Some gained much, some lost much. Usually the sum of all of it is positive. That is capitalism.
Some gained much, some lost much. Usually the sum of all of it is positive. That is capitalism.
Cicero, Pro Milone"Silent enim leges inter arma - For among arms, the laws fall mute"
We are all aware that the senses can be deceived, the eyes fooled. But how can we be sure our senses are not being deceived at any particular time, or even all the time? Might I just be a brain in a tank somewhere, tricked all my life into believing in the events of this world by some insane computer? And does my life gain or lose meaning based on my reaction to such solipsism?
Project PYRRHO, Specimen 46, Vat 7
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You're probably right when it's confined to Bear Sterns, Lehman, and Merrill. AIG is another issue. It's essentially the largest company no one has ever heard of. They mainly deal in mega-size insurance of other companies, firms, banks, and major projects. The collapse of AIG would have massive repercussions to the entire global financial market. Their loss would instantly make hundreds of other companies vulnerable and could very well result in numerous other bankruptcies for smaller banks and companies. For more info, this is a useful read.
Last edited by TinCow; 09-16-2008 at 20:04.
When I see this commercial these days, I can't help but to laugh.
https://www.youtube.com/watch?v=9VvGW98D3XA
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If I werent playing games Id be killing small animals at a higher rate than I am now - SFTS
Si je n'étais pas jouer à des jeux que je serais mort de petits animaux à un taux plus élevé que je suis maintenant - Louis VI The Fat
"Why do you hate the extremely limited Spartan version of freedom?" - Lemur
Ja Mata, Tosa.
The poorest man may in his cottage bid defiance to all the forces of the Crown. It may be frail; its roof may shake; the wind may blow through it; the storm may enter; the rain may enter; but the King of England cannot enter – all his force dares not cross the threshold of the ruined tenement! - William Pitt the Elder
We are all aware that the senses can be deceived, the eyes fooled. But how can we be sure our senses are not being deceived at any particular time, or even all the time? Might I just be a brain in a tank somewhere, tricked all my life into believing in the events of this world by some insane computer? And does my life gain or lose meaning based on my reaction to such solipsism?
Project PYRRHO, Specimen 46, Vat 7
Activity Recorded M.Y. 2302.22467
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It is interesting to note some of the right-leaners calling for more regulation and even jail time for those running these companies. I'm wondering how big a company has to be before it becomes criminal to mis-manage it?
This is the nature of capitalism guys. The little guys made fundamentally bad business decisions by lowering their lending standards and the big guys made equally bad business decisions by buying that debt. The market will correct itself, the poor decision makers will retire with millions or be pushed out, and the industry will learn from their mistakes.
Creating more regulation and bureaucracy that will far outlast this market correction may make us feel better, but it won't do much else. Look what Sarbanes-Oxley has done...
Hey Sarbanes-Oxley gave us a kickin' rap song.
Two things. It's usually an improvement for everyone if the CEO:s actually gain money by making the company healty, istead of earning more by feeding them with lethal anabolics (the CEO then has a nice record to show up for the next job while the old company goes down the drain a few years later).
Second, basic econimics or rather human nature, every new generation needs to get practical experience before that understand that those obsolete rules applies to them aswell. They usually learn enough to burn themself in another market though.
Or in other terms, market bubbles are cyclic, wich means that market crashes are cyclic aswell in a unregulated system (and by the survival of the fittest actually needed). That usually leads to things like depressions or stagflations, something economics and the average joe isn't that fond of. You can run a system on this of course, but I would prefer a more stable one.
We are all aware that the senses can be deceived, the eyes fooled. But how can we be sure our senses are not being deceived at any particular time, or even all the time? Might I just be a brain in a tank somewhere, tricked all my life into believing in the events of this world by some insane computer? And does my life gain or lose meaning based on my reaction to such solipsism?
Project PYRRHO, Specimen 46, Vat 7
Activity Recorded M.Y. 2302.22467
TERMINATION OF SPECIMEN ADVISED
I'm not completely against regulation, just the type of reactionary whinging that’s going on at the moment. Sarbanes was the result of the same type of thinking and it has had unforeseen and far reaching negative economic impacts. (...or positive if you live in London. )
For example, the anti-trust laws imposed at the end of the last century were needed. Monopolies are a natural, yet limiting force in the market and a systemic problem with capitalism. Therefore, a higher authority needs to be involved, as you know.
What we're seeing today is simply the result of poor business decisions, not a fundamental problem with the system itself. At all levels, people made poor financial choices. People bought houses when they should be in apartments by taking out loans they couldn’t repay, thus fueling a vastly overpriced housing market. Banks made those loans that they shouldn't have, and bigger banks bought those loans without doing the due-diligence.
