Horrible News: Lehman Brothers Bankrupt and Merrill Lynch bought by BAC

[Ice]

http://online.wsj.com/article/SB122139688846233147.html?mod=2_1577_leftbox


Crisis on Wall Street as Lehman Totters,
Merrill Is Sold, AIG Seeks to Raise Cash
Fed Will Expand Its Lending Arsenal in a Bid to Calm Markets;
Moves Cap a Momentous Weekend for American Finance
By CARRICK MOLLENKAMP, SUSANNE CRAIG, SERENA NG and AARON LUCCHETTI
September 15, 2008; Page A1


The American financial system was shaken to its core on Sunday. Lehman Brothers Holdings Inc. faced the prospect of liquidation, and Merrill Lynch & Co. agreed to be sold to Bank of America Corp.

The U.S. government, which bailed out Fannie Mae and Freddie Mac a week ago and orchestrated the sale of Bear Stearns Cos. to J.P. Morgan Chase & Co. in March, played much tougher with Lehman. It refused to provide a financial backstop to potential buyers.
[A man walks out of the Lehman Brothers building carrying a box of his belongings, in New York, September 14, 2008. Talks faltered when Britain]
Reuters
A man walks out of the Lehman Brothers building carrying a box of his belongings, in New York, Sept. 14.

Without such support, Barclays PLC and Bank of America, the two most interested buyers, walked away. On Sunday night, Bank of America struck a deal to buy Merrill Lynch for $29 a share, or about $44 billion. Lehman was working on a possible bankruptcy filing that would allow most of its subsidiaries to continue operating as the firm is wound down.

Though it steered clear of a bailout, the Federal Reserve is expected to take new steps to stabilize the broader financial system. These steps, expected to be temporary, would make it easier for banks and securities firms to borrow from the central bank by using a wider range of collateral. Bankers say these financial institutions might need short-term funds as they unwind their many trading positions with Lehman.

In addition, 10 major commercial and investment banks announced Sunday night that they would pool $70 billion of their own money to create a borrowing facility. The 10 institutions, which include Citigroup Inc., Credit Suisse Group, Deutsche Bank AG, could tap the pool to help them ride out the crisis. The banks also said they are mutually committed to trying to mitigate market volatility.

A sense of foreboding gripped Wall Street as top executives feared collateral damage from a Lehman liquidation. Attention was focused on Merrill Lynch, which boasts the largest force of retail brokers, and American International Group Inc., the insurance giant. Both firms have seen their stocks get hammered on worries that they needed capital.

"Monday will be a day of reckoning for the financial markets," said Carlos Mendez, senior managing director of ICP Capital, a boutique investment firm in New York. On Sunday, he said, "it was like a fire alarm went off and people ran in all directions."

How long will it be before the financial sector is stabilized, and what will it take to help bring that about? How should investors respond in the meantime? Share your thoughts.

AIG executives spent the weekend trying to raise cash, either from asset sales or a capital infusion from private-equity firms, or both. AIG executives were meeting with regulators to see if they could transfer capital from some of its subsidiaries to the holding company.

As worries spread across Wall Street that Lehman wouldn't survive, brokerage firms, hedge funds and other traders moved to disentangle themselves from trades with Lehman. When hopes of a potential sale dimmed, a quiet Sunday on Wall Street turned into a mad rush. Executives and traders hurried to their offices or worked their phones to unwind outstanding contracts with Lehman and to gauge their overall exposure.

Merrill, whose brokerage force is known as the "thundering herd," quietly entered into discussions with Bank of America, which has retail bank branches stretching from coast to coast and has long coveted Merrill. Wall Street executives said the Federal Reserve may have been involved in orchestrating the sale, figuring that it was "better to save the relatively healthy patient instead of the dying one," said a lawyer involved in the discussions.

Lehman, a 158-year-old firm that started as an Alabama cotton brokerage, and Merrill, with its trademark bull logo, have been pillars of Wall Street for much of the past century. With the demise of Bear Stearns, three of the Street's five major independent brokers could end up disappearing, leaving only Goldman Sachs Group Inc. and Morgan Stanley.


"We have never seen anything like this," said analyst Glenn Schorr, who covers the investment banks for UBS AG. "There have been tough situations like Long-Term Capital Management and the crash of 1987, but the problem here is there is leverage in the securities under the microscope and in the banks that own them. And to try and unwind it all at once creates a one-way market where there are only sellers, and no buyers."

The convulsions could lead to even tighter credit, higher borrowing costs and moribund capital markets, as securities firms and commercial banks try to further limit risk and preserve capital. Those moves could cause the U.S. economy to slow further.

The future of about 25,000 employees at Lehman and an additional 60,000 at Merrill is up in the air. Lehman's work force already has shrunk by about 3,000 in the past year. If the firm essentially goes out of business, most of the remaining employees are likely to lose their jobs. That would deal another blow to New York City's economy, resulting in lower tax revenues on personal income, real-estate transactions and corporate income.

The damage on Wall Street is the latest consequence of a storm that began last year with the sharp decline in American housing prices and losses on loans and other assets tied to home values. Massive capital infusions have failed to stem write-offs and losses, and financial firms are running out of options to escape the damage.

Regulators and others were preparing for a hectic Monday. The New York Stock Exchange prepared contingency plans over the weekend to reassign the approximately 200 blue-chip stocks that Lehman's specialist unit trades, according to people familiar with the matter. If Lehman is forced into liquidation, the exchange will likely transfer the stocks to one or more of the remaining specialist firms, most likely using the same technology and staff that currently trade the stocks.

Dozens of Wall Street desks have trades with Lehman. As word spread that the Barclays deal was falling apart, worries that the company could be thrown into bankruptcy mounted, and traders labored to get out of those contracts.

At approximately 2:30 p.m., government officials hosted a call, and a trading session was opened to ease fears. One trader said it was agreed that other brokers would pick up contracts that trading desks have with Lehman. If Lehman does open on Monday, the deals struck on Sunday, often at a worse price, would be void. "It is utter chaos here," the trader said.

At many Wall Street firms, traders of credit-default swaps -- contracts that act as insurance against debt defaults -- were told to come to work immediately. Concerned investors were rushing to buy swaps tied to other brokerages and corporations, sending the cost of protection on investment banks such as Goldman Sachs and others sharply higher.

In a statement Sunday, the International Swaps and Derivatives Association, a trade group whose members include many large dealers, said a "netting trading session" took place between 2 p.m. and 6 p.m. on Sunday. The idea was to allow firms to try to unwind their derivatives transactions with Lehman by finding other parties to step into Lehman's shoes.


"The purpose of this session is to reduce risk associated with a potential Lehman Brothers Holdings Inc. bankruptcy filing," it said. It added that trades conducted during this period "are contingent on a bankruptcy filing on or before 11:59 p.m. New York time" on Sunday. If no filing takes place, the trades will be canceled, ISDA said.

Some traders said it was difficult to find new counterparties for many of their outstanding trades with Lehman. The snags included different terms and maturity dates on derivatives contracts, and market prices changed rapidly Sunday afternoon. "People were screaming at each other over the phone, asking: How can this work?" one trader said.

William Gross, chief investment officer at bond-fund giant Pacific Investment Management Co., said very few Lehman trades were offset. "There's an immediate risk related to the unwind of these positions," he said.

Many Wall Street firms concluded that a liquidation of Lehman's assets likely would proceed in an orderly fashion, people familiar with the situation said. That means other firms could quickly buy real estate, securities and other investments, preventing the assets from flooding the market. Because of that, these people said, some participants in the New York Fed talks decided that liquidation was no worse an option than selling Lehman to a buyer such as Barclays.

"There will be an orderly wind down," said one banker involved in the matter. "This was the default option. It happens when you have no buyer."

The outside firms decided that instead of making guarantees for Barclays or some other purchaser of Lehman, they would prefer to pool their resources and buy the assets themselves, taking on the risks and carrying costs, along with the possibility of profiting down the road.

Those firms would likely then buy assets such as mortgage-backed securities, leveraged loans, private-equity positions and investments in real estate or hedge funds.

Roger Freeman, a nine-year Lehman employee who analyzes brokerage firms, spent the weekend gathering cellphone numbers and email addresses from colleagues who also are likely to lose their jobs. He plans to clean out his desk Monday morning. "We worked long hours here, we've made some of our best friends here. We're suddenly being ripped apart," he said. "It's just unbelievable."



Lehman, a 158-year-old firm that started as an Alabama cotton brokerage, and Merrill, with its trademark bull logo, have been pillars of Wall Street for much of the past century. With the demise of Bear Stearns, three of the Street's five major independent brokers could end up disappearing, leaving only Goldman Sachs Group Inc. and Morgan Stanley.

This is very serious.The market reacted very badly today.

[ICantSpellDawg]

I think we are sunk. I feel like we've had a year long stomach bug and just can't stop throwing up. It can either clear up or we can dehydrate and die.

[CountArach]

DOW loses 504 points (http://blogs.usatoday.com/ondeadline/2008/09/dow-plunges-504.html)

[Strike For The South]

Companies fail. Sometimes Big companies fail. Sometimes big companies with allot of investments fail. Are we in a bad time? Yes. Should we be selling everything and moving to the woods? no.

[ICantSpellDawg]

There is an upside to everything. Complete collapse of society would allow me to indulge in my horrific underlying blood lust while forging massive alliances.

[CountArach]

There is an upside to everything. Complete collapse of society would allow me to indulge in my horrific underlying blood lust while forging massive alliances.
:laugh4:

[Big_John]

$50 billion? bill gates could have straight up bought merrill lynch. lol?

[TevashSzat]

Well, its not THAT bad as it may sound. It would affect Wall Street alot more than "Main Street" or the common man. That being said, this recent trend with Bears Sterns and now these two is very troubling. AIG may also be in some financial troubles too from what I am hearing

[Ice]

Well, its not THAT bad as it may sound. It would affect Wall Street alot more than "Main Street" or the common man. That being said, this recent trend with Bears Sterns and now these two is very troubling. AIG may also be in some financial troubles too from what I am hearing

Three out of the five main investment bank firms failing is VERY BAD. Getting into my core accounting studies and paying attention the news has taught me that regulation is a good thing.

[FactionHeir]

Natural selection and the lifecycle of the economy.

