Easy Money...

Is anything but.

1929:

The Wall Street Crash of 1929, also known as the Crash of ’29, was one of the most devastating stock market crashes in American history. It consists of Black Thursday, the initial crash and Black Tuesday, the crash that caused general panic five days later.

The crash followed a speculative boom that had taken hold in the late 1920s, which had led millions of Americans to invest heavily in the stock market, a significant number even borrowing money to buy more stock. By August 1929, brokers were routinely lending small investors more than 2/3 of the face value of the stocks they were buying. Over $8.5 billion was out on loan, more than the entire amount of currency circulating in the U.S. The rising share prices encouraged more people to invest; people hoped the share prices would rise further. Speculation thus fueled further rises and created an economic bubble. The average P/E (price to earnings) ratio of S&P Composite stocks was 32.6 in September 1929, clearly above historical norms.

1987:

Black Monday is the name given to Monday, October 19, 1987, when the Dow Jones Industrial Average (DJIA) fell dramatically, and on which similar enormous drops occurred across the world. By the end of October, stock markets in Hong Kong had fallen 45.8%, Australia 41.8%, the United Kingdom 26.4%, the United States 22.68%, and Canada 22.5%.

The most popular explanation for the 1987 crash was selling by program traders. Program trading is the use of computers to engage in arbitrage and portfolio insurance strategies. Through the 1970s and early 1980s, computers were becoming more important on Wall Street. They allowed instantaneous execution of orders to buy or sell large batches of stocks and futures.

2007:

Central banks on both sides of the Atlantic pumped billions into the financial system to calm nerves over an impending credit crunch today - but their actions only served to heighten alarm, prompting a fresh plunge in global share prices.

The European Central Bank injected an emergency €95bn (£64.5bn) into the markets in its first intervention since the turmoil triggered by the 9/11 terrorist attacks on New York and Washington DC in 2001.

Bonddad;

2.) These are big funds -- 2 billion+ is not chump change. But the manager can't "``fairly'' value their holdings". That means the 2 billion + in total assets may not even be close to accurate. Remember -- Bear Stearns lost 6 billion in 2 funds just a few weeks ago.

3.) The ECB is flooding the market with liquidity. While this is a good thing in the short run because it eases some concerns, it may not be enough. The bottom line is we are seeing announcements of hedge fund/investment losses coming from all over the world. And the pace is snowballing.

4.) "investors aren't recycling their money back because of subprime concerns" Translation: either the ECC can continue to inject liquidity or we're going to have a continued problem in the markets.

5.) In the 1920s, the US banking system collapsed because of runs on the banks. A similar situation is happening with hedge funds right now:

Union Investment, Germany's third-biggest mutual fund manager, stopped withdrawals from one of its funds on Aug. 3 after investors pulled about 10 percent of the assets. Frankfurt Trust, the mutual fund manager of Germany's BHF-Bank, halted redemptions from a fund after clients removed 20 percent of their money since the end of July.

All because of greedy, bloodsucking, soulless people (primarily while males similar to myself save for the fact that they didn't allow themselves to follow any passion they might have had that didn't involve masses of cash) and their unslakeable lust for money and power:

KEITH ERNST: One of the interesting stories here underneath all of this is how these mortgages came about in the first place. You know, we like to think, or I think most Americans think, that mortgages are made by banks and depository institutions, but especially in the subprime market that's not the case. They're largely made through state-chartered finance companies that don’t have any bank deposits, and so they don’t have any bank regulators.

Where do they go for their money? They go to Wall Street. So Wall Street will supply them the money to make the loans, will buy the loans from these lenders, and then will repackage them into securities and sell them to investors. Now, again, in principle, that's fine. It can make low-cost capital available to families who need mortgages. The problem comes when the insatiable appetite builds for more and more mortgages and lenders get reckless with regard to the quality of the mortgages they’re originating.

Why do they allow themselves to get reckless? Why, because the loans aren't representative of families, or anything important like that. They're just numbers and levels of risk that are to be assumed...