Does this mena you **** skins are going back to your **** hole turd world
of
india?
"indiaBPOking" <indiabpoking@[EMAIL PROTECTED]
> wrote in message
news:9323aaca-cc1f-4846-a6a0-75c0eb15ef17@[EMAIL PROTECTED]
> http://www.realtruth.org/articles/080229-007-abc.html
>
> America's Banking Crisis
> A Financial Tsunami Approaching!
> The intensifying American banking crisis threatens the stability of
> its economy and the world's. Where is it leading?
> By Robert R. Farrell
>
> Global financial stability has been shaken and America is facing a
> growing economic crisis that could make the 1930s look like "good
> times." The U.S. banking system is on the verge of disaster, as banks
> have recorded over $100 billion in losses, with hundreds of billions
> more forecasted.
>
> America's subprime mortgage losses have swelled into a full-blown
> financial crisis--and banks and citizens alike are bracing for the
> "perfect storm."
>
> Source: RT photo illustration
>
> Simply put, America's banks are staring into a financial abyss.
>
> What started with subprime mortgage losses in 2007 is now growing into
> a full-blown financial crisis. Consider just one example. As of
> January 2008, Stockton, Calif. (pop. 280,000), had 4,200 homes in
> default or foreclosure, with bad loans totaling a staggering $1.4
> billion. According to CBS News, Stockton has gone from being one of
> the hottest real estate markets to the foreclosure capital of America.
> Prices of homes in the city have dropped as much as 70%.
>
> In many of the nation's cities, towns and smaller communities,
> Stockton-like scenarios are playing out. Banks are busy auctioning off
> houses at "fire sale" prices.
>
> And the news keeps growing worse. Once proud banking titans Merrill
> Lynch and Citigroup had to look to investments from Asian and Middle
> Eastern governments (through "Sovereign-Wealth Funds") to shore up
> their balance sheets. They were rescued by life-saving injections of
> $6.6 billion and $14.5 billion, respectively. European banks have also
> been affected, as Swiss, German, French and British banks have
> suffered billions of dollars in losses.
>
> The losses are not confined to banks alone. One of the world's largest
> insurance companies, American International Group, recently re****ted
> losses from the mortgage crisis of up to $5 billion--up from a previous
> estimate of $2 billion. This may be a sign of coming re*****sments by
> others as the crisis intensifies.
>
> At a meeting of the G7 finance leaders, German Finance Minister Peer
> Steinbrueck stated that the G7 feared losses from the subprime
> mortgages could reach as high as $400 billion (nearly as large as the
> entire economy of Holland, ranked 16th worldwide). Highlighting the
> gravity of the economic situation, U.S. Treasury Secretary Hank
> Paulson described it as "challenging and uncertain."
>
> A deadly combination of the credit crunch, the collapsing housing
> market, increasing energy prices, and the threat of rising inflation
> are rapidly weakening America's economy.
>
> The crisis threatens to engulf banks and other financial institutions,
> affecting pension funds, mutual funds and insurance companies. The
> situation is so grave that President George W. Bush and the Federal
> Reserve (the Fed) have implemented unprecedented emergency measures,
> including stimulus plans, tax rebates and interest rate freezes, in an
> effort to prevent total collapse. The stability of the global economy
> is at stake.
> Featured Personals by David C. Pack
>
> * Solve Your Financial Worries!
> * Has Your Life Been Predetermined?
> * Who Authorized Sunday Wor****p?
> * The Greatest Nations in Prophecy
> * Is World Peace Possible?
>
> Traditional vs. Modern Banking
>
> Banks traditionally operated by taking deposits from their customers
> and lending money to those seeking loans. The difference between the
> interest rate paid on deposits and the higher one charged on loans
> (the "spread") was their profit. If customers defaulted on their
> loans, banks were liable to depositors for payment--the banks held the
> risk "on the books," 100% their responsibility. It was therefore in a
> bank's best interest to carefully screen customers' ability to repay
> before providing loans. The customer needed to have a good job,
> adequate assets, and was required to make a sizable down-payment. This
> conservative approach to lending enabled banks to make tidy profits
> for decades, while staying financially sound.