Nothing that won't at some point take a turn for the better again.

[Sasaki Kojiro]

And AIG will declare bankruptcy tomorrow...

[Ice]

Natural selection and the lifecycle of the economy.

Nothing that won't at some point take a turn for the better again.

Well yeah... that's the nature of cyclical economies. The question is how bad is it and WHEN will it take a turn for the better.

[seireikhaan]

Slash and Burn.

I have faith(and REALLY hope it isn't misplaced:sweatdrop:) that out of the ashes, new innovation and management will emerge from someplace new.

However, in the meantime, of course, that means we're in the flames.

[Lemur]

Getting into my core accounting studies and paying attention the news has taught me that regulation is a good thing.
Why do you hate freedom?

[Crazed Rabbit]

Slash and Burn.

I have faith(and REALLY hope it isn't misplaced:sweatdrop:) that out of the ashes, new innovation and management will emerge from someplace new.

However, in the meantime, of course, that means we're in the flames.

Bah. The management is getting golden parachutes and will have tens of millions of dollars.

We need a law, so that if public funds are used to bail a company out, the top tiers of management go to a real criminal (not white collar) jail, for at least five years, and more the higher your position.

That might be a bit harsh, so maybe we should just seize their assets.

CR

[seireikhaan]

Bah. The management is getting golden parachutes and will have tens of millions of dollars.

We need a law, so that if public funds are used to bail a company out, the top tiers of management go to a real criminal (not white collar) jail, for at least five years, and more the higher your position.

That might be a bit harsh, so maybe we should just seize their assets.

CR
I never stated it was perfect; nor did I say that the new "out of ashes" companies wouldn't themselves rage into an inferno eventually. However, you're dead right that the golden parachutes are ridiculous. You're actually quite more lenient than me on it(see my post in the other thread:sweatdrop:).

EDIT: Cripes, I think I had about 20 posts today. :sweatdrop:

[Ice]

Why do you hate freedom?

Actually, Lemur, I love freedom. Regulation in the financial sector insures freedom loving people have a fair chance and play by the rules. God I sound like such a democrat. :beam:

[Ice]

Bah. The management is getting golden parachutes and will have tens of millions of dollars.


Although I agree somewhat, the golden parachute has it's uses. It's a good defense mechanism for hostile takeovers. It definately needs tweaked though.

[KukriKhan]

Bah. The management is getting golden parachutes and will have tens of millions of dollars.

We need a law, so that if public funds are used to bail a company out, the top tiers of management go to a real criminal (not white collar) jail, for at least five years, and more the higher your position.

That might be a bit harsh, so maybe we should just seize their assets.

CR

Here, Here!!

If it's "too big to fail", it's too damn big. And paying off the hired guns (aka CEO's and CFO's) to preside over the demise, and try to hook the taxpayer to bail them out = Grand Theft, Corporate.

We sould make a game outta this debacle.

[CountArach]

Actually, Lemur, I love freedom. Regulation in the financial sector insures freedom loving people have a fair chance and play by the rules. God I sound like such a democrat. :beam:
*Cackles maniacally*

[FactionHeir]

My economic study times have been a long while ago now, but I've been wondering, why should the average Joe out there care if an investment bank goes bust or not. Don't they just make rich people richer and give a way for a select few people to make money quickly? Outside of that, how do they impact on the average Joe out there anyway, who doesn't invest in stocks, fonds and bonds?

[Rhyfelwyr]

Why do you hate freedom?

I was about to make exactly the same post before I scrolled down. :wall:

The disease is spreading...


Actually, Lemur, I love freedom. Regulation in the financial sector insures freedom loving people have a fair chance and play by the rules. God I sound like such a democrat. :beam:

Yep you just crossed the line into the European zone of 'freedom from', you Communist!

[CountArach]

My economic study times have been a long while ago now, but I've been wondering, why should the average Joe out there care if an investment bank goes bust or not. Don't they just make rich people richer and give a way for a select few people to make money quickly? Outside of that, how do they impact on the average Joe out there anyway, who doesn't invest in stocks, fonds and bonds?
I don't know about America, but down here most of the retirement funds that people get are put into investment funds that invest in all of the above things - hence a huge drop like this that is likely to cause a great deal of problems for retirement plans. I know that last quarter almost all of the retirement funds in Australia lost money and I expect that this quarter will be much the same.

Plus it can cause job losses.

[SwordsMaster]

Ah, the downside of capitalism. I have no compassion for them. Indiscriminate gambling at every level of management and cutthroat internal politics are recipe for this kind of thing. It's about time Wall Street went down the tubes. They're still paying for the excess days of the 80s. I say the more the merrier.

[FactionHeir]

So basically the investors are playing with people's retirements and themselves getting paid 6 digit bonusses in addition to their salary. Those bonusses could go into the retirement funds to alleviate the problem.

[KukriKhan]

I don't know about America, but down here most of the retirement funds that people get are put into investment funds that invest in all of the above things - hence a huge drop like this that is likely to cause a great deal of problems for retirement plans. I know that last quarter almost all of the retirement funds in Australia lost money and I expect that this quarter will be much the same.

Plus it can cause job losses.

Much the same here (re: the effect of all this on "average Joe") Since the demise of the fixed-benefit retirement plans of pre 1980's, most pension plans ride the market, looking for the best return on investment - and they are major players. CalPERS (Calif state employees pension) and TSP (federal & military retirement plan) are huge. The end result is that "average Joe" who'd hoped to retire at 55, 56, 57 years old, will now have to work into his 60's, and maybe even have to rely (gasp!) on that old beast, Social Security to sustain himself.

[Adrian II]

There is an upside to everything. Complete collapse of society would allow me to indulge in my horrific underlying blood lust while forging massive alliances.Aye, there's a man after my heart! :bow: :laugh4:

[Vladimir]

Aye, there's a man after my heart! :bow: :laugh4:


Well, plans to paint the world orange aside, what this really shows us is that even large mega corporations can collapse. Maybe they don't run the world after all. Or maybe some bigger, megaer corporation is secretly pulling the strings here. :stupido2:

Maybe it's the work of Big Bottled Water! :stupido2:

[ICantSpellDawg]

Bah. The management is getting golden parachutes and will have tens of millions of dollars.

We need a law, so that if public funds are used to bail a company out, the top tiers of management go to a real criminal (not white collar) jail, for at least five years, and more the higher your position.

That might be a bit harsh, so maybe we should just seize their assets.

CR

I agree. There needs to be a real and serious punishment for these kinds of failures. Ir reminds me of a sure thing massive bank robbery. These guys are taking home a million or more a year for years running and covering up data to make their salaries higher - bank robbery.

Send them to a sodomy filled prison for 5 years.

[Crazed Rabbit]

So basically the investors are playing with people's retirements and themselves getting paid 6 digit bonusses in addition to their salary. Those bonusses could go into the retirement funds to alleviate the problem.

It seems to me that the firms failing right now aren't the traditional stock and mutual funds, but firms that have made up a bunch of new financial gimmicks, I suppose you could call them, new packages to invest in couple with very poor risk management, and its those firms that are suffering.

So I don't think we'll see a huge problem for the common man. I'm reading up at realclearmarkets right now, though.


Plus it can cause job losses.

Why do you care for Wall Street fools?

CR

[Oleander Ardens]

Some gained much, some lost much. Usually the sum of all of it is positive. That is capitalism.

[Lemur]

Some gained much, some lost much. Usually the sum of all of it is positive. That is capitalism.
Um, sure, yeah, that sounds great. I take it you haven't really been following this issue?

[Ironside]

It seems to me that the firms failing right now aren't the traditional stock and mutual funds, but firms that have made up a bunch of new financial gimmicks, I suppose you could call them, new packages to invest in couple with very poor risk management, and its those firms that are suffering.

So I don't think we'll see a huge problem for the common man. I'm reading up at realclearmarkets right now, though.

Why do you care for Wall Street fools?

CR

CR, what's the supposed downside for the common man by Obamas tax reform? :juggle:

[TinCow]

So I don't think we'll see a huge problem for the common man.

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 (http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/09/how_banks_depend_on_aig.html).

[drone]

When I see this commercial these days, I can't help but to laugh.
https://www.youtube.com/watch?v=9VvGW98D3XA

[Crazed Rabbit]

CR, what's the supposed downside for the common man by Obamas tax reform? :juggle:

The overall economy suffers.

CR

[Ironside]

The overall economy suffers.

CR

And that's because?....

[PanzerJaeger]

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...

[Lemur]

Look what Sarbanes-Oxley has done...
Hey Sarbanes-Oxley gave us a kickin' rap song (http://www.dailynugget.com/sounds/SOX-31.mp3).

My name is Paul last name Sarbanes
Keep chuggin' along I've heard all your pains
I know the days are long and the nights are short
But it's really sad that people try to extort
And we couldn't let things keep goin' on
Cuz there's a lot of companies like Enron
Yea the list is long but we think it's for the best
We had to make it safe for everyone to invest

Yea well my name is Mike last name Oxley
Some think it's overkill but please don't knock me
We had to protect investors from fraud
We wanna minimize the risk for anyone could rob
I think me and Paul finally got it figured out
But I'm sure some of you will continue to doubt
We knew there was something that we had to do
And now you got the Sarbanes-Oxley Act of 2002

Chorus:
Clockin' lots of hours on section 404
I go to work early and I get home late
Clockin' lots of hours on section 404
No time to waste, can't miss the due date
Clockin' lots of hours on section 404
I can pretty much kiss my vacation goodbye
Clockin' lots of hours on section 404
I wish my fiscal year ended in July

I'm the SEC so don't mess with me
I'm gonna tell you 'bout the PCAOB
They're gonna show up at your front door,
Checkin' out your section 404
So you gotta make sure that you get done
And I know for sure it's not gonna be fun
You need to buckle down, you need to get your mind straight
Cuz this is something that rella just can't wait

Yo my name's COSO and I know control
So jump on board and get ready to roll
I brought this up back in '92
But this is something that nobody wanted to do
Y'all probably know my acronym of crime
It just didn't fit and it was hard to rhyme
But these are the things that you need to know
If you think you're gonna make it in the big show

Chorus

Now we haven't even talked about the Big Fat 4
Everybody knows, they're the consultin' whores
It's bad enough when they only had audit
And now with SOX, now they know they really got it
PwC, E&Y, and Deloitte
KPMG, hell they all exploit
The partners at the top make all the cash
While the ones at the bottom have to bust their ass

Chorus and fade out

[Ironside]

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...

