Take care of your pennies and the dollars follow themselves...
There are several things that caused the recent depression.
1) Government requirements to loosen requirements on loans. This was done to encourage people to buy homes. They even created lenders of last resort to make sure it would happen. The governments mistake was thinking no one would abuse the system. They had changed the rules. The banks also realized they could loan money to anyone and pocket the fees (which are substantial) then sell the loan to the bank of last resort or someone else stupid enough to take it and pocket those fees too. The banks of last resort freaked out until they figured out they could 'pool' the loans and have 'zero' risk they sell the risk pools back. They did this by getting number 2 enacted (thru lobbyist pressures). 2) removal of the last of the 1930s laws that prohibited them from playing in the commodities markets.
Nobody ever really asked where did the late 90s bubble money come from? That was some *crazy* amount of money being thrown around. Where did that come from? There are not that many angel investors out there. It came from the banks and their recently loosened terms on what they could invest in. They were allowed to do that to make it easier for them to give out loans. Why would they be investing in risky things like that? Because they could offset the risky thing (loans) with a non risky thing (oil/gold/silver commodities). Which is the basic way a hedge fund works.
The 2008 crash really was an echo of the 2000 one. But worse as the real reason for the 2000 crash was never really addressed.
They still have not put back the regulations that were enacted to stop a 1930s style crash. The 2008 one was almost the same thing. The dodd-frank act put little bits and pieces of it back (and added in it own spin). But not all of it. It also created large amounts of burden on the gov to regulate it. It is unclear at this time if what was enacted will help. (shakes magic 8 ball) 'Outlook not so good'
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Re: A penny saved is... not much. (nt)
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