A sub-prime credit cruch archeology - Aussie Stock Forums

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  1. #1

    Default A sub-prime credit cruch archeology


    Subprime and credit crunch: it is enough to make your head spin, however, these words have become part of the idiom in the last few months.

    Can I ask how the big banks have to pay so much for credit, when the rest of the world's interest rates are hovering, on average, closer to 5%?

    Is there a case for starting a thread on the archeology of world credit? And the creation and destruction of credit, and the reasons for it. Or is it a simple case of Economics101 that I do not understand?

    I think it would make for a fascinating discussion if anyone wants to contribute.

    I can't help thinking 'boo-hoo' when banks whine about how the terms are tighter - even though I hold bank shares. So, I for one, as a shareholder am not interested in receiving a bigger dividend at the expense of my mortgage - or the other people who will be affected.

    A point.

    Can we please not go on about 'people who get over their heads get no sympathy from me!' - that one will be against the rules - ok?

    So, the shovel is over to you all. How did we get into this mess and how can we get out of it?


  2. #2

    Default Re: A sub-prime credit cruch archeology

    No takers?

  3. #3

    Default Re: A sub-prime credit cruch archeology

    Going once, going twice... going three times....

  4. #4
    explod explod's Avatar
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    Default Re: A sub-prime credit cruch archeology

    Quote Originally Posted by BradK View Post
    No takers?
    There have been some very exact and educational threads on just this subject. One included a very good explanation of the real drive behind banks, their history and ownership. I think it is worth the reasearch to find them.

    I do feel that the index searching on here leaves a lot to be desired but there is probably a thread on that too.

    Of course the other problem is many start too many threads which probably makes it hard to find a thread one wants.

    I am too tired from whatching the price of a busshel of wheat go up to go further than that.

    Sorry BradK, auctions dont' seem to be the way to go at the moment.

  5. #5

    Default Re: A sub-prime credit cruch archeology

    thanks for that explod.

    Can a mod help me out here with a link to a thread?


  6. #6

    Default Re: A sub-prime credit cruch archeology


    Here is an example in generic/simplistic terminology.

    Say Im an American bank.
    I loan out at 3% to the Mortgage market.

    I borrow Australian Money in 1998 cause Its cheap
    Say I can get it a 4% but the US$ buys me twice as much due to the exchange rate.Say then 1 US$ to 2 USD$s Effectively 2%.

    Now in 2008 that same money thats borrowed has increased to 6%
    Exchange rate is now .9 to 1 so thats now COSTING the bank big bucks to finance and borrow new funds.

    A great thread.


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