Is the US headed for a depression?

[New Dracora]

Discuss.

[Anime Daisuki]

A stagnation is more probable. The US Economy today is very different from the past. It's no longer very dependent on the hardwares like factories and land, but dependent on innovation and knowledge. The impact of a credit crunch will therefore not be as severe. Some sectors will get hit, but some will not.

Another factor is the rest of the world is much more stronger today, in the sense that the others can pull the US back up.

[Estayland]

The problem is banks have written down their mortgage asset well below what they are worth as part of a fear that if they don't write it down enough, they will be investigated by the SEC. This is an accounting problem caused by Congress and the Financial Accounting Standards Board.

WARNING!! Take caffine pills now. WARNING!!! Accounting hat comes on.

Banks are required to mark their mortgage assets to the market price daily. But, because of these fire sales from companies going under, these market prices are below what their intrinsic value is. If only 10% of their mortgages go bad, does it make sense that they should only lose 10% of the value? PLUS, the only way they get ZERO off the asset is if they can't sell the property.

Instead, there should be a "mark-to-model" concept that the Europeans I believe use (holy crap I agree with the Europeans!). Instead of reducing the value to the market, the value should be placed based on the underlying asset (the property).

In addition, banks were forced to give mortgages to those who couldn't afford a house. This was called the Community Reinvestment Act. With changes made in 1995, banks were now required to give risky loans to lower-income people or be labeled racist for not helping minorities.

So, this is all the government's fault, and I doubt a government solution will fix it. As a great President once said, "Government is not a solution to the problem. Government is the problem."

[Chronopolice]

Stagnation would be an optimistic estimate.

What went wrong I think is that the failed financial institutions got ahead of themselves. They got too confident that they can handle the risk. They gambled with their money by buying up toxic assets, the house went bust, then everything fell apart.

Risk = reward. They forgot to include '...just make sure you don't get killed.'

I'm no financial expert but I can understand what my esteemed colleague Estayland is pointing out. I do agree that failures of this magnitude come from system errors. I will try and get more information from that angle.

I've read quite a few articles about the Crash of the Twenties. I see some similarities between that event and this recent crisis.

P.S.
I'm watching the US Presidential Debates on CNN as I was typing this. Interesting points they raise over a variety of issues, no wonder the US citizens are still deciding which candidate to back even a month before the elections. Even I can't decide which of those two to pick if I get the chance to vote for a US president.

[Anime Daisuki]

In addition, banks were forced to give mortgages to those who couldn't afford a house. This was called the Community Reinvestment Act. With changes made in 1995, banks were now required to give risky loans to lower-income people or be labeled racist for not helping minorities.

Tweaking the market like this is a terrible idea. Unfortunately there's not only this, there are many more "affordable housing" socialist policies in the USA today. In California for example, there's also "Regional Housing Allocation Needs" that forces every city to accept a quote of "affordable housing" every 5 years (housing planning period). What this means is developers must, on average, sell 20 percent of their housing below market rate to the poor, at a loss-- and make up for that loss by selling the 80 percent at a higher cost. Who ultimately bears the cost you think? The other 80 percent of the tax payers, the middle class. They also assume all the risks the banks are taking.

This is a classic example of how the market and the government is hijacked by special interests. -_-

[Estayland]

AD: It's called Section 8 Housing.

[Anime Daisuki]

I know, I'm a land use planner Section 8 is just one of them, there are also other schemes. At the very top we have HUD and HCD (Housing and Community Development -State level), then at the regional level we have rules from ABAG (Association of Bay Area Governments), and then at the city level each city has different assistance schemes. I'm doing two Housing Elements at the moment, and its the most un-enjoyable part of my work. Guess what, in all my interactions with city council members, mayors, planning commission members etc, NONE willingly accept affordable housing in their cities--but they can't help it because it comes from the top. And state politicians had to do it because they don't want to be seen as racist or not helping minorities.

[Estayland]

Sept 27, 2008 21:27:22 GMT -5 Anime Daisuki said:

And state politicians had to do it because they don't want to be seen as racist or not helping minorities.

And that, my friend, is the problem.

