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Obama: European financial crisis scaring world

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Mr Obama the problem with the banks in Europe, is it possible that you have financial amnesia? Do you remember subprime lending and the fall of one of your most prestgious banks just a little while ago? I think its a case of kettle calling frying pan black.

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Europeans don't like to be criticized by Americans. Drives 'em nuts.

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Why should Europe listen to a lame duck?

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Heh, the same could be said the other way 'round, Super.

Obama is right in singling our banking system out but I agree with Chrisitna that it's a bit hypocritical as many Euro-banks were caught up in the American problem having taken US risks.

The Greek problem isn't just going to go away, French and German banks have too much to lose after giving them ridiculous loans. Why we keep bailing them out I don't know, it's time to kick the Greeks out of the single currency. Beautiful place but as corrupt as your next third-world country.

I'd like to think the banks would be held accountable instead of passing on the cost of their mistakes tot he customer in the time-honoured tradition.

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No! Absolutely no need to scare about and feel sad about if the world without the European Union or the 'Euros', everyone should be 'overjoyed' to see her demise and 'gone'! The little loudsy show has finally came to an end!

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It would be better if some leaders would know when they would better keep silent and help, instead. Europe's financial troubles are in no small part thanks to you and the failure of your financial world order. Euro is within the dollar system, but we can not print obscene amounts of green paper (unlike some) to "save" our economy and further increase the internal debt. So, put your face down and look at your own plate, please.

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LOL, the U.S.'s financial problems have all been caused by Bush and Europe, it's going to take Obama and the Democrats at least another 4 years to fix things.

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Konsta:

" Euro is within the dollar system, but we can not print obscene amounts of green paper (unlike some) to "save" our economy and further increase the internal debt. "

If by "we" you mean Europeans, then sorry to say you are dead wrong. The ECB has been monetizing like crazy (and totally in violation of its statutes and the Maastricht treaty) by buying junk assets from PIIG lender banks. And if the Eurocrat politicians get away with installing the ESM next year, then the sky is the limit. Now they are talking about about a funding of 4 trillion, and even that won´t be the end, because the problem is of course structural.

By trying to "rescue" the unrescuable EURO currency against all sanity with ever more guarantees that they either take from German tax payers or simply print, the Euro politicians are going Obamanomics full bore.

So really have a party of the blind advising the blind on painting.... don´t try to say any side is better here.

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Step one: cut budgets to reduce deficit.

Step two: the economy contracts along with the drop in demand.

Step three: deflation and recession commence.

Step four: deflation causes the real value of debts to rise and recession causes revenues to fall.

Step five: note deficits rising.

Step six: cut budgets to reduce deficit.

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@Laguna:

You've captured the insanity of the situation very well. (big thumbs up)

We need real leadership. Anyone whose primary objective is budget cutting immediately disqualifies themselves.

I think of the flow of money through a financial system as something akin to a water system. There is a difference between a leak and irrigation. There's a big difference between wasting water and using it to prime a pump or to cool the engine that's pumping water.

Finally, water that is not in motion stagnates and soon becomes of little use for anything but a breeding ground for pestilence and disease.

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SerranoSep. 27, 2011 - 10:31PM JST LOL, the U.S.'s financial problems have all been caused by Bush and Europe, it's going to take Obama and the Democrats at least another 4 years to fix things.

That IS lol, Serrano. So, acoording to you, the first wave of the current crisis, which hit housing in the US, with Fannie things like Mae and Freddie Mac, was caused by Bush and Europeans? Great! Maybe also by communists and China? And not by Clinton, for example, who had relaxed banking system to their joy and profits (was it 35% artificial raise)? Or do you think that what we see right now is independent of that and Europe has a completely separate economy, and not integrated in the US economy?

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WilliBSep. 27, 2011 - 10:58PM JST If by "we" you mean Europeans, then sorry to say you are dead wrong.