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.

[Goofball]

Companies fail. Sometimes Big companies fail. Sometimes big companies with allot of investments fail. Are we in a bad time? Yes. Should we be selling everything and moving to the woods? no.

Out of the mouths of babes...

[PanzerJaeger]

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.


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. :beam:)

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...

[CountArach]

Why do you care for Wall Street fools?

CR
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.

[LittleGrizzly]

but I can accept that the working class at this present time still have to work for someone.

Just for a little while longer ?

[Xiahou]

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.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.

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. :dizzy2:

[Crazed Rabbit]

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.

"at this present time" -oh, you're priceless.

But I don't think we'll be seeing a lot of people outside of these firms loose their jobs. These firms were using a fundamentally risky and flawed business strategy.

AIG could be more problematic.

CR

[Strike For The South]

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.

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

[Strike For The South]

Out of the mouths of babes...

A biblical reference! I love you!!

[drone]

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/companies/AIG/index.htm?cnn=yes

Next!




And can a mod merge the Freddie/Fannie thread with this one, they are pretty much dupes at this point. :bow:

[Xiahou]

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?

[CountArach]

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
I don't want a revolution - nor would I ever. I believe in Democracy much more than I believe in Socialism.

Just for a little while longer ?
The working class is always going to work for someone, I would just rather that it was the Government in many more cases.

Anyway that isn't important right now, back on topic...

[SwordsMaster]

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.

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. :dizzy2:

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. (http://www.ft.com/cms/s/0/6ff9306c-83f1-11dd-bf00-000077b07658.html)..

[Tribesman]

Well, firstly, only the government can undo government regulation, so yes, in fact we do need more regulation.

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 .
Is it all of it or just most of it?

In the current mortgage crisis, the government encouraged lenders to make loans to people they would otherwise be hesitant to lend to.
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 ?

the industry will learn from their mistakes.

Thats what they say every time , yet every time they don't learn and its the taxpayer who gets shafted .

[Hosakawa Tito]

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 punished thank goodness for bribery...er I mean campaign donations and the taxpayers bailout will ensure they receive their multi-millon dollar paychecks and golden-parachute serverance and pensions. Thanks chumps!:pirate2:

[drone]

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?

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 (https://www.youtube.com/watch?v=KX61PUZ3xkI) to start taking over Wall Street. :pirate2:

[HoreTore]

Getting into my core accounting studies and paying attention the news has taught me that regulation is a good thing.

Have you turned communist? :inquisitive:

[Banquo's Ghost]

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.

[TevashSzat]

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?

[drone]

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.

The Post did mention the Fed's money raising efforts:
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/17/AR2008091701403.html?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.

[SwordsMaster]

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?


Of course, everyone becomes a conservative when it's their money.

[Mangudai]

Regular investors like you and me are protected by SIPC insurance. So the little guy shouldn't lose his retirement account if his broker goes bankrupt.

If AIG went bankrupt many people think a bunch of other banks around the world would be pulled down by it.







AIG is saying here that it has insured $307bn of corporate loans and prime residential mortgages that are on the balance sheets of banks, mostly European banks.

The banks have bought this insurance to protect themselves against the risk that these loans would go bad, that borrowers would default.

Their motive for doing so was to reassure their respective regulators - such as the FSA for UK banks - that these loans are of minimal risk.

And the benefit of doing that was that they could lend considerably more relative to their capital resources.

But if AIG is in trouble, then doubts arise about whether it would be able to honour the financial commitments it has made through these insurance contracts (which, for those of you who like to learn the lingo, are called super senior credit default swaps).

In fact, in a wholly mechanistic way, the downgrades of AIG's credit rating that we saw last night automatically increased the perceived riskiness of loans made by banks that have insured credit with AIG.

Which means those banks' balance sheets become weaker - and that could mean that they'll be forced by their regulators to raise additional capital.

So there's a widespread view among bankers that the US Treasury and the Federal Reserve simply can't allow AIG to fail, in the way that they felt that they could allow Lehman to collapse into insolvency.

If AIG went down, a number of banks' balance sheets would be mullered - there would a dangerous risk to the stability of the global financial system.

[Oleander Ardens]

There is a huge run on Treasury Bills, the largest since 1955 even if the yields are nearing zero. This means more money to spend for the US.

[SwordsMaster]

There is a huge run on Treasury Bills, the largest since 1955 even if the yields are nearing zero. This means more money to spend for the US.

... Yeah, on foreign debt and bailing out banks. Plus there are 5.6 million more unemployed people than this time last year. Or put another way, 2.6 people per job opening. And the USD is starting to fall.

You might find this (http://www.nytimes.com/interactive/2008/09/15/business/20080916-treemap-graphic.html) informative

PS: Can a mod please spell Lehman right in the title?
Edit2: Thanks!

[drone]

On Morgan Stanley and Goldman Sachs, the theory is that their stock prices got hammered yesterday by short sellers. A little schadenfreude profiteering going on, consequences be damned. :pirate2: While still profitable, they are so leveraged that they can't afford bad perceptions.

[HoreTore]

To quote Dilbert;

Let's leverage our synergies by forming a pro-active task force to re-engineer our core processes!

[Adrian II]

Thats what they say every time, yet every time they don't learn and its the taxpayer who gets shafted.Agreed. That's why I opened the other thread about what could and should be done in the way of regulation of markets. Panzerjaeger is right that mismanagement is not a crime. And Crazed Rabbit is right that under a favouritist regime mismanagement is actually 'good' (profitable) management. Structural change is needed, but social structures are not that pliable. Outside police states, that is.

[Vladimir]

Looks like Russia is having the same problem:

http://www.russiatoday.com/business/news/30650

[Hosakawa Tito]

Could be nothing to it, but the New York State AG is starting an investigation into short-selling activity with these companies. CLICKY (http://news.yahoo.com/s/ap/20080918/ap_on_bi_ge/cuomo_short_selling)


Panzerjaeger is right that mismanagement is not a crime.

Perhaps, but being richly rewarded for it should be. Management has the right to manage, but that doesn't infer the right to mis-manage.

[Strike For The South]

hmmmmm. The more I think it about it the more I think publicly traded companies are a bad investment

[yesdachi]

hmmmmm. The more I think it about it the more I think publicly traded companies are a bad investment

I think it depends entirely upon the company. :bow:

[yesdachi]

Well the market took a big upward swing this afternoon after hearing that the Treasury Department has a plan to bail out financial institutions by buying their bad assets. Clicky (http://articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches-091808.aspx)


The bank rescue concept, as reported by CNBC, would involve creating a federally-chartered company that would buy the bad assets of banks, investment banks and others. The financial institutions would then be able to raise new capital and lend money and finance new ventures.

Sounds like a great deal if you are a bank, I wonder if the banks will offer a similar deal to their credit card holders. The banks could take back some of the “bad assts” that were purchased with credit and allow me card holders to borrow more money and finance new bad assets ventures. ~D

[SwordsMaster]

Yeah. (http://economistsview.typepad.com/economistsview/2008/09/rogoff-america.html#more) So what? That's a whole lot of optimism.

[KukriKhan]

Yeah. (http://economistsview.typepad.com/economistsview/2008/09/rogoff-america.html#more) So what? That's a whole lot of optimism.


It may prove to be possible to fix the system for far less than $1,000bn- $2,000bn.

$2,000bn = $2,000,000,000,000. That's a lot of zero's. No wonder they don't wanna say "2 Trillion", being charged on the gov't credit card.

"A Million here, a Million there... pretty soon we're talking real money." :laugh4:

Thank St. Jude that the Chinese have sold enough trinkets to the US consumer, to finance the US taxpayer's "obligations", for which they, nor their elected representatives, never voted.

[ICantSpellDawg]

There is no free market, only a freer market. I'm surprised to hear ideological indignation from fiscal conservatives about regulation. It is disgusting that the Federal government is doing all of these bailouts. It is disgusting that the corruption has run so deep for so long. I support discussions about a solution to this stuff that won't result in another insane bailout putting all of the risk on taxpayers and all of the payout to the mis-management.

Anti-trust and monopoly laws were a good thing from what I know about them - these were'nt "free-market" moves, but they sure were sensible ones. People who believe the government should have nothing to do with anything are anarchists. Markets are tools for good when you keep fraudsters to a minimum - when they run rampant, markets tear peace and stability apart.

I'm for what works both in the short and long term. Capitalism has nothing to do with my moral code unless it is a tool to strengthen it. When it becomes an impediment or it becomes more useful to degenerates we should all take another look.

[PanzerJaeger]

Perhaps, but being richly rewarded for it should be. Management has the right to manage, but that doesn't infer the right to mis-manage.

Thats just populism.

A company can hire a monkey as CEO if it so desires. The responsibility to ensure that a business is managed correctly lies with the board and the investors, not the government.

Somewhere along the line, these golden parachutes had to be disclosed to, if not approved by, shareholders. They certainly weren't on the first page of the annual report, but the information was acessible. If a shareholder didn't believe in that sort of compensation, it was his responsibility to sell the stock or lobby to get it changed.

I remember an older gentleman who invested that I used to help after school for required service hours. He watched his stocks every day and took an active interest in the companies he "owned". He could recite business plans, past and present variables, and even bios on important people in management.

Nowadays, you're lucky to find someone who checks their investments more than quarterly - more often than not its annually. 401ks and the like have thrown a huge number of people in the market who don't really know how it works or even care as long as they make money; then when things go bad, they're all looking for someone to blame. In general, the market has become a far more impersonal atmosphere with more and more power put in the hands of brokers who more than likely all go to the same country club.

If people dont have the time to educate themselves on what they are buying into, maybe they should invest in something less risky. /endrant

[HoreTore]

A company can hire a monkey as CEO if it so desires. The responsibility to ensure that a business is managed correctly lies with the board and the investors, not the government.

The problems starts when the company gets so big that what they do affect pretty much every single business in the country.

It's not a lot of fun to see the company you built for yourself get bankrupt because some idiot did something you had absolutely zero control over. It's not very capitalist either.

[Strike For The South]

Thats just populism.

