Who benefits from this financial carnage ? | Forex Factory

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Who benefits from this financial carnage ?

  • #1
  • First Post: Sep 20, 2008 6:59pm Sep 20, 2008 6:59pm
As the title suggest, since the beginning of the subprime crisis till now along with the collapse of some of the biggest names in the market, amid all these turmoil, somebody got to be benefiting right ? Where has all the money gone ?
  • #2
  • Sep 20, 2008 9:44pm Sep 20, 2008 9:44pm
good question and one I've wondered about myself, I will venture a guess that since all of this started with mortgage backed securites, and initially with subprime mortgages, so if the banks were using money from investors to write mortgages, and the banks then loaning the money to house buyers who gave the money to the seller of the house. I would think though, that the seller most likely had to pay off the their mortgage on the house, which would send the money back to the bank and/or investor, along with the seller probably trading up and getting a mortgage with little or nothing down, something like this maybe?

1. wall street investor/bank to buyer of house
2. buyer of house to seller of house
3. seller of house pays off existing mortgage
4. maybe seller of house buys bigger house (now they are a buyer and process repeats?)
5. seller using alt a or no downpayment loans pockets difference

next through in some good old fashioned leveraging, a peak in housing prices, along with a glut of houses on the market and sky high energy prices. remember that this housing bust started when the low adjustable interest rates started resetting to a much higher interest rate and the buyer couldn't afford the payment anymore. it's estimated that 20% of mortgages were subprime, along with another 20% that were alt-a (no documents needed or liar loans), and then it snowballed.
  • #3
  • Sep 21, 2008 12:13pm Sep 21, 2008 12:13pm
Quoting aiyahmarklah
As the title suggest, since the beginning of the subprime crisis till now along with the collapse of some of the biggest names in the market, amid all these turmoil, somebody got to be benefiting right ?
http://www.dbr-bargteheide.de/Bildch...Fingerzeig.jpg


Quoting aiyahmarklah
Where has all the money gone ?
The Money Didn´t Get Lost In The Financial Markets - Only The Owners Are Changing The Money For An Another Price ...


Best regards & much better trades :

KEYSER SÖZE
  • #4
  • Sep 21, 2008 4:12pm Sep 21, 2008 4:12pm
The face of investment banking has indeed changed. Besides funds from cash rich countries "investing" in US assets, it is interesting to see how the US in general is going to navigate their way out of this mess.

This may sound odd, but it takes creativity to create a subprime bubble like this one. Using the loopholes in the system and redefining risk on hindsight. Leveraging on America's buy first pay later culture to create an asset class.

As this saga continues to unfold, it will be interesting to see if anybody within this great nation can capitalize on this situation and confront the problem with the same amount of creativity.

Right now what we are seeing is just a consolidation within the financial system. Who then after the dust settle, will come in and pick up the pieces and push the industry into a new frontier ? In particular - investment banking.

Oh dear, the scope is so large that I really don't know where to start. There will be new regulations, new people, new names introduced. This is going to be exciting.
  • #5
  • Sep 21, 2008 4:37pm Sep 21, 2008 4:37pm
I'm sure there's been some golden handshakes along the way {conspiracy theorem}, but essentially the money has disappeared into thin air.

Here's why:

1) Person obtains $500,000 loan for a house worth $550,000
2) Value of house drops 30%
3) Person defaults on loan
4) Bank repossesses house
5) Bank sells house for $385,000

Bank is down $125,000. If the person who obtained the loan goes bankrupt, $125,000 is down the gurgler.

Multiply this a few million times and viola, you have a bank that eventually goes belly up
  • #6
  • Sep 21, 2008 4:53pm Sep 21, 2008 4:53pm
Quoting NuckingFuts
I'm sure there's been some golden handshakes along the way {conspiracy theorem}, but essentially the money has disappeared into thin air.

Here's why:

1) Person obtains $500,000 loan for a house worth $550,000
2) Value of house drops 30%
3) Person defaults on loan
4) Bank repossesses house
5) Bank sells house for $385,000

Bank is down $125,000. If the person who obtained the loan goes bankrupt, $125,000 is down the gurgler.

