Economics, incredibly important and all around us. But some *points to self* cant seem to know what's going on. Especially on an international scale, I hear news stories about banks being closed, countries granting loans for insane amounts of money, and everywhere I turn recession seems to be on everyones mind. Off the top of my head all I understand is that the world economy is going to heck (which I find hard to believe.. someone's gotta be making money don't they?)

http://www.nytimes.com/interactive/2008/09/15/business/20080916-treemap-graphic.html

A year of losses, stock market dropping to heck?

http://www.reuters.com/article/bondsNews/idUSN1645915820080917
(loan from above)

I don't really understand the problem, when it started, what caused it.. or where its headed. Im just kinda looking for a "WTF is going on in the world, economically" kinda discussion to gain some better understanding.

Banks lent money to people who couldnt pay it back. Got into debt, wont lend anymore. Media went 'omg look at this' and the world went 'omg wtf'.

Yeah.

Though thats just part of a capitalism for here, it has periods of boom and recession. we just gotta sit it out, biggest problem is how long it'll take to rise again.

Head of the Bank of England clearly needs to be spoken to. Food prices were never kept down and oil prices keep going up. As oil is sold on the world economy in US dollars, dunno about other countries, but right now the pound is so weak against the dollar its just not soaking up the difference.

And today we lost HBOS, and about 40,000 jobs. Our largest mortgage lender just went kersplat.

And thats just the UK =| Though i hear some of the other european countries are steady right now.

Eugh, there so much i could say. My parents both work in finance, so i hear this every day -_-

Yes.

The world is heading for a recession. There is no telling how deep of a trough (decline in economic activity) it's going to be, but we are heading for one. America is basically there, Europe is heading there and so are we. China is doing fine still, due to very large budget surplus's as well as trade surplus and not have ANY Net Foreign Debt. But if China was to follow suit, we would all be in dire straits.

I'm very willing to talk further about this if anyone else is interested. I don't see much sense in going any further if no-one is interested.

For the record, I really like economics. :ninja:

To Luis,
How to cause financial crisis with sub-prime mortgage. Actually with more complications.
Steps:
1.First there are loads of people with not enough money to own a house or want a better house.
2. House prices seem to be rising.
3. Bank offers a stupid package that allows people to pay really low interest for first few years then interest at market price or even much high interest then market price. Whereas people should have opt to pay consistent amount with normal interest.
4. Stupid people think that they can take loans( they have no ability to return) buy a new house and then resale it at a higher value earning some quick cash or owning a house of their own.
5. Many stupid people think they can take these loans. Banks and financial companies also start 'selling these debts' to each other or in simple term pass the debt on to another party.
6. Housing bubble burst. House price fall drastically.
7. Many people get into deep shit. Unable to repay loans nor sell their houses and with their interests EXPANDS.
8. File for bankruptcy, etc. Incurring many bad loans that need to be written off. Causing gigantic loss for particular financial institutions involve.
9. Financial loss becomes extensive. Companies wind-up/merge/get bought over. Shareholders lose money, people lose job, stocks fall, uncertainity blah blah. With spillover effects to other industry such as manufacturing.
10. Crisis.

Why countries must lend insane amount of loans?
Gigantic companies, mega companiese that are very establish like Lehman Brother, Bear Sterns, etc collapse-> impacts stock markets. To prevent further impacts and also try to savage confidence-> country digs up federal reserve to 'SAVE' companies. If they do not save, and no one else bails the company out, company files for bankruptcy and Huge losses internationally cos globalisation allows the tentacles of company to be extended all over the world. :D

@phard, China's production quality is landing it in a bad position. Milk that cause infants to get kidney failures.

Used to like economics, now I don't like it cause there are too many graphs involved.