This just occured to me: The POLITICAL cost of the sub-prime meltdown

[Speck Tater]

So all these foreign investment funds have been suckered into buying Wall Street's worthless paper, and they are going to get stung really badly. The fall out could be that foreign investors will no longer trust Wall Street, which used to be seen as the safest place to invest funds. The whole US economy was seen as a good place to invest, hence the billion dollars a day that flows into our economy from over seas investors.

But the sub-prime crash is going to leave all those foreign investors once burned and twice shy. Who will EVER want to invest their hard-earned money in the American economy again? The US economy will, overnight, go from being trusted to being shunned, perhaps for many years to come, by investors all over the world. The net result: No capital flowing into the US economy. Since the US economy lives on borrowed money, the US economy will not just tank, it will DIE. As in the US becoming a third-world nation. The only thing we contribute to the world economy right now is consumers, and those consumers consume with borrowed money. Money borrowed from foreign investors. And if the foreign investor shy away from investing the US economy, we consumers will have no money with which to consume. Can you say crash and burn?

It's hard to even imagine how disastrous this could be. The rest of the world's economies will recover, but the US economy will be fatally wounded. The trust will be gone. It might NEVER recover.

On a brighter note, We'll always have Paris Hilton and Brittany Spears.

[Pale Blue Dot]

1. I'm beginning to think that THIS is the reason for the timing of Rove's departure.

The shit is hitting the fan, and he's smart enough to know that there is no political recovery from this.

[nadinbrzezinski]

2. Idol YOU FORGOT IDOL

Shame on you!

[juajen]

13. And, football, basketball, hockey, ad naseum

N/T

[Amonester]

17. AND nascar! You forgot NASCAR!! ;--------)

how could u forget =========> NASCAR?!?
:hangover:

[Robbien]

3. Not just foreign investors

CNBC has been advising wealthy US investors to put their money in international investments during these uncertain times.

The dollar is worth only as much as people believe in it. I fear you are right, faith in the currency has been badly damaged.

[nadinbrzezinski]

4. Hell I've been telling my parents

who fall in the foreign investor category, to switch to foreign investment for a year or so

What would I know?

:-)

[enid602]

5. trust

It's also a question of trust; trust in the US Government's honesty in reporting GDP and employment statistics, the perceived transparency of US corporations' accounting, US rating agencies' (Moody's, S&P) honesty in rating debt instruments, etc. Our institutions are now operating like those in Third World Countries. It only makes sense that our standard of living follows.

[Speck Tater]

6. Exactly! Foreigner investors will see Wall Street = Nigerian Scam Artists. nt

[hang a left]

7. I am just recalling back in '91-'92 when all the Japanese

were buying up hotels and real estate in California, Hawaii, and other resort areas at top dollar prices only to lose their shirts in the last real estate downturn.

It is not the first time we have burned foreign investors.

[Alcibiades]

8. International investments are down as well

I think the Nikkei went down 2% yesterday, Hong Kong as well. This current crisis will not be good for either us or those nations holding these debts. Invest in something other than equities right now--we got our retirement money out on friday at 9:00. We've saved a bundle already.

There will be a credit collapse in this country. It's not a question of if, but when. Maybe the banks and the fed will stave off this one, but something will give eventually. Personally, I think it will be the value of the dollar, as devaluation may be the most politically expedient way of dealing with the problem (while creating an entirely new rash of problems, of course!).

[Tesha]

22. Some of that is washed out (or better) by shifts in the value of the Dollar.

> International investments are down as well
>
> I think the Nikkei went down 2% yesterday, Hong Kong as well.

Some of that is washed out (or better) by shifts in the value
of the Dollar. It doesn't matter if the stocks fall, say, 5%
in their value if the currency that the stocks are denominated
in rises by 50%.

One of the best investments we've made in the last few years
were some Euros that we didn't convert back to Greenbacks;
wish we'd bought thousands instead of merely hundreds.

Tesha

[aquart]

9. We're pretty much a third world nation NOW.

But money is more fluid than you think. Flight capital runs from unstable areas to stable ones, and we are, in the sense of no recent armed insurrections, still stable.