A company can hire a monkey as CEO if it so desires. The responsibility to ensure that a business is managed correctly lies with the board and the investors, not the government.

Somewhere along the line, these golden parachutes had to be disclosed to, if not approved by, shareholders. They certainly weren't on the first page of the annual report, but the information was acessible. If a shareholder didn't believe in that sort of compensation, it was his responsibility to sell the stock or lobby to get it changed.

I remember an older gentleman who invested that I used to help after school for required service hours. He watched his stocks every day and took an active interest in the companies he "owned". He could recite business plans, past and present variables, and even bios on important people in management.

Nowadays, you're lucky to find someone who checks their investments more than quarterly - more often than not its annually. 401ks and the like have thrown a huge number of people in the market who don't really know how it works or even care as long as they make money; then when things go bad, they're all looking for someone to blame. In general, the market has become a far more impersonal atmosphere with more and more power put in the hands of brokers who more than likely all go to the same country club.

If people dont have the time to educate themselves on what they are buying into, maybe they should invest in something less risky. /endrant

Agreed.

[PanzerJaeger]

The problems starts when the company gets so big that what they do affect pretty much every single business in the country.

It's not a lot of fun to see the company you built for yourself get bankrupt because some idiot did something you had absolutely zero control over. It's not very capitalist either.

Thats part of the market, with or without the current credit crisis. If WalMart tanked for whatever reason, how many dozens of suppliers would they take down with them?

The problem is that people think, through regulation, we can change the fundamentals. You cannot remove risk from the market.

[Crazed Rabbit]

Well the stock markets have done pretty well.

CR

[Caius]

Indeed. Here the market reacted VERY well. But you never know. Now, what will happen if the thing goes out of control?

[Tribesman]

Indeed. Here the market reacted VERY well.
Its amazing how well a market can react when you throw a trillion dollars to it .:idea2:

[Hosakawa Tito]

Thats just populism.

A company can hire a monkey as CEO if it so desires. The responsibility to ensure that a business is managed correctly lies with the board and the investors, not the government.

Somewhere along the line, these golden parachutes had to be disclosed to, if not approved by, shareholders. They certainly weren't on the first page of the annual report, but the information was acessible. If a shareholder didn't believe in that sort of compensation, it was his responsibility to sell the stock or lobby to get it changed.

I remember an older gentleman who invested that I used to help after school for required service hours. He watched his stocks every day and took an active interest in the companies he "owned". He could recite business plans, past and present variables, and even bios on important people in management.

Nowadays, you're lucky to find someone who checks their investments more than quarterly - more often than not its annually. 401ks and the like have thrown a huge number of people in the market who don't really know how it works or even care as long as they make money; then when things go bad, they're all looking for someone to blame. In general, the market has become a far more impersonal atmosphere with more and more power put in the hands of brokers who more than likely all go to the same country club.

If people dont have the time to educate themselves on what they are buying into, maybe they should invest in something less risky. /endrant

The traditional public bulwark against such galloping greed is deligent government regulation, but the dozing watchdogs of Congress and the Bush administration weren't much interested in ensuring that investment banks offering mortgages had enough reserves to cover bad loans.

The repeal of the Glass-Steagall Act in 1999 should be reversed. This law seperated commercial banks from investment banks, whose investments tend to be riskier. Investment banks aren't subject to regulation by the Federal Reserve, and after the 1999 repeal, whenever investment banks bought out commercial banks and then dived into the subprime mortgage game, customers of commercial banks were put at unsought risk through financial instruments whose increasing complexity has made them all but impossible to understand.

Now that taxpayers "own these companies" I demand that my government representatives ensure that we (through our government) are ceded a 75 percent stake in these companies affairs with the right to change (fire without recompense) senior management. Members of the Board should be barred from ever serving on another, and be subject to civil lawsuits from shareholders for their negligence. This might help restore investor confidence in the market.

[Ice]

There is no free market, only a freer market. I'm surprised to hear ideological indignation from fiscal conservatives about regulation. It is disgusting that the Federal government is doing all of these bailouts. It is disgusting that the corruption has run so deep for so long. I support discussions about a solution to this stuff that won't result in another insane bailout putting all of the risk on taxpayers and all of the payout to the mis-management.

Anti-trust and monopoly laws were a good thing from what I know about them - these were'nt "free-market" moves, but they sure were sensible ones. People who believe the government should have nothing to do with anything are anarchists. Markets are tools for good when you keep fraudsters to a minimum - when they run rampant, markets tear peace and stability apart.

I'm for what works both in the short and long term. Capitalism has nothing to do with my moral code unless it is a tool to strengthen it. When it becomes an impediment or it becomes more useful to degenerates we should all take another look.


It's not disgusting at all, Tuff. It's easy to speak of theory. What's difficult is actually sticking to that theory and watching the economy go in the crap hole for a long time.

[Strike For The South]

It's not disgusting at all, Tuff. It's easy to speak of theory. What's difficult is actually sticking to that theory and watching the economy go in the crap hole for a long time.

agreed SOmetimes you have to know when to cash your chips and stuff theory for the sake of the nation, It was one of those times and Im really glad the goverment did what they did. It could've been worse much worse

[Lemur]

We didn't need that trillion dollars (http://www.washingtonpost.com/wp-dyn/content/article/2008/09/19/AR2008091901059_pf.html), anyway.

[Strike For The South]

We didn't need that trillion dollars (http://www.washingtonpost.com/wp-dyn/content/article/2008/09/19/AR2008091901059_pf.html), anyway.

I dont like it either but what is the alternative?

[Lemur]

I don't know, Strike. And if this bailout goes through we'll never know. I'm going to wait and read what people who do nothing but sit around and study economics have to say about it before I get really depressed.

But I tell ya, between the trillion dollars we sunk into Iraq and the trillion we're going to throw into propping up the financial markets and the other three trillion that somehow got frittered away in debt spending over the last eight years, I'm going to occupy a lot of my later life apologizing to my son and daughter.

Sucks to be them.

-edit-

I see someone already made a film (https://www.youtube.com/watch?v=Ns7geQX2xZU&feature=related) about this.

[Strike For The South]

I don't know, Strike. And if this bailout goes through we'll never know. I'm going to wait and read what people who do nothing but sit around and study economics have to say about it before I get really depressed.

But I tell ya, between the trillion dollars we sunk into Iraq and the trillion we're going to throw into propping up the financial markets and the other three trillion that somehow got frittered away in debt spending over the last eight years, I'm going to occupy a lot of my later life apologizing to my son and daughter.

Sucks to be them.

-edit-

I see someone already made a film (https://www.youtube.com/watch?v=Ns7geQX2xZU&feature=related) about this.

I agree.

[KukriKhan]

Its amazing how well a market can react when you throw a trillion dollars to it .:idea2:

Or 2 or 3. Hey, what's a buncha zero's among friends anyway, right?

I am stunned. When President George W. Bush said in early 2001 that he'd "looked into the eyes, and seen the soul" of Comrade Putin - I admit, I never for a nano-second imagined that he meant anything like: "...and he's right, we should collective-ize all our resources in the name of the people".

Wow. Soviets ftw.

Welcome to the USAR (Union of Soviet American Republics).

Resistence is futile.

[Mangudai]

Wow, a lot of credible people are saying we just stood at the abyss of another Great Depression. When money markets broke the buck and T bills sold at a discount, we were looking at financial armageddon. It looks like the new Fed plan might work. But, I don't believe the rally of 9/18, 9/19. I'm selling a crap load of stock first thing monday morning.

On the subject of regulation; ideology and oversimplification are not helpful. The lassiez faire, caveman capitalism view is naive. Modern markets exist in a complicated legal framework, the system requires lots of lawyers and centuries of legal case history. The assets that a share of stock represents have no analog in the caveman world.

On the socialism side; there are many criticisms I don't have time to go into all of them. My main critique is that economics involves fundamental uncertainty, subjective valuation, and lots of decision making that is arbitrary and capricious.

In a nutshell, I believe the proper approach to regulation is to regulate in the interest of preventing really bad things from happening. We should not regulate in the interest of planning a specific course of improvement. Note that Fannie and Freddie were the most highly regulated financial institutions in the US with a government defined mission to promote home ownership.

The traditional right-left distinctions are fading in importance (individual liberty-collective responsibility, equality). A new distinction is gaining in importance. Those who welcome uncertainty and unpredictability vs those who wish to plan a specific course of change.

[Banquo's Ghost]

Thats just populism.

A company can hire a monkey as CEO if it so desires. The responsibility to ensure that a business is managed correctly lies with the board and the investors, not the government.

Somewhere along the line, these golden parachutes had to be disclosed to, if not approved by, shareholders. They certainly weren't on the first page of the annual report, but the information was acessible. If a shareholder didn't believe in that sort of compensation, it was his responsibility to sell the stock or lobby to get it changed.

I remember an older gentleman who invested that I used to help after school for required service hours. He watched his stocks every day and took an active interest in the companies he "owned". He could recite business plans, past and present variables, and even bios on important people in management.

Nowadays, you're lucky to find someone who checks their investments more than quarterly - more often than not its annually. 401ks and the like have thrown a huge number of people in the market who don't really know how it works or even care as long as they make money; then when things go bad, they're all looking for someone to blame. In general, the market has become a far more impersonal atmosphere with more and more power put in the hands of brokers who more than likely all go to the same country club.

If people dont have the time to educate themselves on what they are buying into, maybe they should invest in something less risky. /endrant

You make excellent points, but only I fear, from a theoretical standpoint.

The vast majority of shareholders are in fact, institutions rather than the little old man you idealise. These institutions are run by people keen to perpetuate their own share options, golden parachutes and excessive salaries. Whilst the market does act on these interests, one can see rather too many instances of smaller investors being over-ruled at meetings on remuneration, and when companies go bust, the same fellows in charge end up in a cushy chairmanship next door.

The system works, but not when significant stresses are applied, and not through the actions or otherwise of small investors.

Well, rarely. :beam: Tuff, you asked in another thread how the US choice of leaders affected my life. Well, your lovely President Bush and his Treasury Secretary have just given me a goodly sum of your tax dollars, bless them. My financial manager bought up banking shares in the UK and Ireland because we both felt, as a long term investment, they were near bottom and could only recover in the next few years. As it happened, Secretary Paulson promising loads of tax dollars to buy up banker's toxic debt kicked them back into the stratosphere in one day, and we sold 'em all again for an average 70% return.