>
> Bipartisan action: President George W. Bush speaks during a news
> conference, aside Treasury Secretary Henry Paulson, in the White House
> briefing room in Wa****ngton D.C. (Jan. 24, 2008). Mr. Bush announced
> that he and leaders of the Democratic-led Congress have agreed to work
> together on an economic stimulus package to boost the sagging U.S.
> economy.
>
> Source: MCT
>
> However, the 1990s saw banks change their traditional way of
> operating. Seeking higher and higher profits to satisfy shareholders
> and to secure executive performance-pay bonuses, banks decided they
> could make even higher profits if they loaned out more money. To do
> this, they used other people's money through "securitization," a
> process that allows banks to convert hundreds, even thousands, of
> mortgages into bonds and then sell the bonds to investors, such as
> pension funds, mutual funds, insurance companies and other banks.
> Banks did not make a profit through the "spread" anymore, but instead
> made a fee for having put together ("originated") the loan, now owned
> by other investors.
>
> Further, the bonds were insured by specialized insurance companies (so-
> called "monoline" insurers), and were rated as safe investments by the
> rating agencies (i.e., Standard & Poor's, Moody's, and Fitch).
>
> Since the loans were now "off the books" and insured, the banks felt
> comfortable about "originating" even more loans. Through their new fee-
> based income, banks made much higher profits than ever before.
> Reckless Lending
>
> In their quest for higher profits, banks no longer felt the need to
> carefully screen loan applicants, as they once did. Customers who did
> not qualify for loans under the banks' standard lending procedures
> (i.e., "subprime" customers) were now targeted as a lucrative source
> of income, and marketed aggressively to. Loans were provided to people
> with no income, no job and no assets (so-called NINJA loans).
>
> Additional "sweetener" incentives were also provided, such as no down
> payment required and interest-only payments. Those who initiated the
> loans and approved them were no longer attached to the risk, and were
> paid handsomely for their efforts.
>
> The subprime mortgage market became a ticking bomb, ready to explode
> at any time.
> Enter the Fed
>
> Thinking ahead: Federal Reserve Chairman Ben Bernanke discusses
> "Savings" during an Economics Club of Wa****ngton luncheon (Oct. 4,
> 2006). Mr. Bernanke called for an urgent reform of Social Security and
> Medicare, warning that failure to do so soon could lead to dire
> economic consequences for future generations.
>
> Source: MCT
>
> Two developments have played a significant role in the development of
> modern banking and the current crisis.
>
> The first was deregulation of the U.S. financial services industry
> with the 1999 repeal of the Glass-Steagall Act, after years of
> lobbying by the banks. Carefully crafted during the Great Depression
> to control speculation in the stock market, Glass-Steagall prevented
> retail banks, insurance companies and investment banks from owning
> each other. With the repeal of Glass-Steagall, massive financial
> services conglomerates were suddenly formed, combining these three
> types of financial institutions. Industry behemoths such as Citigroup
> and JP Morgan quickly came into being. This meant that retail banks
> seeking higher and higher profits could now dive headlong into high-
> risk speculative ventures through owner****p of (or being owned by)
> investment banks, which led to disastrous consequences during the
> Stock Market Crash of 1929.
>
> The second was the low interest rate policy pursued by the Federal
> Reserve. Low interest rates encouraged banks to target subprime
> customers with variable rate mortgages. Banks offered initially low
> interest rates ("teaser" rates), to be increased two or three years
> later. Because of rising house prices, customers took the bait
> believing they could refinance their homes at an affordable rate when
> the time for the reset arrived.
> A Culture of Greed
>
> In many cases, mortgage brokers misrepresented terms and conditions to
> eager customers who provided them with fraudulent information.
> Sometimes banks did not even bother to check the information provided.
> "Predatory lending" was compounded by "predatory borrowing"!
>
> Banks sold risky bonds as safe investments to unsuspecting investors.