[Mukeli]

Maybe I'm reading the legislation the the wrong way, but the CRA of 1977 and its amendment in 1995 state nowhere that the financial soundness of the lending institutions be jeopardized by lending to individuals in their communities. Furthermore they do not require that institutions lend to minorities, only that they serve the credit needs of their community. As far I as can tell, minorities only come up when defining a minority-owned financial institution.

Income levels are defined for lenders to serve, however, so one could argue that this "forced" the banks to lend to people that fit this criteria. However I point again to the fact that the Act and amendment both state the soundness of the lending institution not be jeopardized. I do not know what the reality is when regulatory agencies examine banks and measure them on this area. I would be shocked though if a regulatory agency such as the Office of the Comptroller of the Currency or the Office of Thrift Supervision penalized an institution for not giving out more loans. After all banks have to abide by reserve requirements set by the Federal Reserve. Let us also remember that banks could have motivation to lend to sub-prime borrowers because they could charge higher interest rates. While in my opinion such borrowers represent higher risk (thus the higher rate), others could view it as higher profit.

Getting back to the main subject of this thread, I do believe the U.S. economy is heading for some tough times. Americans have not saved any money (personal savings rate is at an all-time low), meaning that the economic good times were brought on by American consumers accruing debt. Furthermore the U.S. government needs to create a balanced budget, whether through cutting spending, raising taxes, or a combination of both. Essentially the U.S. government and Americans need to re-learn how to live within one's means.

[Estayland]

It's not what's written in the law, it's the actions of the government... not necessarily the Office of Thrift Supervision nor the Federal Reserve, but the Justice Department.

[Olsenistan]

Anyone who happened to watch the news tonight knows that we are, in fact, heading for a depression.

[Petalumadom]

S&P down 8.8%

bah...

Also, when everyone knows things are going to go lower they start going up again...

I'm not saying you should go pouring money into the market... but depression is a lil far... as we aren't even officially in a recession yet

[Chronopolice]

There goes the first round, US Congress 1, Wall Street 0.

Seriously, if Wall Street haven't been f******g and pushing around Main Street, they might have garnered enough support to push that bailout through the Houses.

It is wrong to make US citizens pay an additional cost of around USD5000 for bad corporate decisions made on Wall Street. Would Wall Street help the individual citizen bail out of financial trouble? Maybe yes but it will cost them of course.

As I've said before, risk equals reward. Wall Street risked their cash on toxic assets. They lost the gamble. They must pay the price.

Conspiracy theories aside, I've a gut feeling that those failed corporations knew the storm was coming and still pushed thru with their plans. Of course, being the mega-corps they are, the government would bail them out for fear of economic instability. Who doesn't want free lunch?

[New Dracora]

While I can understand the basic implications of having a quota set by the government for certain sub-prime mortgage allowances given the apparent trigger that started all this fuss, I can't help but be a little skeptical that this whole mess is entirely caused by social programs aimmed at providing homes for the homeless - despite how very poorly implemented it is.

Surely there are other reasons? It's not like these are small institutions falling over here - something stinks real bad here

[Mukeli]

While FDR did some good things for the U.S., creating Fannie Mae (and Freddie Mac in 1970 as a result of Fannie Mae's existence) was a mistake. The fact that they both guaranteed payment of interest and principal regardless of mortgages being paid was foolish, as was the strong inference that the U.S. government would back their investments. Because of their creation the two institutions ended up backing or guaranteeing $5 trillion and the U.S. government has assumed stewardship of them. And now Paulson and Bernanke want over half a trillion dollars more to bail out Wall Street. At this point I'm grumpy and cynical enough to ask where to send my paychecks to cover these government expenditures.

Edit: Homeownership is something to work towards. If one can't accumulate the cash to buy a house then they work hard to help their kids accomplish it. The American dream of homeownership is something to work for, not an entitlement.

[Anime Daisuki]

Sept 30, 2008 10:06:50 GMT -5 Mukeli said:

Edit: Homeownership is something to work towards. If one can't accumulate the cash to buy a house then they work hard to help their kids accomplish it. The American dream of homeownership is something to work for, not an entitlement.

Unfortunately MANY people think it is, and presidential candidates like Obama and McCain keep trotting the populist path and reminding them, as if homeownership is a right.

