Secondly, and more interestingly, when we look back through history - or think about the underlying economics of business cycles - we realise that every financial crisis and bear market in the past has been a buying opportunity because we can see, with hindsight, that the world never did come to an end. Yet if everyone in the market knew that previous financial crises and bear markets always created buying opportunities, then a new bear market could never occur, unless large numbers of investors believed that the latest financial crisis was somehow different - and worse - than any that had gone before. If people believed that this was just an average sort of crisis, they would now be buying instead of selling, and there would be no crisis.
In other words, to create any financial crisis - even a fairly mild one - there has to be a widespread belief that things are much worse than ever before. In terms of market psychology, the view that "this crisis is different from every other" is really just an echo of the cry "this time is different" that is always heard at the top of a bull market.
"incredibly, collapsing, significant, depressed, euphoria, 'orgy of', 'incredibly deep', painful, huge, contagion, 'insane extremes', 'not sustainable', 'mountain of'"
The Federal Deposit Insurance Corp. is taking steps to brace for an increase in failed financial institutions as the nation's housing and credit markets continue to worsen.
FDIC spokesman Andrew Gray said the agency was looking to bulk up "for preparedness purposes." ...
The agency, which insures accounts at more than 8,000 financial institutions, is also seeking to hire an outside firm that would help manage mortgages and other assets at insolvent banks, according to a newspaper advertisement.
"Regulators are bracing for well over 100 bank failures in the next 12 to 24 months, with concentrations in Rust Belt states like Michigan and Ohio, and the states that are suffering severe housing-market problems like California, Florida, and Georgia," said Jaret Seiberg, Washington policy analyst for financial-services firm Stanford Group.
Joe Lents hasn't made a payment on his $1.5 million mortgage since 2002.
That's when Washington Mutual Inc. first tried to foreclose on his home in Boca Raton, Florida. The Seattle-based lender failed to prove that it owned Lents's mortgage note and dropped attempts to take his house. Subsequent efforts to foreclose have stalled because no one has produced the paperwork.
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