How did this new crisis come about?

The companies affected by the latest crisis had massive commitments in the markets for structured loans, primarily US real-estate loans, and in the derivative markets. This exposure led to huge losses and resulted in a serious requirement for liquidity and capital. The markets no longer wanted to meet these demands in the context of the general situation with high levels of uncertainty and aversion to risk. The only remaining hope was provided by the state, but the government was not always prepared to step in.

What is the difference between the current development and the subprime crisis? Or is this simply a continuation of the last crisis in the financial markets?

We are still experiencing the consequences of the same crisis. The subprime market was the epicenter of the earthquake and the shock waves are still rolling over the financial markets. Subprime mortgages were only the trigger that brought to light the fundamental mistakes that had been made in the financial systems in recent years: primarily a readiness to take too many risks, lack of transparency in product structures and too much credit leverage.

Treasury Secretary Hank Paulson just finished his press conference on Bailouts. He stated that a “bold” approach was needed to achieve “stability” in the market.  Translation:

“Bold” = Massively massive, taxpayer-funded rescue. “Stability” = Privatizing profits and socializing losses on a scale we have never seen before in our lifetimes.

The fundamentals of the market suck. The fundamentals of capitalism have been sabotaged.

Yes, yes, crony Democrats are to blame for much of how we got here. You don’t need to recite all the talking points back to me. I’ve been writing about the Fannie/Freddie debacle for years.

But it is September 19, 2008. And this is a Republican White House presiding over the Mother of All Bailouts. Every step along the way since stimuluspalooza began last summer, we’ve heard that every bailout step was just a one-off. Each step was supposed to calm the markets. Each new government intervention and allocation of taxpayer dollars was supposed to achieve “stability.” Each new package of goodies rewarding irresponsible behavior and bad financial decisions was supposed to prevent new ones.  None did. And now, here we are.

http://michellemalkin.com/2008/09/19/the-mother-of-all-bailouts-the-death-of-fiscal-conservatism/

The taxpayer bailout of epic proportion.  Who’s next in line for the entitlement?  Yes, McCain is correct…Cox should be fired.  This is his job afterall.  Whatever happened to accountability?  So for those of us who have been responsible and frugal, we will now share the burden.  This is so wrong.  http://mcnorman.wordpress.com/2008/09/16/regulationwho-did-what-and-when/

McCain DID sound the warning.  Let’s go back to 2006:  http://uppitywoman08.wordpress.com/2008/09/21/john-mccains-fannie-maefreddie-mac-warnings-may-2006/