In the early 19 to 20th century, immigrants who come to the US. lived in cities under crowded conditions. But today immigrants --some of them illegal, live in suburban homes, have super big families, and get bank loans even though they have no credit (that's how the subprime crisis come about). The fault is not all theirs, greedy banks share the blame. But socialist policies like "affordable" housing quotas we described above made the situation worse.

[Fleeb]

Excellent, fascinating discussion--we ought to publish it more widely: it's far superior to 85% of the stuff on TV.

I only have a question about the question originally posed:

What is the reason to suppose that a depression in the United States would be confined to that nation alone? Is there real evidence to believe it would not trigger genuinely world-wide systemic consequences?

[TheSensitiveNewAge]

To Fleeb:
I thought the US Depression of the 1920s was also part of a global economic depression? Heck, most of Europe was still rebuilding to some degree after the first world war, colonialism was still strong, I can only think of Argentina ("rich as an Argentine" was an expression used in England like we might say as "Rich as a Saudi") and maybe Japan were doing at all decently.

If anything, I think the problem will be larger in scope and hit people harder than before. More nations and people depend far more than ever on international trade. Also, there are fewer people who do subsistence or close to subsistence living than before (my great grandparents lived on farms, they could provide most of their own food and barter for most supplies, such as sugar for canning fruit, the problem was dollars for taxes). This was going to happen from better communication and transportation anyway and more people moving to cities.

The other part are the neoliberal (read liberal as rights, few restrictions, not in the common way as leftist politics, which were originally one and same) economic policies which do away with trade protections, such as food production, or regulations regarding the environment or safety. NAFTA started by Bill Clinton is a good example of neoliberalism, which really begins with Reagan and Thatcher. I understand protections can be a problem, even for the country that's trying defend its factories or whatever. However, it seems the free trade has gotten out of hand between a lot of third world farmers struggling to compete with Conagra or Monsanto corporations or the problems China has with toxic foodstuffs. Compare this back to level of trade in the 1920s and the amount of specifically free trade and the problem can be much worse.

As to the discussion before Fleeb's comment:
I'm intrigued by the discussion of housing acts that were put into place to combat racism. At a guess, they were in all likelihood needed for a while to at least boot people into doing the right thing. If more information could be posted regarding the matter I would appreciate it. (As to the trouble guaranteeing affordable housing, I do sympathize to some degree, honest.) However, I think there are other issues that have been overlooked. Corporate culture I think is probably the biggest culprit.

For example, credit card companies refer to people who quickly pay off their debts as deadbeats, not the pay that drag their heels. Credit card companies need people who don't pay things off right away to make money through interest. So the credit card companies start lending to people with higher risks of not paying back and has grown enormously. As to banks, a lot of them are linked with credit cards and it also seems that mortgages were given to higher risk people because housing was booming, and looking at most economic booms, only a few actually make a lot of money, most just suffer. To be fair, many people feel entitled to living beyond their means and that is part of the problem. Most people seem to have forgot that thriftiness is a virtue.

Also, let's not forget Enron or just the system of lavish CEO salaries while middle and lower-class workers are laid off. Companies are being looted by their own officers. All this combined with government corruption (both parties) has screwed any chance of regulation.

Lastly, I feel the issues regarding oil have worsened the problem. Oil is just involved in too many thing not to influence the dilemma.

[Estayland]

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&partner=permalink&exprod=permalink

[Mukeli]

Oct 1, 2008 14:57:35 GMT -5 Estayland said:

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&partner=permalink&exprod=permalink

Just goes to show that the government shouldn't have gotten involved in the mortgage industry. I guess we can expect another dip in the economy ten years from now.

[Estayland]

Oct 1, 2008 15:02:59 GMT -5 Mukeli said:

Just goes to show that the government shouldn't have gotten involved in the mortgage industry. I guess we can expect another dip in the economy ten years from now.

EXACTLY!

Oh, and another tidbit I found: clearinghouse.wustl.edu/detail.php?id=10112&search=source%257

Citibank was sued in 1994 for not giving blacks mortgages because they wouldn't be profitable. Look to see who was one of the plantiff's lawyers...

[10KI Investment Corporation]

Just a note to some...

Although we can certainly have a recession and maybe a serious one... to say this will be as bad as the great depression when 20% of americans were un-employed and production sank by 1/3rd is a little far...