Hurrah for American Socialism! :birthday2:

[Husar]

Welcome to the USAR (Union of Soviet American Republics).

You mean the uhm... Historic Union of Soviet American Republics... yeah, sounds a lot better to me. :mellow:

In related "news" I saw that some german bank dealing with tax money in some way sent 300 Million Euros to that Lehman bank on Monday, after the collapse of the bank was known since Saturday so they basically threw 300 million Euros taxpayer money out of the window(or so the news said anyway). Now they're looking for someone to blame of course but that could be hard, someone said such transactions have to be signed by several people.
My question is if the government helps the bank with what you call a bailout, wouldn't that mean that all those investments aren't lost after all, isn't that the whole point anyway?

[Xiahou]

The traditional public bulwark against such galloping greed is deligent government regulation, but the dozing watchdogs of Congress and the Bush administration weren't much interested in ensuring that investment banks offering mortgages had enough reserves to cover bad loans.I'd argue that the best bullwark against "galloping greed" is the greed of others. Companies rarely become exploitative, because they'll lose customers to competitors who aren't. The trouble comes when you have the government wading in to "fix" things. Just as much as you can count on greed in the free market, you can count on corruption and incompetence when it comes to government.

Setting aside the inherently corrupt nature of government sponsored enterprises like Fannie and Freddie (http://money.cnn.com/2008/07/11/news/economy/fannie_freddie.fortune/index.htm), let's skip to more recent history- when the Clinton administration came up with the “The National Homeownership Strategy: Partners in the American Dream” plan. Here's an article from back in February that lays some of the blame for the current mess there.
Plenty of other ideas in the plan did become reality, though. Knowing what we know now about the housing bust, the earnest language in the document seems faintly ridiculous. Here's an excerpt. Read it closely and you can see the seeds of disaster being planted:


For many potential homebuyers, the lack of cash available to accumulate the required downpayment and closing costs is the major impediment to purchasing a home. Other households do not have sufficient available income to to make the monthly payments on mortgages financed at market interest rates for standard loan terms. Financing strategies, fueled by the creativity and resources of the private and public sectors, should address both of these financial barriers to homeownership.

Note the praise for "creativity." That kind of creativity in stretching boundaries we could use less of. Mason puts it well: "It strikes me as reckless to promote home sales to individuals in such constrained financial predicaments."Obviously, Bush continued on with similar policies- encouraging (forcing) businesses to make loans to people who were bad risks. The now obvious result of all of this is the mess we're in today.

The government caused the problem, so pardon me for remaining skeptical when people say the government will do it right next time, with more regulation and favoritism. The nationalization of companies and obscenely expensive bailouts is disgusting, but we have little alternative given the mess we're now in. The question will be what do we do when we're finally out of the woods?

[Husar]

when we're finally out of the woods?

You really think you'll ever get there? :laugh4:

[KukriKhan]

You mean the uhm... Historic Union of Soviet American Republics... yeah, sounds a lot better to me.

I bow to superior acronymity. :bow:

Are you still sure you want to come live here? At least over there, as far as I can tell, you guys pretty much abide by your constitution. Over here, we seem to have moved from ignoring ours, to dousing it with gasoline, setting it on fire, and stomping it to smithereens. Then charging the citizenry for the paper, gasoline, and cleanup costs.

[Oleander Ardens]

What a terrible day for stocks. If they go up like that markets will go down low in the long term. Well anyhow, thanks to the American taxpayer for lifting my few remaining stocks :clown:

[CountArach]

The Financial Bailout Bill (http://blogs.wsj.com/economics/2008/09/20/treasurys-financial-bailout-proposal-to-congress/)was released today and, surprise, surprise there is a power grab in it (http://www.npr.org/blogs/money/2008/09/now_we_see_it_the_white_house.html#more):

I would guess that this has to be one of the biggest peacetime transfers of power from Congress to the Administration in history. (Anyone know?). Certainly one of the most concise.

The Treasury Secretary can buy broadly defined assets, on any terms he wants, he can hire anyone he wants to do it and can appoint private sector companies as financial deputies of the US government. And he can write whatever regulation he thinks are needed.

I understand that they wanted freedom to respond and an ability to move quickly, but to designate the Treasury Secretary full power to oversee the, uh, Treasury Secretary's decisions seems unusual. Especially given that Congress only gets a report twice a year:


Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

This graph really stands out:


Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Whoa.

So, for the next three months, and then an additional six months after that, the Treasury Secretary can do anything he deems appropriate without anybody anywhere looking it over.

[KukriKhan]

The Financial Bailout Bill (http://blogs.wsj.com/economics/2008/09/20/treasurys-financial-bailout-proposal-to-congress/)was released today and, surprise, surprise there is a power grab in it (http://www.npr.org/blogs/money/2008/09/now_we_see_it_the_white_house.html#more):

The transition to the Imperial Presidency is almost complete. Just throw the Dept of Transportation and the FCC under Homeland Security, and give the Post Office the power to charge their own rates anytime they want, and charge mail recipients 10 cents per piece for the privilege of picking up their mail at a secure, semi-disclosed location...

and we're there. All Hail King George!

No wonder those guys fight tooth-and-nail for the job. Won't they be disappointed when, by Executive Order, for the good of the country, as a "temporary" measure, martial law is declared, elections are postponed indefinitely, Congress and haebeus corpus are suspended, and for added security, soldiers are stationed in private homes. But hey! the trains will run on time.

1776.

Dust off yer muskets, lads.

[CountArach]

I think Senator Bernie Sanders has a good plan (http://www.sanders.senate.gov/news/record.cfm?id=303313) that will punish the people who actually caused this mess rather than the regular tax payer.

Specifically, to pay for the bailout, which is estimated to cost up to $1 trillion, the government should:

a) Impose a five-year, 10 percent surtax on income over $1 million a year for couples and over $500,000 for single taxpayers. That would raise more than $300 billion in revenue;
b) Ensure that assets purchased from banks are realistically discounted so companies are not rewarded for their risky behavior and taxpayers can recover the amount they paid for them; and
c) Require that taxpayers receive equity stakes in the bailed-out companies so that the assumption of risk is rewarded when companies’ stock goes up.

(2) There must be a major economic recovery package which puts Americans to work at decent wages. Among many other areas, we can create millions of jobs rebuilding our crumbling infrastructure and moving our country from fossil fuels to energy efficiency and sustainable energy. Further, we must protect working families from the difficult times they are experiencing. We must ensure that every child has health insurance and that every American has access to quality health and dental care, that families can send their children to college, that seniors are not allowed to go without heat in the winter, and that no American goes to bed hungry.

(3) Legislation must be passed which undoes the damage caused by excessive de-regulation. That means reinstalling the regulatory firewalls that were ripped down in 1999. That means re-regulating the energy markets so that we never again see the rampant speculation in oil that helped drive up prices. That means regulating or abolishing various financial instruments that have created the enormous shadow banking system that is at the heart of the collapse of AIG and the financial services meltdown.

(4) We must end the danger posed by companies that are “too big too fail,” that is, companies whose failure would cause systemic harm to the U.S. economy. If a company is too big to fail, it is too big to exist. We need to determine which companies fall in this category and then break them up. Right now, for example, the Bank of America, the nation’s largest depository institution, has absorbed Countrywide, the nation’s largest mortgage lender, and Merrill Lynch, the nation’s largest brokerage house. We should not be trying to solve the current financial crisis by creating even larger, more powerful institutions. Their failure could cause even more harm to the entire economy.

[Banquo's Ghost]

The tax rise in a) is just theft for no good reason and will change nothing.

However, the following points have some merit, most especially 4). The increasing danger is that consolidation will result in a set of global institutions that are back-stopped by national taxpayers, but free from national policy. No organisation that benefits from market freedoms can be "too big to fail". Nor should they receive the advantages of incorporation.

[CountArach]

The tax rise in a) is just theft for no good reason and will change nothing.
I believe that 1a was more a way to raise the money to help pay off the debt and for the rest of the costs associated with paying for the assets. The money has to come from somewhere.

[Banquo's Ghost]

I believe that 1a was more a way to raise the money to help pay off the debt and for the rest of the costs associated with paying for the assets. The money has to come from somewhere.

Maybe a more focussed approach to these fellows (http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4795072.ece?token=null&offset=0&page=1).

[CountArach]

Maybe a more focussed approach to these fellows (http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4795072.ece?token=null&offset=0&page=1).
I wouldn't disagree with you there...

[Hosakawa Tito]

Maybe a more focussed approach to these fellows (http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4795072.ece?token=null&offset=0&page=1).

That is exactly the reason I protest these bailouts with no strings attached or punishment for the perpetrators involved, and this same sort of thing happens time & time again. They have no right to mismanage, monkey CEO's included, and expect to profit or be rewarded from it at taxpayer expense.

Unfettered, unregulated free markets ensures that every dirty financial trick will be used by some to manipulate and exploit for fun & profit. Controlling galloping greed by the greed of others, on this scale, is one can o' worms we don't want to open.

Senator Sanders' plan is a good start, let's hope it isn't too watered down.

[Mangudai]

http://www.icahnreport.com/report/2008/06/corporate-democ.html



It is the board’s responsibility to hold a CEO accountable, and remove the CEO if he or she is not producing results. But exacting such a measure requires effort and strategic consideration, and boards are often too lazy and/or passive to rock the boat, especially since the company will continue to pay and pamper and even indemnify them under almost any circumstances. Board members receive expensive tickets to important sporting events, the theatre, and are also treated to use of the company’s fleet. Worst of all, the board itself is not made accountable because corporate board elections are generally a joke.

Board meetings are often a complete travesty. I know because I have sat and do sit on a number of boards where I am in the minority. Because of this, today our economy is in a major crisis. Many of our companies are incapable of competing. Additionally our banking system has issued mortgages that cannot and will not be paid back. We are in this situation because there is no leadership in the executive suite. Why did we get here? Because in corporate America there are no true elections. It is tyranny parading as democracy. It’s a poison running through the blood of corporate America. Perhaps, with enough public support, the lawmakers and regulators will take note.