I think it is pretty clear whom I call "we" in the context of current article, and as long as I am a European living in Europe, called "Western" by some and "Northern" by the other. Didn't like this kind of writing much.

By trying to "rescue" the unrescuable EURO currency against all sanity with ever more guarantees that they either take from German tax payers or simply print, the Euro politicians are going Obamanomics full bore.

You are right. I don't argue with that. I think that Germans with their obscessions are crazy. But I would not like to mix reasons and consequences either. Germans are the ones, who hold this Europe together, and probably the only ones, who are not doing like Greece. It is their toy.

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And not by Clinton, for example, who had relaxed banking system to their joy and profits

How did Clinton personally "relax" the banking system?

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@yabits

clinton himself has expressed regrets with respect to loosing the regulations on derivatives.

the point is that he was looking to make brownie points with the erudite american body politique in terms of "the economy, stupid", so he entrusted that to cretins like rubin and summers, who in turn did nothing but help their cronies on wall st.

bush was straightforward in simply cutting taxes for his constituents, and facilitating the Enron scandal and other types of malfeasance.

but that fact that politicians are all out for short terms boosts gained by presenting a false image of economic growth is the root of the problem here. and that, in turn, begs the question of how the population can be so easily swayed by the lowest common denominator.

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clinton himself has expressed regrets with respect to loosing the regulations on derivatives

I don't think he could have done that. Derivatives had always been unregulated. So he couldn't have very well "loosed" the regulations on them, could he now?

Perhaps he expressed regrets that he left them unregulated. (But he wasn't the one who set that system up.)

Also, the question was about the banking system, which derivatives are not part of. How did Clinton personally "relax" the banking system?

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yabits, we are actually speaking not about the banking system, but about collapse of the American and world economy. But you got me on terminology. Good!

As to the "The near collapse of both the American and world economy has more to do with the fraudulent trading of derivatives than mortgages.", it can be read elsewhere.

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ubikwitSep. 28, 2011 - 02:43AM JST. short terms boosts gained by presenting a false image of economic growth is the root of the problem here.

Countrywide was a successful subprime lender, the nation’s largest, and made a lot of money. The situation was similar to that of Bernie Madoff and his investment schemes. No one wanted to ask questions, with the profits rolling in.

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yabitsSep. 28, 2011 - 04:11AM JST. How did Clinton personally "relax" the banking system?

The repeal of Glass-Steagall and the sudden growth of the subprime mortgage market has been problem. If you think of graph in a level playing field, it was flat for many decades before Bill Clinton repealed Glass-Steagall, then notice how suddenly, almost double to triple growth had taken place. Those subprime loans amount to nothing more than an organized ripoff of millions of innocent Americans, with the steepness of the graph illustrating the how far the playing field has tilted. The result is that all of a sudden people are thinking Glass-Steagall wasn't such a bad idea after all.

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End the Keynesian craziness.

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The repeal of Glass-Steagall and the sudden growth of the subprime mortgage market has been problem.

Who authored the law that repealed Glass-Steagall? (Were they Democrats?)

Was there anyone who opposed the repeal of Glass-Steagall? If so, who?

Also, I'm not sure how the repeal of Glass-Steagall had anything to do with sub-prime mortgages since some of the biggest financial institutions selling those mortgages -- like Countrywide -- were not subject to Glass-Steagall.

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When President Obama comments on the US economy the stock market there drops.I would prefer he keeps any thoughts he might have about Europe's economy to himself.

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yabits:

" How did Clinton personally "relax" the banking system? "

The Glass-Steagal act, which allowed all the bank insanity, was signed by Clinton. Read up on it.

And while you are at it, check out the Community Reinvestment Act, which caused the Housing Bubble and the Fanny&Freddie disaster. It is a Democratic Party baby.

As foolish as GWB was, it is pretty absurd to blame him for all that.