Although there are many more serious factors to this problem that problems we've had in the past life will not always be like the 90s!

Short term economic problems are common throughout our history. This one may be more serious but we don't need to go too far on this one.

Interesting stuff and a lot of "firsts" are happening though... good times

[Boolari]

One facet of this that I find interesting is if you asked almost any American a few years ago, they would have said a depression in the US would be impossible. Now it's a given.

I think one problem is that we tend to use a system that worked at the time of its creation and do not modify it to encompass changes over time. I forget who wrote the article but a fellow spoke of how we live with a faith based economy, too much nonexistent money floating around, etc. The system is broken and people are beginning to realize it although it's a bit late. Interesting article on that: business.timesonline.co.uk/tol/business/columnists/article4856620.ece

As for Fleeb's question, our situation is impacting a lot of other countries since we're all tied into a global market now. For example, many Asian stocks took a hit when the House of Representatives rejected the bailout package. There was a rumor circulating around that Chinese regulators had told the domestic banks to stop lending to US institutions (before it was denied).

Finally, about that comment that AD made that spoke of housing and minorities, I think that was a gross generalization because there are a lot of minorities that are much better off than American born citizens and there are many American born citizens who are worse off than other minorities.

And what does everyone think about the bailout package?

[Anime Daisuki]

There is no denying that a portion of minorities are doing better than American born citizens. Hell, I'm a "minority" myself and I hold 2 Master degrees. Many asiantic immigrants (Chinese, Japanese, Korean, Indian, Pakistani) and other legal immigrants are similarly highly educated and earn as much as, if not more than, the average White American. But their numbers are few next to Blacks and Hispanics. On the whole, minorities are hardest hit by the current economic crisis.

According to MarketWatch's article:

"More than a quarter million black and Hispanic families are expected to lose their homes in the next few years due to foreclosure. For many, the financial trouble will be traceable to a mortgage they should never have been given.

The heads of these households signed up for mortgages that appeared affordable, some with enticingly low starter rates. But what they were really agreeing to were loans with ultimately onerous terms, high costs and prepayment penalties that make refinancing the loan difficult."

New York Times:

"The housing boom of the last decade helped push minority home ownership rates above 50 percent for the first time in 2004 and the overall foreclosure rate below 1 percent."

About 30 percent of home purchase loans made to blacks from 1999 to 2004 and 20 percent of home loans made to Hispanics were subprime, compared with 10.4 percent of loans to Asian-Americans, only slightly higher than for white borrowers.”"

I look at a lot of statistics when doing Housing Elements. And the trend shows the problem clearly. From the late 90s, California's average income levels basically stayed the same after adjusting for CPI (aka inflation), but the price of housing increased by an average of 40 percent. YET against this increase, ownership increased. And what do you know, the amount of borrowing also increased (stats available from FIEC). In many cities esp in the central valley, population --mainly hispanic, mushroomed, which in turn fed a construction boom. Tenure (owner/renter) difference stayed the same, meaning among the new population we have alot of new owners. What about affordability? Take the city I'm doing right now- in 1990 the percentage of owners spending a third or more of their monthly income on housing was 29 percent. In 2006 it was 47 percent.

Keeping in mind, the official definition of affordability according to HCD (California Dept of Housing and Community Development) is - If you're paying more than 30 percent of your income on housing, you can't afford it.

What led us to this? Its a combination of factors
- People taking out loans they can't afford
- Predatory lending that took advantage of ignorant borrowers
- Government policies from Bill Clinton era, carried to the extreme by George Bush that encouraged "home ownership"

I'll touch a little bit more on the last point. A recent article I read recently put it very well. It is a conservative opinion piece, but the points made are rational: (link)

---

"And the primary political goal of President George W. Bush's political strategist: to bring Hispanics into the Republican Party."

