How true Truthnow78.
Just look at it as a practice run for when oil supply peaks and then
starts downhill.

What many do not realise is that the current credit crunch was expected.
It was made a lot more severe because while they expected a number
of defaults, due to the terms of the loan increase in interest rates,
the combination of the increase in interest rates plus the increase
in petrol prices which in turn caused an increase in food prices, was
just too much for a lot more of the subprime borrowers.

While the lenders had insured against the expected defaults they had
nowhere near enough coverage for what eventually happened.

There were warnings about the exposure of the financial system.
The same people are now saying that when the recovery starts and the
price of oil also recovers the new economic conditions may stall at a
low level and be permanent.
There may be no recovery to business as usual.

"Kinda makes a joke of the academic community." speaking of things that don't exist. Economists don't represent the total academic community, anymore than proctologists represent the entire medical fraternity.

The money never existed. The stock exchange works on what people think something is worth, not what it's actually worth. Same with the 'value' of housing. The whole market system revolves around what people are prepared to pay, not what stuff is actually worth.

At one point in Holland people would kill their own mothers for a tulip bulb, such was the imaginary value of tulips. There's your fundamental problem with recently fashionable economic theory, which assumes individuals are rational despite the fact that history demonstrates otherwise

Chainsmoker, don't forget Dennis Moore the Monty Pythonesque highwayman. He robbed the rich of their lupins and gave them to the poor.

"Stand and deliver! Your lupins or your life."

In Holland chainsmoker in ww2 they ate those same bulbs because they had no food.
Yes some of the money never existed, like the $100.000 my home has dropped in value, who cares? I am not selling.
But some lost very real fortunes, some do not yet understand but they too are broke.
Talking of not having lost until you sell is unwise , we may never see shares sold at last years peek again.
Some do not take this crisis seriously, we all will by this time next year.
What about those who bought a home or shares at the peek?
Or bought into oil at $147 a barrel?
We each lost real cash, superannuation for a start, Americans bought into fanny may and Freddy mack.
Banks are gone, some shares fell from $100us to a sale price of $2 us.
Soon the world will have proof not all the money was monopoly money some very real pain is coming.

Bazz,

The money didn't go anywhere because it never really existed in the first place.

Banks literally create money out of debt and only about 5% of the money in the world exists in cash - the rest is on bits of paper or just floating around in cyberspace. For every dollar you physically deposit in a bank, they are allowed - by Law - to loan ten dollars to somebody else (currently that's crept up to about thirty dollars so a lot of major defaulters caused a bit of a problem).

Wealth is created at the bottom of the economic food chain but money is something else entirely. Enjoy it while you can.

Not quite true Wobbles,
When people work for a week and get paid, that is real money because it is a measure of time of their life.

Money generated by bank loans is only part real and the idea is for
work to be done to repay it. Then it is real money.

What is not real is interest, although you do have to work for it.