All bad decisions, sure, but should the government be in the business of trying to anticipate and regulate the next big thing? Or making sure certain companies cannot fail?
Lets not forget that the sky, in fact, did not fall despite the vast fortunes lost after the tech bubble burst. Again, bad business practices.
We will hit a bottom, lessons will be learned, and we'll move on to the next over speculated, under researched, profit driver. The smart ones will make big money and the slow ones will get caught with their pants down. That’s capitalism. Hell, even today someone, somewhere, with a little luck and a lot of insight is making a killing off of all this. Unnecessary regulation will simply retard that natural progression...
Last edited by PanzerJaeger; 09-16-2008 at 23:41.
I don't - I care about the people who work for the businesses that will inevitably have to close because of this sort of thing. Don't get me wrong, I still hate mega-corporations and I think there should've been a great deal of intervention before this, but I can accept that the working class at this present time still have to work for someone.
Rest in Peace TosaInu, the Org will be your legacy
Originally Posted by Leon Blum - For All Mankind
but I can accept that the working class at this present time still have to work for someone.
Just for a little while longer ?
In remembrance of our great Admin Tosa Inu, A tireless worker with the patience of a saint. As long as I live I will not forget you. Thank you for everything!
How many of those monopolies came about as a result of government favoritism in the first place? I think many government regulations are only trying to fix problems the government itself created.Originally Posted by PanzerJaeger
In the current mortgage crisis, the government encouraged lenders to make loans to people they would otherwise be hesitant to lend to. "Affordable housing" initiatives were really the opposite- getting people into mortgages and homes that they couldn't afford by encouraging lenders to make risky loans. Now, both parties are telling us that we need even more red tape and regulation from the government to protect us from what the government has already done.
"Don't believe everything you read online."
-Abraham Lincoln
Ja Mata, Tosa.
The poorest man may in his cottage bid defiance to all the forces of the Crown. It may be frail; its roof may shake; the wind may blow through it; the storm may enter; the rain may enter; but the King of England cannot enter – all his force dares not cross the threshold of the ruined tenement! - William Pitt the Elder
You realize you're dream of working class revolution is fundamentally flawed and one should really look to real world solutions based on there present situations and assets rather than revert to tired ideological talking points of some overrated 19th century German or some 20th century senator from Arizona
There, but for the grace of God, goes John Bradford
My aim, then, was to whip the rebels, to humble their pride, to follow them to their inmost recesses, and make them fear and dread us. Fear is the beginning of wisdom.
I am tired and sick of war. Its glory is all moonshine. It is only those who have neither fired a shot nor heard the shrieks and groans of the wounded who cry aloud for blood, for vengeance, for desolation.
There, but for the grace of God, goes John Bradford
My aim, then, was to whip the rebels, to humble their pride, to follow them to their inmost recesses, and make them fear and dread us. Fear is the beginning of wisdom.
I am tired and sick of war. Its glory is all moonshine. It is only those who have neither fired a shot nor heard the shrieks and groans of the wounded who cry aloud for blood, for vengeance, for desolation.
Well, AIG get the federal bailout. $85 billion loan for an 80% stake in the company. Assets should cover the taxpayer bill, the bailout is for an ordered breakup of company assets instead of a firesale.
http://money.cnn.com/2008/09/16/news...ex.htm?cnn=yes
Next!
And can a mod merge the Freddie/Fannie thread with this one, they are pretty much dupes at this point.
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If I werent playing games Id be killing small animals at a higher rate than I am now - SFTS
Si je n'étais pas jouer à des jeux que je serais mort de petits animaux à un taux plus élevé que je suis maintenant - Louis VI The Fat
"Why do you hate the extremely limited Spartan version of freedom?" - Lemur
We're talking about a Federal Reserve bailout right? So when they say they're loaning AIG
$85 billion, doesn't that just mean that they're creating $85 billion and giving it to AIG?
"Don't believe everything you read online."
-Abraham Lincoln
I don't want a revolution - nor would I ever. I believe in Democracy much more than I believe in Socialism.
The working class is always going to work for someone, I would just rather that it was the Government in many more cases.Just for a little while longer ?
Anyway that isn't important right now, back on topic...
Last edited by CountArach; 09-17-2008 at 08:21.
Rest in Peace TosaInu, the Org will be your legacy
Originally Posted by Leon Blum - For All Mankind
Well, firstly, only the government can undo government regulation, so yes, in fact we do need more regulation.
As of the flawed system PJ was referring to, I'd like to say that indeed the system is flawed, or rather not adapted to the new economic circumstances.
Considering that most core economic regulation as we know it today came in the wake of the 1930s crisis and WWII, and a lot of water has gone over that dam since. Fundamental market forces have changed in the past 30 years more than they had in the previous 200, and regulation, I'm afraid, is lagging far behind. This is why, the current situation was never in doubt, just merely a question of when.
