Needing a steady hand at the helm
The front-page story "Where did it go?" in the Daily Herald Oct. 11 is excellent but does not tell all.
A share of stock is not money, but hard-earned money is used to buy it along with other risks, such as a lottery ticket, hoping to gain real money.
Some people are trying to blame the economy crash on the good intentions of liberals for trying to make it possible for poor people to own homes.
However, a 100-foot tidal wave did suddenly not hit lower Manhattan nor did God send an earthquake to sink San Francisco, but there was a panic of selling stocks anyway. Why?
The administration has been telling the public that the economy is strong, but all of a sudden there was panic.
While it was unwise and corrupt to overextend Freddie and Fannie, these two entities did not cause the sudden credit collapse.
Foreclosures are relatively slow moving events. The mainstream media (left and right) has not told the full story, but Fortune Magazine and 60 Minutes did.
The culprit that caused the panic was the bundling of mortgages and other debt forms and treating these bundles as securities to leverage real capital.
These phony securities are called Credit Discount Swaps and Collateralized Debt Obligations. These unregulated deals totaled an estimated $55 trillion.
Financial organizations have been using these as a hedge. Executives panicked and suddenly tried to rid them selves of the phony investments.
Government had to act, and now with new trillions in the system, there is danger of hyperinflation.
Obviously our country needs a steady hand at the helm.
Russell C. W. Crom
Mount Prospect