> Rating agencies, paid by the banks, rated risky bonds (those with
> subprime components) as safe--even giving them the highest rating.
>
> With substantial increases in real estate prices occurring every year,
> builders went on a building spree around the nation.
>
> This created a sense of "easy money"--"something for nothing." In their
> greed, many were "scamming the system." At a meeting in Toronto,
> Canada, billionaire investor Warren Buffet commented, "It's sort of a
> little poetic justice, in that the people that brewed this toxic Kool-
> Aid found themselves drinking a lot of it in the end" (Reuters).
> Crisis Strikes
>
> The crisis started in the summer of 2007. Due to the surplus of homes
> on the market, housing prices fell moderately--tipping the scales. Also
> around this time, the first batch of interest rate resets came due.
> Faced with exploding monthly payments, falling house prices, and an
> inability to refinance their mortgages, many customers defaulted on
> their loans. Lenders call it "jingle mail," as so many homeowners are
> just turning in their keys.
>
> Confronted with higher monthly payments on mortgages that are greater
> than the value of their homes, homeowners are abandoning their
> mortgages. Many feel no moral obligation to fulfill what they promised
> to repay, believing it is better to walk away from their homes. They
> feel that while this hurts their credit rating, in the short-term it
> hurts less than the downward spiral toward bankruptcy.
>
> This change in attitude is in stark contrast to years ago when
> borrowers felt a moral duty to pay off their loans. With the morals
> and values of the nation disintegrating, many lack the character and
> fiscal responsibility of previous generations.
> An American City at the Edge of Bankruptcy
>
> Vallejo, Calif., is deep in a financial crisis. Years of overspending
> have left the city, as City Councilwoman Stephanie Gomes called it,
> "teetering on the edge of bankruptcy" (Associated Press). The city,
> population 126,000, faces an immediate $10 million general fund cash
> shortage and almost a $13.8 million deficit for the next fiscal year.
> Vallejo may soon run out of funds.
>
> Mayor Osby Davis downplayed the option of bankruptcy, refusing to call
> it the only possibility and promising to look to other solutions. "I
> like to look on the positive side," Mr. Davis told local television
> station NBC11.
>
> "I'm confident we're going to be able to work this out without having
> to file bankruptcy. It's not an alternative we want the public to
> believe we're moving toward with any intention."
>
> The City Council has drawn up an emergency plan that would cut $20
> million from the current budget, with most cuts coming from city-
> funded jobs. The emergency plan includes cutting city salaries 5% by
> June 30, 2008, reducing firefighter and police officer salaries by
> 15%, and electrical worker funding by 8%. Overall, 17% of general
> funds positions would be cut, requiring layoffs.
>
> However, the spending cuts must be approved by unions of these groups.
> Current labor pacts are in force until 2010, meaning the unions are
> not legally required to negotiate.
>
> Contracts for public safety jobs such as police officers and
> firefighters make up 80% of the city's general fund budget.
>
> Similar cuts have been proposed before to ebb Vallejo's overspending
> but have always been voted against by the unions.
>
> Though there are many causes of the city's financial problems, the
> fire department proves to be a prime example of the budgeting
> troubles. During the past years, the fire department has suffered from
> staff shortages, forcing many firefighters to work overtime, with some
> making $100,000, or even $200,000, a year. Further, upon hearing the
> city was in dire financial straits, more than 14 fire employees
> retired, meaning Vallejo must spend an additional $4 million in buyout
> costs.
>
> Vallejo's current liability for already earned retiree benefits of
> retired and active city employees is $135 million, with another $6
> million being accrued per year.
>
> "It's not a question of whether it is right or wrong for employees to
> give up anything. This is totally a question of survival of the city,"
> said Councilwoman Joanne ****vley (Times-Herald).
>
> Being the first city in California to declare Chapter 9 bankruptcy
> means there is no template or previous case to predict what this would
> do to the city.
>
> City Manager Joseph Tanner said in a re****t to the City Council that
> without a compromise with the unions, his estimate for insolvency was
> late April 2008.
