What is exactly causing the current worldwide depression?

[Kagemusha]

I would like to hear opinions of the esteemed Orgahs, about the reasons behind the current depression, which is threatening the global economy? Is it caused by sloppy credit giving by banks and investment banks? Or is it just a normal phenomenom of hitting a economical low point, which is followed by high tide? Or maybe something else? For example all the economy papers were hinting for many months before the credit crisis that investors should move their funds from stocks, into gold for example.
Was this an event where we can wittness vice analyst´s predicting the future downfal of markets, or was this an intentional manouver from investors to create a downfal in stock values? Since it is natural phenomenom that once people who are playing with lend money are forced to sell because of lack of ability to pay, or lack of more credit, prizes go down and others who have access for large amounts of funds can buy many things for extraordinary cheap prizes.

In the end is it even possible for investors to speculate on such grand scale?Opinions and thoughts please, if you will.

[edyzmedieval]

Subprime market and the greediness of American banks. And their leaders too. (AIG - Golfing tournaments)
"When America sneezes, Europe catches cold."

'Nuff said.

[Lemur]

We sank the bank on tulips.

Except that this time, instead of tulip bulbs, we put it all in asset-backed securities.

[CountArach]

Its all in your head. Phil Gramm said so.

[Marshal Murat]

See sig.

[CountArach]

See sig.

[King Henry V]

Communism.

[HoreTore]

Yes, according to the highly intelligent right-winger party here, the crisis is a result of president Bush and his socialist policies...

[Ser Clegane]

The original financial crisis was for real - the following overall economic crisis is largely based on psychological ripple effects, i.e. everybody (companies and private households) is afraid that things might turn out really bad and therefore refrains from making any spendings that are not absolutely necessary right now to beon the safe side (e.g., private households will postpone investments for a new car or TV for 1-2 years, companies will not buy machinery, build new plants or will hold back R&D investments).
This "holding back" is currently leading to a very real and sharp economic downturn.

If you have enough cash right now and don't have any reasons to worry about incoming cash (e.g. because your job is absolutely secure and will not be affected by a downturn), now might be a very good time to spend money on a new car or new furniture as you are very likely to get some nice discounts.

[Strike For The South]

Bush

[seireikhaan]

Worldwide depression?

Stop being such economic girlie-men.

[KrooK]

Americans who take credits while are absolutely undable to pay it.
And banks who are giving such a credits.

[Fragony]

We sank the bank on tulips.

Except that this time, instead of tulip bulbs, we put it all in asset-backed securities.

Hey cool I didn't know that story was known abroad.

[Sigurd]

Stop being such economic girlie-men.

I can't say that I experience any depression right now.
All I know is that the interest rate on my mortgage is sinking due to a sinking value in the money market.
The oil still needs pumped out of the sea bed and I am in Maintenance. No worries yet.

[JR-]

american sub-prime caused by fannie and freddie veing forced by their political masters to lend to people who are not creditworthy.

european banks massively over-leveraging themselves, (well in advance of that done by US banks in fact).

[BigTex]

Yes, according to the highly intelligent right-winger party here, the crisis is a result of president Bush and his socialist policies...

Bush

Wow so much blame for bush, he must be godlike to have this kind of control. Controling even the minds of the fearful mob and investors, simply amazing.

A lot of problems lead to this crisis, almost all created by banks (both U.S. and europe/asia). But the problem now is created by fear, people to afraid to invest and selling off the stock they have. Though as someone already said, now would be the perfect time to buy that new car or invest in the stock market with the rock bottom prices.

[Oleander Ardens]

Top political causes:

1. Republicans: Since Reagon their religion was deregulation to please Wall Street and the very rich under the cover of the golden "efficient" market. They spread their gospel around the world, bringing misery to the poor, a gaping gap of wealth and the spoils for the rich.

2.Outdistanced but still relevant: IMF, World Bank, FED, some Europian gov. (Thatcher above all) and the Democrats under Clinton.

Other factors:

1. Human greed, especially in the USA. Greedy ignorance is a most dangerous thing.

2. Loose credit -> lacking regulation -> Republicans

3. Herd-like behavior of the "top" management to earn the huge bonuses caused by bad incentives, terrible in the USA, still bad in the EU. Banks lent like lulling lollypops to every fool and liar in the USA, irresponsible lending also in some countries of the EU. Now even good companies can't get credit.

4. Lack of a strong gov. -> no investment in profitable assets, no social security net -> drastic fall of short term consumption

5. Far to much consumption in the long term, to little savings and profitable investments

[Strike For The South]

Wow so much blame for bush, he must be godlike to have this kind of control. Controling even the minds of the fearful mob and investors, simply amazing.

A lot of problems lead to this crisis, almost all created by banks (both U.S. and europe/asia). But the problem now is created by fear, people to afraid to invest and selling off the stock they have. Though as someone already said, now would be the perfect time to buy that new car or invest in the stock market with the rock bottom prices.

joke.

I swear some of you are hopeless

[BigTex]

joke.

I swear some of you are hopeless

Truly

[Uesugi Kenshin]

Hey cool I didn't know that story was known abroad.

It's on Wikipedia of course we know about it!

[HoreTore]

Wow so much blame for bush, he must be godlike to have this kind of control. Controling even the minds of the fearful mob and investors, simply amazing.

"Highly intelligent" was said in a rather sarcastic way

[AlexanderSextus]

unfunded paper money and low interest rates at the Fed.

Greenspan and Bernanke/Paulson.

[Prince Cobra]

Subprime market and the greediness of American banks. And their leaders too. (AIG - Golfing tournaments)
"When America sneezes, Europe catches cold."

'Nuff said.

I strongly disagree. Of course, this crisis might be different but somehow it was USA that was more vulnerable to the crisis of '29. Of course, a possible explanation is that the US economy of that time was developing with extremely fast pace. It is also true that consensus is needed inside European Union in order to fight the crisis and there is still much work to be done. And yet I continue to hold the opinion that USA is more vulnerable to crises than Europe. We'll see if this crisis will confirm this belief of mine or not.

I would like to hear opinions of the esteemed Orgahs, about the reasons behind the current depression, which is threatening the global economy? Is it caused by sloppy credit giving by banks and investment banks? Or is it just a normal phenomenom of hitting a economical low point, which is followed by high tide? Or maybe something else? For example all the economy papers were hinting for many months before the credit crisis that investors should move their funds from stocks, into gold for example.
Was this an event where we can wittness vice analyst´s predicting the future downfal of markets, or was this an intentional manouver from investors to create a downfal in stock values? Since it is natural phenomenom that once people who are playing with lend money are forced to sell because of lack of ability to pay, or lack of more credit, prizes go down and others who have access for large amounts of funds can buy many things for extraordinary cheap prizes.

In the end is it even possible for investors to speculate on such grand scale?Opinions and thoughts please, if you will.

Well, this crisis is certainly more than temporary slow down after boom. I also think no government should be blamed on such a event (even if it is headed by George Bush ). Certainly the Republicans contributed to it but not to the extend they are often blamed. This crisis was result of unwise investment of credits and the irresponsible and short-sighted policy of the banks. Nothing new under the sun: people are often too thoughtless when they are on their peak... In a way it is a crisis of the system,which encouraged that thinking. And since nowadays everything depends on credits, this financial crisis would become world recession. I am a bit pessimist about easy and happy end of the crisis...

[CrossLOPER]

RUSSIA

[Mangudai]

Too much leverage/debt at all levels of society.

[Lemur]

Whatever the cause, we should just listen to this guy. It's scary how right-on he was in '06 and '07.