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Sorry, should have been "the repeal of the Glass-Steagall act"

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And while you are at it, check out the Community Reinvestment Act, which caused the Housing Bubble and the Fanny&Freddie disaster

Oh, I've looked at it, and you are wrong. The subprime excesses came mainly from institutions that were not regulated by CRA.

Second, the CRA was passed in 1977, which gave plenty of time for a party which might have opposed it to repeal or modify it.

The [repeal of the] Glass-Steagal act, which allowed all the bank insanity, was signed by Clinton. Read up on it.

I know it was signed by Clinton, but who authored and sponsored it? Was there anyone opposed to the repeal? If so, who?

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@yabits

i stand corrected, indeed, he made the comment:

"I regret that I didn't regulate derivatives ... I should have taken advice"..

all you have to do is google "clinton regrets derivatives", and you get hits like this article from the UK paper The Telegraph:

http://www.telegraph.co.uk/finance/comment/liamhalligan/5373382/Clintons-belated-advice-should-be-heeded.html

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all you have to do is google "clinton regrets derivatives",

As your article mentions, the push to regulate derivatives was made by a Stanford-educated liberal: Brooksley Born.

Who among the conservative side pushed for the regulation of derivatives?

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yabits:

" Oh, I've looked at it, and you are wrong. The subprime excesses came mainly from institutions that were not regulated by CRA. "

The CRA applied to every bank, and the sub-prime deriverate debacle it created was a direct result of it. And the CRA was, unsurprisingly, a democratic pet project. Get over you tunnel vision.

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The CRA applied to every bank, and the sub-prime deriverate debacle it created was a direct result of it. And the CRA was, unsurprisingly, a democratic pet project. Get over you tunnel vision.

Are you sure you aren't the one with tunnel vision?

Why don't you then admit that it was the non-bank lending institutions that were not subject to CRA regulation who made between 2/3rds to 3/4ths of all subprime loans? By contrast, the vast majority of CRA-regulated loans were not of the sub-prime variety.

So I don't see how you or anyone can justify that the sub-prime derivative debacle was a direct result of it. How also can you overlook the fact that CRA was passed in 1977 -- and in the 25+ years since that time were plenty of Republican administrations and congresses that could have taken steps to change it. It's rather comical and damning to your own position to point out a smoking gun from 1977 that was left smoking for all those years.

Lastly, can you point to the specific provision within the CRA law that "forced" banks to make loans to unqualified borrowers?

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yabits

i don't understand the point of your question.

i exposed my naivete with regard to derivatives regulation as it now seems ludicrous to me that they weren't regulated to begin with.

it almost goes without saying that the drive for financial deregulation launched when reagan was the repubican front-man in the white house and thatcher his counterpart in the uk) has been successively pushed by "conservatives".

as i have said on this forum many times, one reputable republican from the past--Theodore Roosevelt, initiator of anti-trust regulator and essentially a social progressive, referred to these people as "the criminal wealthy class".

and though the excesses of the democratic administrations pales in the face of the outright criminality of the so-called republicans, that does not exempt the democrats from being taken to task for basically unleashing the US financial sector as a predatory tool of empire.

the long term implications of this crisis is just beginning to be fathomed.

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Europe just ignores Obama as far as I can tell.Let him bloviate.

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Lieberman2012Sep. 29, 2011 - 08:14AM JST Europe just ignores Obama as far as I can tell.Let him bloviate.

Not really. Polite people do usually reply: http://www.independent.ie/business/european/german-finance-minister-hits-out-at-obamarsquos-comments-on-europe-debt-crisis-2887973.html

Funny thing is that Schauble said very similar things to what I said here. In addition to the linked article, Schauble also said that he himself could give a lot of advices to Obama. His anger is only interesting in the context. And the context is that he was probably THE most pro-american German minister in Europe, always wanting to join European wisdom and American drive. He was very public about it. And here we go.

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The Britisher press, the Telegraph paper in particular I believe, runs headlines quoting European politicains who say Obama looks ridiculous weighing on these matters. I have to agree.

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