Of course the latest governments' trend of overspending and living in debt constantly doesn't help the situation, since all this money comes from banks who need the money back, and this is mainly why the central banks can't just sit back and let them collapse. Imagine the scenario.
If the US debt is 500bn (hypothetically) and the bank they owe 100bn to pulls the money out, the US that has no money either will have to devaluate the currency to be able to pay it back. Which will make oil relatively more expensive, and so on.
What I'm trying to say is that regulation is by far the most painless and viable route IF the system is to be saved. Otherwise, we'll have to come up with a new one.
PS: Ah, and by the way...
Last edited by SwordsMaster; 09-17-2008 at 09:23. Reason: PS
Managing perceptions goes hand in hand with managing expectations - Masamune
Pie is merely the power of the state intruding into the private lives of the working class. - Beirut
How much of this was down to the changes in regulation set up after the wall street crash for financial institutions , first by Reagan and then by Clinton .Well, firstly, only the government can undo government regulation, so yes, in fact we do need more regulation.
Is it all of it or just most of it?
Wasn't that part of the spend like crazy on credit to promote growth plan we heard so much praise for in certain quarters of this forum ?In the current mortgage crisis, the government encouraged lenders to make loans to people they would otherwise be hesitant to lend to.
Thats what they say every time , yet every time they don't learn and its the taxpayer who gets shafted .the industry will learn from their mistakes.
Last edited by Tribesman; 09-17-2008 at 14:18.
These companies board of directors failed to do their jobs and rein in the CEO's that were excessively reckless with company finances. Considering the scope of their stupidity there should be jail time for some and personal financial/career ruin for everyone responsible. However, what will happen is that those most responsible will not be punishedand the taxpayers bailout will ensure they receive their multi-millon dollar paychecks and golden-parachute serverance and pensions. Thanks chumps!Spoiler Alert, click show to read:
Last edited by Hosakawa Tito; 09-17-2008 at 15:43.
"He is no fool who gives what he cannot keep to gain that which he cannot lose." *Jim Elliot*
I believe it's the Federal Reserve, but they are not loaning them the money. They are essentially buying the company - $85 billion for 80% of the shares. They will deal with and back the debt, and then sell off AIG's assets to cover it. The company is still going down, the Fed just wants it to be nice and orderly, so the damage is limited. I think the Fed believes that the company's assets, when not sold at bankruptcy rates, should cover the $85 billion.
At some point, I'm waiting for the Crimson Permanent Assurance to start taking over Wall Street.
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If I werent playing games Id be killing small animals at a higher rate than I am now - SFTS
Si je n'étais pas jouer à des jeux que je serais mort de petits animaux à un taux plus élevé que je suis maintenant - Louis VI The Fat
"Why do you hate the extremely limited Spartan version of freedom?" - Lemur
Listening to the news this evening, commentators were saying that the US government (rather the Fed) has run out of money for any more bailouts after AIG, and is seeking $40bn from the markets via Treasury Bonds. Meanwhile, Morgan Stanley is teetering on the edge and Goldman Sachs following it down the slippery slope.
There was even a quote from a Standard and Poors source saying the the US government's Triple A credit rating "is not gifted from God" and may be at risk.
I'd be interested to know if any of these observations are being made in the US - since the markets are still open there.
"If there is a sin against life, it consists not so much in despairing as in hoping for another life and in eluding the implacable grandeur of this one."
Albert Camus "Noces"
Just a thing my economics teacher has noted here: Isn't it ironic that the same people who were once calling for less and less government regulation now the ones who were wanting the government to bail out these companies?
"I do not know what I may appear to the world; but to myself I seem to have been only like a boy playing on the seashore, and diverting myself in now and then finding a smoother pebble or a prettier shell than ordinary, whilst the great ocean of truth lay all undiscovered before me." - Issac Newton
The Post did mention the Fed's money raising efforts:
http://www.washingtonpost.com/wp-dyn...l?hpid=topnews
As far as I've heard, Morgan and Goldman are still fine. They took hits, but still reported profits for the 3rd quarter. They need to watch out for the new kids though, competing with BoA/JPM will be tough with their current debt levels.
The .Org's MTW Reference Guide Wiki - now taking comments, corrections, suggestions, and submissions
If I werent playing games Id be killing small animals at a higher rate than I am now - SFTS
Si je n'étais pas jouer à des jeux que je serais mort de petits animaux à un taux plus élevé que je suis maintenant - Louis VI The Fat
"Why do you hate the extremely limited Spartan version of freedom?" - Lemur
Managing perceptions goes hand in hand with managing expectations - Masamune
Pie is merely the power of the state intruding into the private lives of the working class. - Beirut
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