Kerry Lutz – The Financial Survival Network

from The Financial Survival Network

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http://www.informedtrades.com/
The 3rd and final lesson in a series on the subprime mortgage US Banking financial crisis explained.

Duration : 0:7:17

Practical Money Skills for Life – Financial Literacy & Education Summit (audio only)

from Financial Literacy & Education Summit (audio only)

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Powerful banks such as Wall St. banks, Germany’s Deutsche Bank and the Bank of England are committing acts of ‘financial terrorism’ which have caused the Euro crisis, an analyst tells Press TV.
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Financial stability, or the lack thereof. Leading thinkers speak out on what they feel is at the core of the problem. Featuring: Joseph Stiglitz, Gillian Tett, David Tuckett, Stephen Kinsella, John Kay, David Weinstein, Steve Keen and Dirk Bezemer. Directed by Four Corners Media | www.fourcornersmedia.net
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Hale Dwoskin – The Past and the Future- Financial Liberation Retreat

from The Sedona Method Compilation Album

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Gerald Celente : Financial Armageddon 2.0
Gerald Celente on abc6.com – What’s Next For Our Economy?
check out abc6 page with Gerald Celente interview at http://ww.abc6.com/Global/story.asp?S=12523304
and for more Gerelad Celente Interviews go here :
http://geraldcelentechannel.blogspot.com

Duration : 0:4:56

Financial crisis understanding from the ground up (Part 4) By George C (www.finance-database.com)

The current financial crisis

The public have a common understanding that the subprime mortgage crisis has leaded to a far more serious consequence, so called “the financial crisis” recently. To be exact, It has been going on for seven months. But how will that be happened? This is the question. The subprime load crisis is relatively simple to understand. People bought homes they couldn’t afford, and now they are falling behind on their home loans. This has caused the loss of related financial institutions. However, the amount of loss is not the major cause of the financial crisis. US government has already announced to take over Fannie Mae, Freddie Mac and AIG, and have injected the capital over that amount into the market. Besides, the majority of homeowners are still doing just fine. The conventional mortgage market is still healthy. So, how is it that a mess concentrated in one part of the mortgage business: the subprime loans, has frozen up the whole credit markets in United States? How would that crisis caused such a big impact to the stock market, causing the collapse of Bear Sterns, lehman brothers, etc, and left the economy on the brink of the worst recession in a generation and forced the Federal Reserve to take its boldest action since the Depression in 1923?

In order to have a big picture of this incident, I think this could be explained in this way. First of all, behind the whole financial crisis, there are actually 3 major components: the subprime mortgage, Leverage (or gearing), and the Credit Default Swap(CDS). We have mentioned about subprime mortgage before. So, what is leverage? In the finance industry, leverage is a common way to use in such a way to magnify the outcome of the investments. This can be done by various financial instruments such as options, futures, margin or borrowed capital, to increase the potential return of an investment.

At present, many investment banks use leverage to operate more then 20 times of their capital. For example, if bank A have an asset of 5 billion, then 30 times of leverage means that bank A can operate 150 billions of money, in which most are borrowed. It is obvious, if there is 5% of profit in the investment, then bank A has a profit of 7.5 billion. However, on the other hand, if there is 5% loss in the investment, then bank A loss all it’s 5 billion of asset, and still owe the lender 2.5 billion.

The third component is CDS. What is CDS? As explained above, the operation of leverage is very risky. So some bankers think of a way to take insurance on these leverage. This insurance is called CDS. It is a specific kind of agreement which allows the transfer of third party credit risk from one party to the other. One party in the swap is a lender and faces credit risk from a third party, and the counterparty in the credit default swap agrees to insure this risk in exchange of regular periodic payments. For example, Peter borrows $100 from John. John wants to get insurance on this $100 debt in case Peter was unable to return the money. The John goes to Jane and asked for Jane to insurance that debt. Jane agrees to do so if John is willing to pay her an insurance fee of $5 per year. That is exactly the most simplified scenario of CDS.

Now, apply that in the world of banks. Recall the example of “bank A”. Bank A operates a leverage of 30 times. To reduce the risk, it goes to bank B and asked for bank B to do CDS insurance. After analysis the market data, bank B knows that the breach of contract case is less than 1%. Therefore, bank B is willing to take that insurance to earn the insurance fee. However, this is not the end of the story. Although bank B agree to accept the insurance, it can not have the insurance fee immediately. At the same time, some other banks such as bank C, bank D, etc. are interested to these CDS contracts. So bank B is willing to re-sell them to other banks to have the cash immediately. This is the scenario. The CDS contracts being sell and re-sell continuously among different financial sectors. In the mean time, the market value of the CDS has reached 62 trillion.

However, you may see that, all the banks A, B, C, etc are making money. So, where is the money comes from? The money comes from the revenue generated by the subprime mortgage business. So why the honey moon period can continue in the previous few years? It is because the real estate prices keep rising in the previous few years. In that period, home owners and buy and re-sell the real estates easily, who can earn good money at the same time. It just likes snowball or bubble. The market keeps rocking until 2006. When the downturns came, the prices of the real estates dropped. People who are lack of financial ability was unable to pay the high interests of those subprime loans. In that case, the subprime mortgage market started collapsing, which in turn affecting the CDS market. Banks and financial institutions who are involved in those products is unavoidably being affected. In fact, nearly all I-banks and most of the commercial banks are involved in this storm, or more appropriates, the tsunami.

George C
http://www.articlesbase.com/personal-finance-articles/financial-crisis-understanding-from-the-ground-up-part-4-608120.html

Eddie Ifft – Global Financial Crisis

from Live From Australia

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Cartoonists and comedians have a field day as Greece battles its worst crisis.

Al Jazeera’s Barnaby Phillips explains.

Duration : 0:2:32

The seven-week sanctions against Iran oil sales and the use of the banking system and the Swift Code facilities by US, UK and European governments has as yet not been effective. Negotiations are in process with six EU nations to adopt oil contracts for up to five years. Future oil must be paid for immediately. Four of those members can barely pay for oil now. The embargo as you can see is ridiculous. Even if alternative services are found how will they pay for all of it? This has to be one of the most ill thought out schemes ever. The financial end won’t stop payment countries can use barter, multiple currencies and gold. Talk about shooting one in the foot. This has been a case of the Illuminist’s shooting themselves in both feet. Talk about financial vehicles of mass destruction. No we have three of them if we include derivatives. We have had limited sanctions against Iran for some 30 years, yet their economy has improved. In the years to come more growth will be there. Iran is breaking the hold on the petrodollar so it must be destroyed under any ruse. It must revisit the Stone Age. This is the elitist idea of freedom and liberty. After discussions as far as we can discern, the Iran oil deal with India is for 45% of payment in Rupee and the balance in barter. That eliminates the dollar in billion in annual oil imports from Iran to India. theinternationalforecaster.com www.infowars.com www.prisonplanet.tv twitter.com
Video Rating: 4 / 5