As part of this plan, George W. Bush made several speeches rallying enthusiasm for his October 15, 2002 White House Conference on Increasing Minority Homeownership. For instance, there was his classic Bushian effort on June 18, 2002:

"The goal is, everybody who wants to own a home has got a shot at doing so. The problem is we have what we call a homeownership gap in America. Three-quarters of Anglos own their homes, and yet less than 50 percent of African Americans and Hispanics own homes. … So I've set this goal for the country. We want 5.5 million more homeowners by 2010—million more minority homeowners by 2010. (Applause.) … "

The five and a half million marginal minority homeowners that Bush bunglingly called for is a big number. At a mortgage of, say, $127,000 each, that would add up to, let me check my calculator, oh…

$700 billion—the size of the current bailout. Well, whaddaya know …

Bush rattled on:

"I'm going to do my part by setting the goal, by reminding people of the goal, by heralding the goal, and by calling people into action, both the federal level, state level, local level, and in the private sector. (Applause.) …

And so what are the barriers that we can deal with here in Washington?

Well, there’s one obvious barrier to minority homeownership: many American minorities don't earn enough money to be able to afford their own home.

Bush and Rove didn't have a plan for helping minorities earn more. Instead, they had a plan for helping minorities borrow more.

Bush went on in his June 18th speech:

"Well, probably the single barrier to first-time homeownership is high down payments. "

Uh-oh.

Traditional standards requiring "high down payments" existed for, as we see now, very good reasons. Being able to pony up 20 percent, or even just 10 percent, was cold, hard evidence of borrowers' credit-worthiness. It showed you hadn't spent every penny you ever earned. And a big down payment meant you instantly had substantial skin in the game. That you had paid out tens of thousands of dollars meant you were likely to do whatever it took to avoid losing your house by failing to pay off the loan.

To Bush and Rove, however, old-fashioned down payments were just keeping minorities from their fair share of the American Dream. Bush burbled on:

"People take a look at the down payment, they say that's too high, I'm not buying. They may have the desire to buy, but they don't have the wherewithal to handle the down payment. We can deal with that. And so I've asked Congress to fully fund an American Dream down payment fund which will help a low-income family to qualify to buy, to buy. (Applause.)

We believe when this fund is fully funded and properly administered, which it will be under the Bush administration, that over 40,000 families a year—40,000 families a year—will be able to realize the dream we want them to be able to realize, and that's owning their own home. (Applause.)"

[Mukeli]

For a large part of my life my father was a landlord but decided to sell the properties he bought after the S&L crash in 2001 and 2002. I recall the real estate agent, a long-time family friend, expressing concern that first-time home buyers were getting away with 10%, 5%, and even 0% down payments. It was explained to me then the importance of down payments and why it should be at least 15%, if not 20% (with the latter one avoids paying PMI).

Between my junior and senior year in college (2005) I interned at the Massachusetts Division of Banks in their Consumer Assistance department. I received several phone calls a day from people who were having issues with their mortgage lender and wanting the Division to forestall foreclosure. In most cases we couldn't do a thing because they signed the agreement without reading or understanding exactly what they were committing to. It became apparent to me during that internship it was only a matter of time until the market crashed. Oddly enough we received A LOT of complaints against Countrywide and WaMu who I believe were both later accused of predatory lending.

If you ever want to forecast a recession in the housing market I suggest calling your state banking agency and asking about any increases in complaints against mortgage lenders. Even if the agency doesn't take action they record the complaint.

Edit: www.nytimes.com/2008/10/05/business/05fannie.html?pagewanted=1&_r=1&adxnnlx=1223147106-aAe0Q%20vUtH2dQvzvLlj5rw

[Mukeli]

Forgive the double post but I just saw this article. I think we've all seen this coming and I don't believe the US will have the money for a bailout even if there was political support for it.

www.businessweek.com/magazine/content/08_42/b4104024799703.htm

[New Dracora]

Australia's response to the latest in the global economic screw up:

money.ninemsn.com.au/article.aspx?id=645738

UPDATE 2-Australia guarantees bank deposits to combat crisis
12/10/2008 7:54:29 PM
(Repeats to additional subscribers with no changes in text)

By James Grubel and Adrian Bathgate

CANBERRA/WELLINGTON, Oct 12 (Reuters) - Australia and New Zealand gave a blanket guarantee to all bank deposits on Sunday in a move likely to raise pressure on other economies to do the same, amid a crisis of confidence in the global financial system.

The two neighbours, both dominated by Australia's four major lenders, had portrayed themselves as having strong bank systems, especially Australia whose government and regulators gave repeated assurances it was well placed to weather the storm.

