No Need To Panic, Let The Market Decide

Ostensibly the problem was caused by what are termed loans in the ‘sub-prime market’, which to you and me are bad loans made to people who cannot afford to pay them back, primarily for mortgages which the rise in interest rates have made them too expensive for the unfortunate house ‘owners’. These loans were made by commercial banks in the US who are now saddled with losses totalling billions of dollars. One major US lender, American Home Mortgage had already ‘gone under’ as they say, with bad loans totalling $100 billion dollars and it filed for bankruptcy the other day. So what’s going on here? We are told that left to itself, the ‘market evens things out’, supply and demand all that garbage so why are governments intervening? Aside from anything else, if governments don’t intervene, the entire capitalist order would collapse but at the heart of the problem are the weird and wonderful devices the banks have invented in order to get rid of their bad loans. http://www.williambowles.info/ini/2007/0807/ini-0497.html

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