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It took years to fuck things up, it can't be corrected overnight.



This whole financial debacle is manufactured by the use of 'mark-to-market' accounting princibles at banks as required by the federal government instead of 'mark-to-value' accounting. Mark to Market accounting requires banks to value assets in their portfolio at their market value. When fear spread that the housing bubble would pop, banks froze lending. Without new lending, home prices in fact collapsed and the banks created thier own destiny.

Now, if banks were allowed to mark the value of thier real estate portfolio to the actual value - the amount people agreed to pay for the house in their mortgage - everything would be fine because 91% of mortgage holders are still making their payments and the actual value of the contracts havent changed.

So right now banks are taking huge 'losses' writing down the paper value of their real estate portfolios. When the real estate curve trends up, they will take huge 'gains' and all the bank executives will take huge bonuses based on the gains. The whole while, the banks are holding their 'bailout funds' (i.e. very low interest loans) at the federal reserve waiting for inflation - so they can jack mortgage rates back up to the mid teens like the 1980's


So, why is this happening now??? Because in 1932 the mark to market accounting rule was suspended by congress to keep banks afloat during the depression. In 2006, when democrats took over committee chairs, they re-instituted the rule and started stoking the 'recession' flames in every campaign speech (remember, Obama's been campaigning since 2006).

The Democrats did this to cause the recession and get elected. They keep the rule in place so they can ram home their socialist policies and once they get everything they want, they'll remove the rule and **POOF** the recession will dissappear - right before the next election so they can go 'we did it.'

And why will the recession **POOF** dissappear? Because banks have cash requirements based on the value of their assets. Mark to value will mean they have tons of 'extra' cash on hand and they'll start aggressively lending again.

So, yes - things didn't get fucked up overnight. Just when the democrats took over and they did it on purpose in the name of 'social justice' (i.e. wealth redistribution).