But Australian Prime Minister Kevin Rudd called a snap news conference on Sunday to say his government would guarantee Australia's entire deposit base of A$600-A$700 billion ($386-$450 billion) for three years and guarantee wholesale bank funding.

"We are in the economic equivalent of a national security crisis, and the challenges are great," Rudd said.

He referred to recent moves by other economies, such as Britain, Germany and Ireland, to extend guarantees or state aid to their banking systems and said Australian banks could be disadvantaged if his government failed to act.

"I don't want a first-class Australian bank discriminated against because some other foreign bank, which has a bad balance sheet, is being propped up by a guarantee by a foreign government," Rudd told reporters.

The country's top four lenders are: National Australia Bank (NAB.AX


NATL AUST BANK12 October,200812/10/2008 20:25 Sydney, Australia.
Price Change % Change
20.800 -2.930 -12.350%

Company overview
Real-time quote
NAB.AX , 20.800, -2.930, -12.350%), Australia and New Zealand Banking Group (ANZ.AX
ANZ BANKING GRP12 October,200812/10/2008 20:25 Sydney, Australia.
Price Change % Change
15.300 -1.350 -8.110%

Company overview
Real-time quote
ANZ.AX , 15.300, -1.350, -8.110%), Commonwealth Bank (CBA.AX
COMMONWEALTH BK12 October,200812/10/2008 20:25 Sydney, Australia.
Price Change % Change
39.550 -2.850 -6.720%

Company overview
Real-time quote
CBA.AX , 39.550, -2.850, -6.720%) and Westpac Banking Corp (WBC.AX
WESTPAC BANKING12 October,200812/10/2008 20:25 Sydney, Australia.
Price Change % Change
20.190 -1.310 -6.090%

Company overview
Real-time quote
WBC.AX , 20.190, -1.310, -6.090%).

New Zealand Prime Minister Helen Clark announced her deposit guarantee scheme moments later, though she gave no time frame.

"Our government has agreed to implement a deposit guarantee scheme which will provide New Zealand depositors with additional confidence," Clark told broadcaster TVNZ at the launch of her ruling Labour Party's campaign for the Nov. 8 election.

The New Zealand scheme charges a guarantee fee of 10 basis points a year for institutions with deposits exceeding NZ$5 billion ($2.97 billion).

PRESSURE FOR OTHERS TO FOLLOW

Both countries said their guarantees should not be taken as a sign of weakness in their banking systems.

Rudd quoted local regulators as saying bank finances remained in good order. "Right now, the balance sheets look great," he told reporters. "Our banks and our financial institutions are in first-class financial order.

"This measure puts our banks on a similar footing to other banking systems around the world."

Australia would also make an extra A$4 billion available for mortgage-backed securities market to help maintain liquidity for non-bank lenders, Rudd said, adding that the measures were part of an international response to the crisis.

Paul Xiradis, managing director of fund manager Ausbil Dexia, said the moves by Australia and New Zealand just made it more likely that other economies would have to do the same, or risk being overlooked by investors shopping around for security.

"The government is not reacting because it needs to, it's being proactive to make sure it takes a positive step," he said.

"It is likely that all government's will do so and this step by the Australian government is simply aimed at ensuring that everyone is on an even keel."

There was no threat to Australian deposits before Sunday's announcements, according to Australian Bankers' Association Chief Executive David Bell.

"But if it does give people extra confidence then this must be viewed as a good thing," Bell said.

Rudd said his government was in close contact with other nations, including the G-20, and coordinated action was crucial. (Additional reporting by James Regan; Writing by Mark Bendeich; Editing by Anshuman Daga)

[Chronopolice]

So they started using the "R" word eh? About damned time they saw that!!!

Oh about the bailouts? Total rubbish. It won't work in the long term because they forgot that in order to have wealth flowing again, you'll have to generate it.

They might have fixed the pipes but they forgot to fix the pumps!

[Chronopolice]

Oh, I was basing my replies on how systems generally behave. Push a few variables too far, the system goes 'Tilt!' and tries to reestablish a new equilibrium.

This crisis is the system trying to seek a new equilibrium.

[New Dracora]

So... anyone else think the bailout is a waste of money?