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Joined: Mon 28. Feb 2011, 11:17
PostPosted: Mon 23. May 2011, 19:08

Below in speculative bubbles are to be understood. In a recession will also find solvent borrowers or lenders no good projects, because the mood is pessimistic and desperate. Boom in many, and bad loans are forgiven because prevailing euphoria and optimism. It will then be invested with money that they do not invest in companies and securities , but also in real estate.
Irrational behavior can be used for the various levels but be rational. Quite a few smart business people are in a time of new economy come to a lot of money because they companies that could not function properly, with astronomical ratings on the stock placed. Like a chain letter or pyramid selling in a stock market bubble, only the latest to be bitten by dogs. Each is hoping to not belong to the past. Kindleberger called it then logically the "greater fool theory" there is always a bigger fool, the one's already expensive stocks, houses or tulip bulbs can still higher price.
The year 2000.The optimism knew no bounds in the financial markets. The Internet and communication technologies were seen as key to continuing economic growth. Companies like Yahoo, Amazon, eBay had stock market valuations, the traditional brands such as Siemens and Coca-Cola to the multiples exceeded. Today, few of these companies are not insolvent or had undergone a dramatic revaluation. plazte When the speculative bubble of the new economy, the astronomical sum of 12 trillion U.S. dollars had been resolved by the private wealth Börsenchrash in air. The listed market in the New Economy in Germany was set implied by the Exchange. The new market fell from 9631 points (March 2000) by 96% to a meager 318 points (Oct. 9, 2002).
As the prices of technology stocks imploded, developed what was called then the biggest bubble in history. America discovered that it could take advantage of falling mortgage interest rates and rising house prices to subsidize their living standard. The magic words were "Refinancing and Home Equity Loan." After the attacks of September 2001 turned the former Federal Reserve Chairman Greenspan, monetary taps U.S. Fed gaping wide. He flooded the entire U.S. economy and thus the rest of the Western world with liquidity. Interest rates fell again significantly. America accepted this and they begamnnen liquidity to refinance their homes.
The year 2000: a normal American home worth $ 300,000 .. Meanwhile repaid $ 150,000, so that equity exists in the amount of 150,000 dollars. Now, two things happen: the interest rates fall from 8.8% to 6% while increasing the house value of 300,000 to 400,000 dollars. Assuming the bank can make, then a new mortgage of $ 200,000 be included and the old are being replaced. Now they have put $ 50,000 more equity in their house and at the same time you can spend $ 50,000. Because there were so refinanced $ 200,000 and still have 50% equity available. And the best part, the interest burden falls on the month.
2002, the value of the refinanced mortgage loans 1.5 trillion dollars. Despite rising home prices fell, equity, from 70% in the early 80s to 55% 2005.That means that U.S. citizens use not only price increases of the property to take on more debt, but also increased their level of indebtedness. The sum of the mortgage debt of households in 2004 was 8.82 trillion dollars. They are as many as 70% of economic output in the country. Much of the capital, which has been recorded, went into consumer spending, in repayment of other debt, in financial investments or other property. The rise in house prices has accelerated markedly since 1995. In conjunction with falling prices then all the necessary conditions for a real estate bubble. The real estate fever reached the 2003/04 general public. U.S. citizens were given the opportunity to realize the dream of home ownership, which should have allowed the financially can never quiet. These mortgages were also converted into bonds with AAA ratings and sold and played in funds from Invenstmentbankern. Only the interest yield.
Reality caught up with everything. In the second quarter of 2005, served 4.34% of all borrowers are no longer their mortgage loans. Further 1.83% were in serious arrears. As in the first quarter of 2004 increased the short-term interest rates, the number of default in the borrowers rose to 10.04%. The final stages of the housing bubble was possible because the banks were willing to mortgage borrowers to finance even then, if they were already insolvent. Sun awarded under special loans without redemption, and even with negative amortization, in which not even the interest burden was served.
In August 2007 the time had come: the U.S. housing bubble burst. On 8 February issued a profit warning by HSBC Bank. It should be written off bad real estate loans worth a total of 10.5 billion dollars, which would lead to an immediate reduction in profits by 10%. For a bank like HSBC that was indeed to cope with, but the message was clear. On April 2 announced the first-mortgage lenders, New Century of insolvency. On 21 June it was announced that two hedge funds known investment bank Bear Stearns were almost bankrupt. From the 10th August was almost hardly buyer for exchange. The banks were hoarding their cash for fear of a big crash, which prompted many central banks to hundreds of billions of dollars into the system pumping.
Meanwhile, there were the rates of subprime mortgages in free fall. Sometimes only 30 cents per dollar of securitized debt have been paid. A price decline of 70%. The two state banks-Federal National Mortage Association and Federal Home Loan Mortage Corporation bought-in one way or another, most of the private mortgage auf.2004 had Fannie Mae and Freddie Mac mortgages in the value of 1555 billion U.S. dollars are in the books. This represented 13% of the national product.
To date in the USA 81 banks have become insolvent since 2007. Many financial houses have to be supported by the state. The insurance giant AIG needs to be backed with enormous financial injections. A collapse of this Insurancemammons would have a worldwide catastrophe.
And all because of speculative excesses ... ....

Greed eats brains ... ..

Michael Farrell. "It's a long cold winter on the capital markets."

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