When you rid a company of a fruitless board, the rewards are often enormous because the underlying company and its employees can be excellent. It is the top level management that hangs like an albatross around the company’s neck. Years from now historians will marvel why we the shareholders – the legitimate owners of companies – did not do something effective about removing terrible managements. We can do something about the current situation. I will discuss in future entries how simple it can be and what has constrained us from taking action.






This country's corporate democracy – the primary mechanism of which is the election of a company's board of directors – is ineffectual. Every year, a company will circulate a proxy statement to its shareholders for their vote on a slate of board nominees, but those nominees are nominated by the board, and they nominate themselves or others that they deem to be "qualified."

It is possible for a shareholder to nominate directors, but the company does not have to include these nominees in the company's proxy statement. In an attempt to elect nominees to the board in a proxy fight a shareholder is forced to comply with arcane rules for prior notification and to prepare and circulate his or her own proxy statement at great expense. A proxy fight can cost millions of dollars out of the shareholders pocket.

Faced with a contested election for the board, management will spend the company's money (the assets of the shareholders) fighting to reelect themselves and their handed picked nominees. To add insult to injury, it's likely that the company has a staggered board In this case, even if the shareholder wins seats, the representation will not be the majority required to enforce action thus necessitating another proxy fight the following year. Occasionally newly elected directors, even if a minority of the board, are able to sway the incumbents. However, this is often very difficult to achieve – trust me, I've been there.

[Ronin]

Sinfest hits it (once again) right on the head.

https://img.photobucket.com/albums/v677/vincent_pt/sinfest_economy_titanic.gif

:laugh4:

[yesdachi]

If we have to bail out someone, would we be better off bailing out the people who foolishly over borrowed or the banks that let them.

[Lemur]

Read someone who rather summed up my feelings (http://andrewsullivan.theatlantic.com/the_daily_dish/2008/09/trust-us.html#more) this morning:


After nearly eight years, the phrase "trust us" no longer works. Now we're presented with a historically unprecedented bailout proposal for the nation's financial institutions. I have a jumble of differing reactions to this. First, for years the Republicans have sold us a deregulation mantra and suggested that any form of regulation is "socialism." But anyone who's actually read Adam Smith knows that he and other philosophers of free markets made plain from the outset that the state needs to guard the integrity of the marketplace. Smith says that there is a dark side to the entrepreneurial spirit that the state must guard against. This is not a rejection of market economics--it's a protection of the market place against those who abuse the freedoms it offers.

Second, we are as usual placed in a position in which great pressure is brought to bear to quickly accept a deal which will reverberate for decades without close inspection.

We are again told that things are vastly complicated and we should trust Treasury and the Fed to do the right thing. My trust reservoir is exhausted. I actually respect Paulson, but I also believe he is "playing the hand he's been dealt," as he said. This is not the way decisions should be taken that have long-term consequences for the nation's future. If in fact all of this bubbled to the surface quickly, without being anticipated, then the folks at Treasury are incompetent. However, I don't believe that for a second--I am convinced that in this case, again, the Bush Administration knew what was up and calculated that it could just muddle through until after the elections. We should all be apprehensive about what is coming after election day.

Third, the administration's proposals continue a process of socializing loss and preserving profits and distributions, many of which were made with full knowledge of the pending losses. When management distributes illusory profits to insiders in full knowledge of a massive loss, this is called a fraudulent conveyance, and in equity proceedings such distributions are routinely recovered for the creditor mass. There should therefore be a careful scrutiny of distributions of profits and bonuses by failed firms. The bailout we now see may mean effectively that taxpayer money is subsidizing the purchase of macmansions and Bentleys by investment managers who behaved irresponsibly. How can that happen? Only in the age of Bush.

Fourth, I really started steaming this morning reading the NYT article about the participation of foreign banks in the bailout. Granted that the US has an interest in protecting financial markets, but why should the US be bailing out German and UK firms? At least this should be a burden shared with their own governments. This really needs to be subject to some probing questions. What's going on here?

[TevashSzat]

Apparently, the Senate is not going to let this bailout pass too easily.

Basically, the Democrats won't let it happen unless there are strict regulations regarding qualification for the bailout and its terms and the Republicans won't let it because it is a bailout

[PanzerJaeger]

Read someone who rather summed up my feelings (http://andrewsullivan.theatlantic.com/the_daily_dish/2008/09/trust-us.html#more) this morning:

Blaming Bush and the Republicans for everything is quite laughable, but definitely reflective of your worldview. :2thumbsup:

[drone]

Where have we heard this before?
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/22/AR2008092200186.html?hpid=topnews

In his statement this morning, Bush urged Congress not complicate the administration's proposal, saying the plan needs to be passed quickly and relatively intact to stem damage to global financial markets.

Weekend negotiations "made good headway" in crafting a bill to bolster a system weighed down by problem home mortgages, Bush said. But with proposals circulating to include provisions for homeowners in the bill or to use it to limit executive compensation, Bush cautioned that too many added provisions could impede approval of critically needed legislation.

"Obviously, there will be differences over some details, and we will have to work through them," Bush said, but "the whole world is watching to see if we can act quickly to shore up our markets and prevent damage to our capital markets, businesses, our housing sector, and retirement accounts.

"Failure to act would have broad consequences far beyond Wall Street. It would threaten small business owners and homeowners on Main Street."
Quick, pass the bill without reading it, and hand over the power of the purse to the executive branch! ~:rolleyes: I wasn't sure what my feelings on the bailout bill were before, but these words scream "DANGER! DANGER!". Typical Bush administration crisis handling: let the situation get really, really bad, then demand extraordinary powers to "fix" it. The rape of the Treasury is almost complete.

Congress needs to really look at this bill before passing it. Let the markets flail for a bit, short term stability is not worth the price of poor legislation in this situation.


In other news, we have no more investment banks! Goldman Sachs and Morgan Stanley took on regulators and became normal bank holding companies. Not sure how well they will fare in this role, since they are leveraged to the hilt compared to other banks.

[CountArach]

Quick, pass the bill without reading it, and hand over the power of the purse to the executive branch! ~:rolleyes:
I worked with FISA :shrug:

[Strike For The South]

Well at least we gave it the good college try. Goodbye republic! Hello Caesar :rome:

[Crazed Rabbit]

Read someone who rather summed up my feelings (http://andrewsullivan.theatlantic.com/the_daily_dish/2008/09/trust-us.html#more) this morning:

I'm no fan of the bail outs, but the blame is not really on the GOP for the cause of this mess. I posted this in the Fannie and Freddie topic:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0


Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute colleague Peter Wallison, the Securities and Exchange Comiission's chief accountant told disgraced Fannie Mae chief Franklin Raines that Fannie's position on the relevant accounting issue was not even ``on the page'' of allowable interpretations.

Then legislative momentum emerged for an attempt to create a ``world-class regulator'' that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themselves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.
...
What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.

Different World

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.

But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.

That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: ``It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.''

Fannie and Freddie were created by the government, and given special benefits because of that. Without those, I don't think we'd be near the mess we have today.


That means re-regulating the energy markets so that we never again see the rampant speculation in oil that helped drive up prices.

What an insane moron. :wall: That didn't work last time, did it?

We don't need knee-jerk leftist cries for regulation. We need to enforce accountability, which more burdensome regulation won't achieve. We need to take away governmental favoritism so that poorly managed companies cannot become as large as Fannie and Freddie did, and throw CEOs and boardmembers of companies that require public money rescues into jail and seize their assets.

CR

[Xiahou]

Fannie and Freddie were created by the government, and given special benefits because of that. Without those, I don't think we'd be near the mess we have today.
Creating Fannie and Freddie in the first place was bad enough, but then the government -starting under Clinton, and continuing under Bush, encouraged them to underwrite mortgages to bad credit risks under the guise of increasing home ownership. When housing prices were undergoing a meteoric rise, they got away with it, but when prices leveled out and began to slump, the whole house of cards came crashing down. Don't blame Wall Street- they did what the federal government wanted them to. :no:

[drone]

I had a really evil thought creep into my head this morning, but since I'm no financier/accountant I'm not sure if I'm on the right track. I haven't heard any mention of this in the news, I think most people are just thinking short term at the moment, but here goes:

2008 - 1945 = 63. How much retirement planning and how many nest eggs for Baby Boomers are in jeopardy here? Theoretically, money should be moved to safer investments as the retirement age approaches, what is the risk to bond markets and other low-yield investments at the moment? Money market funds got insured, they should be covered for now. Even if these are all safe, in a couple of years large sums will be removed from these investments to pay for old people living (driving down markets as assets get converted to cash) as well as increased Social Security payments from the already-strapped Federal coffers. The looming SS debacle is upon us, we've known about it, we've pushed it off to future generations, but we can no longer ignore it and may not have the means when it comes about.

Am I off base?

[Crazed Rabbit]

An important note for the socialists here:
http://online.wsj.com/article/SB122186507676758669.html

Taking Revenge on the Rich
Will Not Bring Recovery
By AMITY SHLAES

Police short sales and block them, says Securities and Exchange Commission Chairman Christopher Cox. Fire the SEC chairman, says John McCain. Investigate those short sellers, say state attorneys general. Hold hearings to grill Wall Streeters says Nancy Pelosi. "Fire the whole Trickle-Down, On-Your-Own, Look-the-Other-Way crowd" says Barack Obama, and "get rid of this whole do-nothing approach to our economic problems." The Democratic presidential candidate wants public affirmation of his argument that the whole free-market philosophy of economics has been wrong.

Some of this talk carries an implicit suggestion: Do what I say or we will have another Great Depression. And no wonder: This September feels a lot like autumn 1929.

But there's an important fallacy here. The stock market crash of October 1929 and the Great Depression were not the same thing. What made the depression great was not magnitude but duration -- the fact that unemployment was still 20% 10 years later. In the 1930s, policies like the ones described above did not speed recovery; they impeded it.

CR

[Lemur]

An important note for the socialists here:
Hey CR? If the bailout goes through, and we effectively nationalize our financial sector? We're all socialists then, baby. Here, read this one, it will really get you blood boiling: How We Became the United States of France (http://www.time.com/time/nation/article/0,8599,1843168,00.html).

-edit-

This (http://angrybear.blogspot.com/2008/09/your-urgent-help-needed.html) brightened my day somewhat:


Your Urgent Help Needed

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.