BUT nothing will happen as long as little Caligula is in charge because nobody trusts him. Frankly, you want foreign investments, then you probably need to vote for Hillary. I'm voting Edwards in the primary because of his labor background, but that wouldn't interest a foreign investor. Bill Clinton, however, is an international figure still held in high esteem.

My personal economic position is that we have to get back to sponsoring AMERICAN innovation instead of stifling it. We MUST nationalize healthcare so that our larger and smaller corporations can become competitive. It will also remove the greatest stress that Americans carry which citizens of other western nations don't. Privatization failed. Government needs to get back in the business of governing. And sponsoring innovation and creativity: grants for research into energy and green industry. Sponsor a grant competition to replace plastic bags. The world used to depend on our inventions and ingenuity. Do we still have any of that ability? We need to find out. Innovation attracts investment like flies to honey. Remember the computer bubble? What was that? It was investors throwing money at innovation.

Oh, and we might want to think about doing things that create jobs HERE. Right now, the jobs are in India and China...and so is the money. Funny how that works.

[ruiner4u]

16. Finally a post I agree with...

I would like to add that yes things might appear scary right now in the financial market, but thats part of the risk when you invest. It ebbs and flows. In a few years things will be a lot more stable. And im sure once again before we will die there will be another crisis moment. and so on and so forth.

[aquart]

20. I'm not prepared to say it will be a "lot more stable."

The destabilization factor of global warming isn't really being taken into account. And it's going to be huge.

[EST]

10. Ah-it gets worse.

Because US credit is taking a beating, instruments of credit are worth less and less,

What it really means is that, after a couple of cycles, the actual value of the credit is so bad that, if there is any collateral backing an instrument, the creditor or investor would be money ahead to attach the collateral--theoretically buying up million dollar homes and billion dollar shopping malls for a song.

The next big thing is going to have to be finding a way to get out of the downward spiral we are already in.

[defendandprotect]

14. China and Mexico are financing our DEBTS -- !!! Stores filled with goods from China -- !!!!

Check what you're buying -- PLEASE --

[EST]

23. Yeah, so I've heard.

Other than food and medicines, I buy almost nothing. My wife works, still, but she's also very wal-mart averse. We live very frugally and try to recycle all we can. A garden helps a little and we try to get as much locally grown produce as possible.

[defendandprotect]

11. Wall Street hasn't been about "investment" since the coup on JFK -- it's speculation only -- !!!!

Most of the regulations which controlled Wall Street up to that time have been overturned --

[nadinbrzezinski]

12. That started in the 80s, for historical accuracy

but you are correct, it is one reason for this mess

[defendandprotect]

15. Wall Street immediately began to change after JFK coup . . .

it was slow at first -- but noticeable.*

Deregulation -- buy out's -- began happening.

Granted, Reagan accelerted -- propagandized capitalism's regulation --

From the moment of the New Deal regulations, the right-wing was at war with them.

* It wasn't very long, thereafter, either, that we began to hear about banks being made offers "they couldn't refuse."

[Manifestor_of_Light]

18. Euros and Pounds and such, oh my!!

[Greyhound]

19. Have you forgotten what backed those "sub-prime" loans?

Real estate, thousands and thousands of homes, most of them in prime, newer upper-class developments or newly "gentrified' neighborhoods. The lenders now own those properties and while the company may fold the real assets are now the property of the money behind the companies that took them back for a fraction of their value.

Big money is going to make out very well, emerging from the economic destruction holding trillions in property bought with billions of devalued dollars.

[SoCalDem]

21. People with CASH, will snap these houses up cheaply

like they do in any real estate downturn..

People with debt are poorly positioned to take advantage of this market.. ..as they are for any opportunity.

You are never ready for an opportunity, if you are hopelessly in debt.

That's how rich people get richer..they spend less than they make.. Of course they also see to it that the make A LOT of money so it's easier to do..
Our government helps them stay rich and get richer..:(

[Javaman]

24. I'm beginning to think that a depression would be our only way out

of this mess and to effectively clean house.