Business

Wall Street To Write Down $460 Billion In Losses

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Yeah, sure, deregulation works great…

From Bloomberg:

March 25 (Bloomberg) — Wall Street banks, brokerages and hedge funds may report $460 billion in credit losses from the collapse of the subprime mortgage market, or almost four times the amount already disclosed, according to Goldman Sachs Group Inc. Profits will continue to wane, other analysts said.

“There is light at the end of the tunnel, but it is still rather dim,” Goldman analysts including New York-based Andrew Tilton said in a note to investors today. They estimated that residential mortgage losses will account for half the total, and commercial mortgages as much as 20 percent.

Just think if some sensible limits would have been put in place. I hear all this grousing about how regulations only confine markets, but hardly ever any mention of how they help. Well folks, here are 460 billion reasons to make sure our markets are more closely regulated.

Listen, there’s nothing wrong with making money, but this situation shows us that when you let pure, unadulterated greed govern markets, well, get ready for massive fallouts. And you can’t tell me that people couldn’t see this coming. In fact, many did. But the reason it wasn’t readily apparent is that this particular type of debt didn’t need to be stated publicly. Corporations could hide it. All they needed to do was make even more questionable loans and forecast how much they would make off of them to offset the losses they were already suffering. Pretty interesting, no? Corporations can hide their debt by going further into debt? Yeah, doesn’t make much sense to me either, but then again I’m not a Wall Street whiz, so what do I know?

So now all this greed and gross lack of business ethics is going to land on the backs of the American middle class. And that isn’t a platitude. The little “guys” will be the ones hardest hit by the lack of obtainable loans and the inevitable inflation that the Fed’s move to stem this mess will cause. Also, let’s not forget that this credit crunch will most likely result in less business investment, particularly for small businesses. That means fewer good jobs.

So much for the American Dreamâ„¢.