Multiply this a few million times and viola, you have a bank that eventually goes belly up
I agree, and I always enjoyed the conspiracy part, better than watching reality TV.
  • #7
  • Sep 21, 2008 5:26pm Sep 21, 2008 5:26pm
IMHO, The same people who print the money and loan it out to our government at interest. The same people who have control over interest rates. The same people who have benefited since they opened their doors to the public.

THE CENTRAL BANKS.


Quoting aiyahmarklah
Who benefits from this financial carnage ? ?
It's me...
  • #8
  • Sep 21, 2008 5:53pm Sep 21, 2008 5:53pm
Who benefits?

The democrats.

They are getting with with blaming Gramm-Leach-Bliley Act because it deregulates part of the financial industry, but not the part that does loans and no one has challenged them on it.
  • #9
  • Sep 21, 2008 6:00pm Sep 21, 2008 6:00pm
Quoting AgentFx
IMHO, The same people who print the money and loan it out to our government at interest. The same people who have control over interest rates. The same people who have benefited since they opened their doors to the public.

THE CENTRAL BANKS.
This is banking and finance 101. Hmm kinda reminds me of how the Bank of England was formed in the first place and who really benefited.
  • #10
  • Sep 21, 2008 6:04pm Sep 21, 2008 6:04pm
Quoting Code4Capital
Who benefits?

The democrats.

They are getting with with blaming Gramm-Leach-Bliley Act because it deregulates part of the financial industry, but not the part that does loans and no one has challenged them on it.
Who then is going to protect the taxpayers ? Certainly things ain't moving in that direction.
  • #11
  • Sep 21, 2008 6:07pm Sep 21, 2008 6:07pm
Quoting AgentFx
IMHO, The same people who print the money and loan it out to our government at interest.
In turn, the tax-payers will foot the bill.
  • #12
  • Sep 21, 2008 6:09pm Sep 21, 2008 6:09pm
Don't take my word for it though LOL. Research it, google it, go to the library, talk to people, find out why the central banks were born, who staring them, what they do? You will be surprised to see much of the world economic downfall staring you back in the face.

Quoting aiyahmarklah
This is banking and finance 101. Hmm kinda reminds me of how the Bank of England was formed in the first place and who really benefited.
It's me...
  • #13
  • Sep 21, 2008 6:10pm Sep 21, 2008 6:10pm
Quoting NuckingFuts
In turn, the tax-payers will foot the bill.

OUCH
  • #14
  • Sep 21, 2008 6:11pm Sep 21, 2008 6:11pm
The money has disappeared into thin air because that's where it came from.

An overpriced housing market is suddenly consolidating and so you get negative equity. People try to re-mortgage (if they are credit worthy) but can't get the house valued at enough to cover the principal amount.

The end result is that what started out as a $200k house is now empty and only worth $140K

The upside (if there is one) is that anyone with cash on the hip can pick-up these houses for a steal, sit on them for a few years and make a killing when things pick up.

Then you get money out of thin air! Bit of a vicious circle really and I expect in 10-15 years we will see the same crisis all over again.
  • #15
  • Sep 21, 2008 6:12pm Sep 21, 2008 6:12pm
Quoting willf
The money has disappeared into thin air because that's where it came from.
Yep, created out of thin air, disappeared into thin air.
  • #16
  • Sep 21, 2008 6:14pm Sep 21, 2008 6:14pm
Quoting AgentFx
Don't take my work for it though LOL. Research it, google it, go to the library, talk to people, find out why the central banks were born, who staring them, what they do? You will be surprised to see much of the world economic downfall staring you back in the face.
Well I just finished watching a documentary about central banks on youtube. LOL it seems like an old video and its damm long almost 2 hrs in length. But its informative. A good crash course as well
  • #17
  • Last Post: Sep 21, 2008 6:17pm Sep 21, 2008 6:17pm
Quoting willf
The money has disappeared into thin air because that's where it came from.

An overpriced housing market is suddenly consolidating and so you get negative equity. People try to re-mortgage (if they are credit worthy) but can't get the house valued at enough to cover the principal amount.

The end result is that what started out as a $200k house is now empty and only worth $140K

The upside (if there is one) is that anyone with cash on the hip can pick-up these houses for a steal, sit on them for a few years and make a killing when things pick up.

Then you get money out of thin air! Bit of a vicious circle really and I expect in 10-15 years we will see the same crisis all over again.
Ah ha, who dares wins !!
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