I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transaction is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to
wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully Minister of Treasury Paulson

[Crazed Rabbit]

Hey CR? If the bailout goes through, and we effectively nationalize our financial sector? We're all socialists then, baby. Here, read this one, it will really get you blood boiling: How We Became the United States of France (http://www.time.com/time/nation/article/0,8599,1843168,00.html).


No, no. Despite all this, we're not socialists. Not yet.

Socialists only nationalize successful companies.

CR

[yesdachi]

No, no. Despite all this, we're not socialists. Not yet.

Socialists only nationalize successful companies.

CR

What do you call someone that nationalizes unsuccessful companies?
http://www.pbs.org/mediashift/files/George%20W.%20Bush.JPG

[Lemur]

It's a good thing Republicans don't do bailouts (http://www.gop.com/2008Platform/Economy.htm): "We do not support government bailouts of private institutions. Government interference in the markets exacerbates problems in the marketplace and causes the free market to take longer to correct itself."

Take that, foul Socialists!

[CountArach]

What do you call someone that nationalizes unsuccessful companies?
http://www.pbs.org/mediashift/files/George%20W.%20Bush.JPG
Haha :laugh4:

An important note for the socialists here:
http://online.wsj.com/article/SB122186507676758669.html


CR
Its the Wall Street Journal. Nuff Said.

[Crazed Rabbit]

Its the Wall Street Journal. Nuff Said.

So you dismiss a careful analysis of history like that? Did you even read the article? It's not rhetoric, its historical fact you're ignoring.

But I now have a much greater understanding of how people can support socialism.

CR

[Mangudai]

I had a really evil thought creep into my head this morning, but since I'm no financier/accountant I'm not sure if I'm on the right track. I haven't heard any mention of this in the news, I think most people are just thinking short term at the moment, but here goes:

2008 - 1945 = 63. How much retirement planning and how many nest eggs for Baby Boomers are in jeopardy here? Theoretically, money should be moved to safer investments as the retirement age approaches, what is the risk to bond markets and other low-yield investments at the moment? Money market funds got insured, they should be covered for now. Even if these are all safe, in a couple of years large sums will be removed from these investments to pay for old people living (driving down markets as assets get converted to cash) as well as increased Social Security payments from the already-strapped Federal coffers. The looming SS debacle is upon us, we've known about it, we've pushed it off to future generations, but we can no longer ignore it and may not have the means when it comes about.

Am I off base?

I think this is a very important point. I have views on this subject, but a lot of smart people disagree with me.

1. Obviously Baby Boomer nest eggs are taking a hit. Retirement is not going to be as plush for most people as they believed a few short years ago. Most retirees can still follow mainstream advice and pull out 4% of their gross every year.

2. The burden of Social Security is going to hit us all like a freight train. This is going to have to include raising the retirement age, raising taxes, and raising national debt. Medicare is actually going to be a far greater problem than SS, even before we add Demo-care.

3. Stock prices will not be driven down much as a direct result of retirement account withdrawals, because selling for withdrawal is only a small part of total selling (i.e. hedge fund short selling). However, the growth in stock values could slow significantly due to several factors including under-capitalization of the bond market.

4. Baby boomer retirement accounts constitute a very large portion of bond holdings. If China or someone else doesn't pick up the slack, then corporate borrowing will be more expensive. Therefore, growth will slow. Over the next decade or two (not this year), bonds will become more attractive, and stocks less... boring.

5. Most people believe that demand stimulates economic growth. They think that a wealthy population of senior citizens who consume buy don't produce is good for the economy. For example, the state of Florida has had greater economic growth than most other states. Something about this thinking seems deeply flawed to me.

6. Many people point out that Baby Boomers are still hogging many of the best jobs. When they retire better opportunities will present themselves to younger people. This contains some truth, yet whether it represents a net gain is unclear. Besides jobs are being created and destroyed at a rapid rate.

7. Making predictions about the future is laughably difficult. Twenty years from now things could be very bad, or very good, or mediocre, but definitely different. A ground for optimism is the idea that we are good at imagining future problems and disasters. We are poor at imagining future breakthroughs in science and technology.

[cmacq]

Can anyone tell me why this happens every time the American executive leadership nears the end of its office, regardless of political party?


I have seen the same thing happen over and over and each time its a bit worse. I am want to hear it called by another name, but it still smells none too sweet.


What did Charlie Keating say about banks? If you want to rob one, own one. Didn't Greenspan work for Keating when that op went south?


CmacQ

[CountArach]

So you dismiss a careful analysis of history like that? Did you even read the article? It's not rhetoric, its historical fact you're ignoring.

But I now have a much greater understanding of how people can support socialism.

CR
No that is not why I rejected it. I have heard those arguments before about the Great Depression and I couldn't disagree with them more.

And the term "Historical fact" is heavily loaded and as shown here - what is fact for one person may not be fact for another...

[Ironside]

So you dismiss a careful analysis of history like that? Did you even read the article? It's not rhetoric, its historical fact you're ignoring.

But I now have a much greater understanding of how people can support socialism.

CR

The itty bitty part about crashing banks either causing or worsening the problem of the Great depression might be good to mention as you bring up the subject, particullary considering your "let them fall" stance on the banks... :juggle:

[Idaho]

Oh those right wing yanks - can they do anything right?

[Lemur]

Oh those right wing yanks - can they do anything right?
They know how to create debt faster than anybody else. That's some kind of bragging rights.

[Crazed Rabbit]

A subprime primer (NOTE: Swearing) with stick figures:
http://docs.google.com/TeamPresent?docid=ddp4zq7n_0cdjsr4fn&skipauth=true&pli=1

Actually, not too shabby at explaining what happened.

CR

[ICantSpellDawg]

I'm reluctantly for the bailout (minus the Zero transparency addendum) and the slashing of salaries for the now governmentally employed CEO's. We can either riskily back up securities firms and investment banks now and possibly recieve an 11% interest, or we can do nothing and adhere to the Republican mantra of never doing bailouts no matter what - and we will spend even more money with no chance of a return when even more people default and a run on banks like WaMu or CapitalOne happens. I believe that we'll be out at least that 700 billion in the end anyway if we don't push it through.

The bottoming out of home prices is good for a 25 year-old guy like me just out of college as long as everything else doesn't collapse because of it. Do the bailout this time and step back as soon as transparency returns to the books of our formerly most trusted banking names (or whoever is left in the aftermath). Anyone whose home has been forclosed on should appeal to friends and neighbors, or on an individual basis to the government, to help them out of the mess. Let them burn if they ignorantly contributed by lying on their applications just like those out of work co-conspirators at the investment banks and the rest of the guys on the ground like me and my 4 buddies - all from different industries - who have lost our jobs because of cuts.

I love how Lemur is solely basing his condemnation on Republicans. He is sush a partisan hack it is laughable. In fact - even Sasaki has contributed things other than simply running the party line during this election.

Lemur - I used to respect your middle ground approach, but I am utterly dissapointed in you these past two months. I will have a hard trusting the supposed "even keel" of your opinions for some time to come.

The fact that we have 2 candidates in the race who have negligible knowledge or experience in economics should give everyone pause. Part of the problem has always been that the people who write the laws have no knowledge about the subject of the law in question. They've played hot potato for so long, but the music has finally stopped - It is clear as day that they get by on charm and a defaulted mortgage of brain power.

[Koga No Goshi]

This was not a problem of economics. This was not brought about by "uh oh we shouldn't have raised taxes in an economic upswing." This was brought about by an intentional and systematic destruction of regulation and an ideology of deregulation which trumped fact or even common sense. And that IS a political issue.

In this case, Tuff, blame should be placed where it's merited. Clinton did a lot of deregulation in his attempt to be "centrist." Blame certainly falls there. But deregulation has NOT been the clarion call of the Democrats since the 1980's. It's been the clarion call of the Republicans. In fact, it still WAS, even after Enron, after the CA Energy Scandal, after ample evidence that all it resulted in was corruption and graft and market manipulation en masse with devastating consequences for working Americans, right up until last Tuesday with the market crash. Then suddenly Republicans were on board for regulation and in fact are trying to now act as if they've "always" been for regulation. Hmm... interesting, especially from McCain, who has multiple staffers who have been taking money from Freddie and Fannie Mae as paid deregulation lobbyists for the financial institutions for years.

If pointing this out makes me a partisan hack, so be it. Frankly it's gotten to the point where criticizing anything about America under the Bush Administration or Republican control makes you unpatriotic, a partisan hack, or part of a liberal conspiracy/bias. I'm tired of it being the first line of defense for neocons and their abysmal policies whenever anyone breaks the status quo of "yes yes, you're right, both sides do everything just the same and follow the same ideology, they are equally to blame for every single issue to the exact same degree."

[Lemur]

I love you too, TuffStuff, and I'm not afraid to say so. BTW, I posted an item in the Election Thread specifically for you, but I think it got buried. Here it is. (https://forums.totalwar.org/vb/showpost.php?p=2021850&postcount=2354) I know abortion is an overriding issue for you, and I'd be curious to hear your reaction.

[ICantSpellDawg]

I'll move it to the election thread.

[Redleg]

In this case, Tuff, blame should be placed where it's merited. Clinton did a lot of deregulation in his attempt to be "centrist." Blame certainly falls there. But deregulation has NOT been the clarion call of the Democrats since the 1980's. It's been the clarion call of the Republicans. In fact, it still WAS, even after Enron, after the CA Energy Scandal, after ample evidence that all it resulted in was corruption and graft and market manipulation en masse with devastating consequences for working Americans, right up until last Tuesday with the market crash. Then suddenly Republicans were on board for regulation and in fact are trying to now act as if they've "always" been for regulation. Hmm... interesting, especially from McCain, who has multiple staffers who have been taking money from Freddie and Fannie Mae as paid deregulation lobbyists for the financial institutions for years.

."

In all fairness you have to acknowledge that Senator Dodd is the number one receiptant of funds from Freddie and Fannie Mae with Obama the second highest receiptant of funds. So yes McCain has staffers who take money - but Obama takes money directly.

All polticians are guilty of allowing this to happen, just like a lot of citizens are responsible, taking up to 125% of the value of the house in equity loans helped to create the situation. Just like finicial instutions giving mortages to individuals who they know were extreme risks for paying back the loan.

