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Did Foreigners Cause America's Financial Crisis?

Discussion in 'BBS Hangout: Debate & Discussion' started by Ubiquitin, Jan 16, 2010.

  1. Ubiquitin

    Ubiquitin Contributing Member
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    http://www.time.com/time/business/article/0,8599,1954240,00.html

     
  2. Invisible Fan

    Invisible Fan Contributing Member

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    The dollar had been set up since post WW2 to be the world's currency reserve. In order to sustain that status, the American consumer became the world's consumer. Export nations could overproduce and their banks could assume our debt in order to fuel our purchases. Their industry grows and sustains their middle clase. Everyone wins. There's an argument that the current crisis and our past bubbles occured because of excess liquidity worldwide, and that future crises/bubbles will happen because the US has been on an unnatural course of profligate spending without a real penalty in borrowing (for as long as it lasts).

    European banks did want "safe assets" but the way both parties used AIG as a loophole to get around capital reserve requirements is the result of pure greed with the intent to fleece everyone. It didn't matter if it were safe or unsafe as long as it had a AAA rating. No one forced a gun to their heads to innovate by defrauding. Liquidity of sovereign banks opened opportunities. Fraud took advantage of it. And by fraud, I mean on the basis of banks overleveraging on 30:1 ratios or 50:1 for some European banks.

    I guess it's good to pay attention to this aspect as our economy is fundamentally attached to it, and the fact that it's unsustainable. But the headline is misleading if it's used to convince people that it's the only reason ...Like blaming the entire crisis on Fanny and Freddie misleading. Of yeah, foreigners forced the poor banks (who were making a pittance 10% profits before) into this situation as those poor banks were the sole reason for watered down regulation and resistance growing and enforcing our government's watchdog groups.

    Those damn foreigners.
     
  3. Mathloom

    Mathloom Shameless Optimist
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    That's odd, especially considering that Saudi Arabia, not unlike its neighbouring countries, has been America's hoe forever.

    The relationship is so close, Saudi started selling guns to its citizens recently! lol

    It's like big brother.

    China on the other hand... well, duh. They are direct competitors and will understandably try to bring down the US economy if it's in their favor.
     

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