

Miriam

[David Waring]

Originally Posted by Miriam

Hi David,

thank you very much for your very informative and educating website!
I am a student from eurpoe. Yesterday, I got a theme for my diploma thesis. It deals with the subprime-crisis and how it affects the u.s. american financial reporting system. Unfortunately, I have never been taught about the u.s. american reporting system (only IFRS). So, I am facing great problems... I already found some literature on the websites of the SEC, ASF and SAQ, but I do not know, which other groups deal with my thesis and I am also missing literature on the history of the subprime-crisis (part 1 of your video).
It would be great!, if you could give me some hints, where I can find adequate literature, which I can use as souces for my diploma-thesis.


Best regards

Miriam

Hi Miriam,

Good to hear from you. Here is a link to my delicious bookmarks on the crisis which I think you will find useful in this pursuit.

Informedtrades' bookmarks on del.icio.us

Best Regards,
Dave