>
> The city now waits for the decision of four main unions or it will
> quickly run out of options. Councilwoman ****vley told NBC11 that the
> cuts being "purposed in order to remain solvent will decimate city
> services." She continued, "Anything other than totally new contracts
> is a Band-Aid."
> Crisis Spreads
>
> As the crisis intensifies, mortgage defaults are multiplying. And
> everyone is on the hook. "Monoline" insurance companies have suddenly
> become liable for multiple billions of dollars of debt. Investors have
> been left holding bonds that may never be repaid. Banks are finding it
> difficult to sell additional bonds as investors have backed out of the
> market, leery of poor investments. Thus, the banks' fee income has
> dried up--leaving them with massive deficiencies in capital.
>
> As credit problems mount, banks have sharply reduced lending to each
> other and the public, fearful the loans will not be repaid (the
> "credit crunch").
>
> Shockwaves from the crisis are also being felt in other sectors of the
> economy. Evidence of this is clear, as liquidity dries up and less
> money is available to finance commercial loans. Recently, a group of
> bankers were unable to back $14 billion of debt to finance an
> entertainment company. Other major deals in the tens of billions are
> now in jeopardy. Deutsche Bank had to repossess some Manhattan
> buildings because a well-known developer was unable to refinance $7
> billion of debt. The credit crunch has pushed beyond retail banking;
> it is now affecting major business deals and even commercial real
> estate. And municipal bonds (used to fund cities, colleges and
> hospitals), which were once considered safe investments, can no longer
> readily find buyers.
>
> As more and more loans arrive at interest rate resets, more defaults
> will occur, deepening the crisis. A financial tsunami is rapidly
> approaching America's shores!
> Kings Become Beggars
>
> Increasingly, America's banks have been forced to look to other
> nations for capital. Recently, U.S. banks received massive infusions
> of capital from Asian and Middle Eastern sources that are purchasing
> larger stakes in America's largest bank institutions.
>
> During the G7 meeting mentioned earlier, To****hiko Fukui, governor of
> the Bank of Japan, made a statement that could have serious
> ramifications, as the banking crisis further deteriorates: "If
> everyone does the same thing it won't be any more effective. Each
> country needs to do what is best for its own particular situation."
>
> In the near future, will countries that have so often sup****ted
> America financially stop doing so, causing the crisis to spiral out of
> control?
>
> Recent news spotlighted a trend in New York that was unimaginable just
> a few years ago: Some shops are now accepting Euros for payment of
> merchandise. While accepting foreign currency has been the norm along
> the Canadian and Mexican border, accepting it in the financial capital
> of the world is a sign of a weakening U.S. economy. This distrust of
> American capital is just the tip of the iceberg, as people and nations
> are learning there are alternatives to the U.S. for security and
> investment.
>
> Time will tell if the ongoing financial irresponsibility of America
> will cause the world "to do what is best for its own particular
> situation." If this happens, it will hasten the demise of the U.S. as
> the world's financial leader. There are indications that this has
> already begun. In its Jan. 15 issue, the Financial Times noted, "The
> U.S. looks poised to lose its mantle as the world's dominant financial
> market because of a rapid rise in the depth and maturity of markets in
> Europe, a study suggests. The change may have occurred already, not
> least because the U.S. markets are beset by credit woes, according to
> research by McKinsey Global Institute."
>
> The American banking crisis shows the vulnerability of the global
> economic system. The world is looking for an alternate, and America
> will be replaced as the financial engine of the world by a superpower
> soon to arise in Europe.
>
> The good news is that a new--and far superior!--global economy will one
> day be established. Instead of being rooted in greed and corruption,
> this future worldwide financial system--which will benefit every
> nation, small and great--will be based on outgoing concern for others.
> From individuals to businesses to government bodies, all will practice
> fiscal responsibility during the soon-coming age the Bible refers to
> as "the world to come" (Matt. 12:32; Mark 10:30).
>
> Until then, there are financial laws and principles found in God's
> Word that--if faithfully lived by--would bring a multitude of benefits
> here and now, in this current age.
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