If you didn’t think there was a wink and a nod relationship between large banks and the feds, the “Volcker Rule” should serve as an acknowledgment. Because lending and credit is so crucial to the economy, financial institutions know the government will backstop them during crisis mode in the industry.
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“Volcker Rule” Both Practical, and Admission
under: Deficits, Dollar, Federal Reserve, Game Theory, Individual v. Collective, Live and Learn, Obama Says, Taxes, Treasury, Trust
Tags: bailout, Barack Obama, financial crisis, financial sector, government safety net, Great Depression, moral hazard, Paul Volcker, Savings and Loan Crisis, Senate Finance Committee, Volcker Rule
Bubblicious
But where does a real estate bubble really begin? With low interest rates and additional cash to lend. Now, remind me again: who provides additional money and artificially low interest rates to “stimulate” the economy? That’s right, the Federal Reserve. If the financial crisis, caused by toxic mortgages, derivatives, and credit default swaps, was a giant game, the first play was made by the Federal Reserve. Simply put, if there’s no additional money to be loaned, and no artificially low interest rates to loan at, a real estate bubble doesn’t occur. Speculative manias have to start somewhere. Without a steroid shot of demand, it’s tough for too much mania to ensue.
under: Deficits, Dollar, Energy, Federal Reserve, Game Theory, Individual v. Collective, Live and Learn, Obama Says, Taxes, Treasury, Trust
Tags: Alan Greenspan, Anderson Cooper, bank panic, Bank Runs, Ben Bernanke, bubble, credit default swaps, derivatives, devaluation, easy money, FDIC, federal funds rate, Federal Reserve, financial crisis, financial sector, gasoline, George Bush, housing bubble, hyperinflation, inflation, monetary, monetary policy, money supply, mortgage rates, oil, quantitative easing, real estate, speculators, sub-prime mortgages, Treasury debt, Wall Street
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