Ye ol' harbinger of capitalistic destruction, the "market" is at it again. For those that have been watching, the subprime crisis that hit the US (and world) in August is still leaving a trail of destruction behind every bank in the world.
Basically, the banks who lent out the cash, took those bad subprime mortgages, packaged them up with other debt and sold those off to investors/banks around the world. When the subprime crisis hit, all those bundles became "illiquid" meaning that no one wanted to buy them. This meant that all those people holding bundles of debt they were supposed to be able to cash in were left holding something that no one would buy. This lead to MASSIVE losses. Worldwide. What's worse, that means the banks have a hard time selling future bundles for cash, which they need in order to make loans.
What's even more worse is that HUGE "markets" representing all of US financial growth - credit derivatives, risky financial products, and above all, cheap credit - have evaporated because of this chain reaction..
This weeks riches to rags fiasco comes from the Dow Jones and Toronto stock market which plunged over 300 points each...which is, like, a lot.
And just to add a kick in the teeth to the US, oil is coming up on $90 a barrel, which, if it causes 18% inflation or a run on the dollar, could bankrupt the US overnight.
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