And yes your right the republican position on this issue is the most hypocritical of the lot, and they were the party in control when the advice first started coming out about this disaster was approaching us.

President Bush is most to blame for not taking an active role much earlier when it was identified back around 2003

Republican Leadership in Congress for not addressing the issue when it was brought to them by President Bush - according to reports back in 2003, when McCain proposed something in 2005.

And the Democrates are in this picture to for proposing the deregulation back in the 1990's, for putting party hacks in charge of both Freddie and Fannie Mae

Fincial instutions for underwriting mortages to high risk borrowers
and Individuals for taking loans for up to 125% of value

I kind of see it as an equal blame for each group - which puts the Party Politic of the Republicans only slightly ahead of the democrates and the American People in general

[KukriKhan]

Just watched King George give me a lesson in Econ 101. And predict doom and gloom if I don't consent to give him a year's pay (and a year's pay of every other taxpayer) to fix this thing.

No prob, sez I. Just show me the collateral, and show me where I co-sign each and every bailout loan. Without that: no deal. Even Wall Street would agree to those terms.

Fannie, Freddie, AiG, Lehman, Merrill, WaMu... Ford, WalMart, CalPers, - please.

If they're too big to fail, they're too big. They must fail. Nobody rescues Joe's Bar when he lost too much money at the track. And they sure don't give him a house, limo and bass-boat for his trouble.

[Koga No Goshi]

I'm in agreement, let them fail. Let that be a testament to every future wannabe monopolist who cries deregulation when life is high on the hog and turns into a crybaby capitalist when their bubble bursts and they want bailouts after giving their execs golden parachutes.

Why is it that I'm a super leftie and I'm arguing the things all the fiscal conservatives ought to be? It's like Bizarro World.

[Sasaki Kojiro]

In all fairness you have to acknowledge that Senator Dodd is the number one receiptant of funds from Freddie and Fannie Mae with Obama the second highest receiptant of funds. So yes McCain has staffers who take money - but Obama takes money directly.



https://img217.imageshack.us/img217/1246/10fanniegraphicsq8.jpg


Eh. People donate for all sorts of reasons. McCain has a lot of lobbyists running his campaign and obama has enough charisma to raise bunches of money from small donors. Propaganda by either party aside that should tell you whose campaign is less bought out...

[Koga No Goshi]

https://img217.imageshack.us/img217/1246/10fanniegraphicsq8.jpg


Eh. People donate for all sorts of reasons. McCain has a lot of lobbyists running his campaign and obama has enough charisma to raise bunches of money from small donors. Propaganda by either party aside that should tell you whose campaign is less bought out...

Yes, large industries and corporations tend to hedge their bets by giving at least some to both sides, in many cases.

The difference is, as you say, paid and CURRENTLY paid financial industry deregulation lobbyists work on McCain's campaign, and it isn't Obama who's spent the last 22 years working for the cause of deregulation.

[Strike For The South]

what the fed is doing is illegal. There is no constitutional basis for them baling out these companies. Why does no one see this??

[Koga No Goshi]

what the fed is doing is illegal. There is no constitutional basis for them baling out these companies. Why does no one see this??

I agree with you but seriously Strike..... it is news to you that the government has been doing unconstitutional things for several years now?

[Strike For The South]

I agree with you but seriously Strike..... it is news to you that the government has been doing unconstitutional things for several years now?

Well no I just like to bitch and moan

[Koga No Goshi]

Well no I just like to bitch and moan

Well Bush as well as Wall Street and Treasury Department officials are all insisting in day-long sessions that the economic world is going to end if they don't do a bailout. All the people in Congress and the Senate seem genuinely concerned, but also concerned that they are being strongarmed into making a quick deal with no oversight, and thankfully they seem to be saying "hell no" to going along with that, AGAIN, as they have before with Bush and very bad things(tm) that he has shoved through on a similar basis using fear and scare tactics in the past.

But, I am sure we will spend the next 8 years listening to how it was the Democratic Congress's fault for passing the bailout and the Republicans wouldn't have done it-- even though McCain is cancelling the debate to rush back and reinvent himself now as a regulator and bailout advocate.

[Strike For The South]

Well Bush as well as Wall Street and Treasury Department officials are all insisting in day-long sessions that the economic world is going to end if they don't do a bailout. All the people in Congress and the Senate seem genuinely concerned, but also concerned that they are being strongarmed into making a quick deal with no oversight, and thankfully they seem to be saying "hell no" to going along with that, AGAIN, as they have before with Bush and very bad things(tm) that he has shoved through on a similar basis using fear and scare tactics in the past.

But, I am sure we will spend the next 8 years listening to how it was the Democratic Congress's fault for passing the bailout and the Republicans wouldn't have done it-- even though McCain is cancelling the debate to rush back and reinvent himself now as a regulator and bailout advocate.

What an astute political move lol. I agree there there is fear-mongering going on but is that anything new to you Koga? :smile:

[Koga No Goshi]

What an astute political move lol. I agree there there is fear-mongering going on but is that anything new to you Koga? :smile:

Being habitually scared into making very bad decisions we will pay far more for later than we will benefit from at all ever isn't new, it's about 8 years old South :)

[Redleg]

https://img217.imageshack.us/img217/1246/10fanniegraphicsq8.jpg


Eh. People donate for all sorts of reasons. McCain has a lot of lobbyists running his campaign and obama has enough charisma to raise bunches of money from small donors. Propaganda by either party aside that should tell you whose campaign is less bought out...


Are you being naive enough to believe I was refering to a single year? Again now do I want to get in an arguement about which political party is the biggest crook - got news for you Sasaki while I am a right wing conservative I have never been a member of a political party because I have always had the belief that the political party system is broken and that most politicians are basically in it for themselves. So if you trying to convince me that McCain is just as full of crap as Obama - you're barking up the wrong tree. Both candidates are guilty of have special interests and lobbiests in their campaigns.

So again in all fairness both political parties are guilty of doing the exact same thing in regards to this particuler situation - however the leadership blame goes to the Republican Party since they are in the Presidential Office and had major control of the Congress when the two weak attempts were made to address the issue.

So party politicals is stupid in this instance - but to demonstrate your counter is a complete misunderstanding of my statement.

http://pfds.opensecrets.org/092408.html

Name Office Party/State Total

1. Dodd, Christopher J S D-CT $133,900

2. Kerry, John S D-MA $111,000

3. Obama, Barack S D-IL $105,849

4. Clinton, Hillary S D-NY $75,550

5. Kanjorski, Paul E H D-PA $65,500

6. Bennett, Robert F S R-UT $61,499

7. Johnson, Tim S D-SD $61,000

8. Conrad, Kent S D-ND $58,991

9. Davis, Tom H R-VA $55,499

10. Bond, Christopher S 'Kit' S R-MO $55,400

11. Bachus, Spencer H R-AL $55,300

12. Shelby, Richard C S R-AL $55,000

13. Emanuel, Rahm H D-IL $51,750

14. Reed, Jack S D-RI $50,750

15. Carper, Tom S D-DE $44,389

16. Frank, Barney H D-MA $40,100

17. Maloney, Carolyn B H D-NY $38,750

18. Bean, Melissa H D-IL $37,249

19. Blunt, Roy H R-MO $36,500

20. Pryce, Deborah H R-OH $34,750

21. Miller, Gary H R-CA $33,000

22. Pelosi, Nancy H D-CA $32,750

23. Reynolds, Tom H R-NY $32,700

24. Hoyer, Steny H H D-MD $30,500

25. Hooley, Darlene H D-OR $28,750


So it seems that two things are evident - that different groups get different data from what the claim is the same source, so a bit of crooking the books is going on in the media - no big surpise there, and that both McCain and Obama are getting contributions from our favorite big crooks who should all be tried for crooking the books of their organizations to get bonus.

[Sasaki Kojiro]

On the contrary Redleg, I'm not argueing that "McCain is just as crooked as Obama" I'm arguing that he's more crooked.

Obama is good at raising money. Very good. He's raised hundreds of millions of dollars, far more than any other candidate. It doesn't take a rocket scientist to see that if you add up the employee contributions from almost any company, obama will top the list. So, that list you posted is an interesting distraction, but I would focus on rick davis, the number of lobbyists on McCain's campaign, the amount given to the McCain campaign by lobbyists, and McCain's support of deregulation over his 26 year career.

In general I find that the apathetic, "oh they are all equally crooked so I won't make a judgement as to which is better" attitude is not in the american spirit...voting thoughtfully is a responsibility.

[Redleg]

On the contrary Redleg, I'm not argueing that "McCain is just as crooked as Obama" I'm arguing that he's more crooked.

So your attempting to argue degrees of crookness - Interesting I think your barking up the wrong tree on that aspect - a crook is a crook regardless of the degree. So it seems that your arguement here is exactly the same as mine - they are both crooks.



Obama is good at raising money. Very good. He's raised hundreds of millions of dollars, far more than any other candidate. It doesn't take a rocket scientist to see that if you add up the employee contributions from almost any company, obama will top the list. So, that list you posted is an interesting distraction, but I would focus on rick davis, the number of lobbyists on McCain's campaign, the amount given to the McCain campaign by lobbyists, and McCain's support of deregulation over his 26 year career.

On the list paints a bigger picture then the one your wanting to see, it paints a picture of widespread corruption with the political process that has influence both parties. So it seems your focusing on what influence lobbiest have on the Campaign of McCain where I am focusing on the overall corruption of the system as it relates to both parties. You do realize that in 2001 there was a complaint filed against Fannie Mae and Freddie Mac for just his issue, sadly I dont know the result of the complaint on that it was done, and it pointed to the corruption that such contributions were doing to the political process



In general I find that the apathetic, "oh they are all equally crooked so I won't make a judgement as to which is better" attitude is not in the american spirit...voting thoughtfully is a responsibility.

Then you might want to try being thoughtful on the voting process versus party politics. Care to focus on the corruption that both parties have created? Or do you want to focus on McCain?

[Sasaki Kojiro]

Well you're right in that this isn't the election thread and I was treating it as such. When it comes to voting obviously degree of crookedness is important.

[Koga No Goshi]

So your attempting to argue degrees of crookness - Interesting I think your barking up the wrong tree on that aspect - a crook is a crook regardless of the degree. So it seems that your arguement here is exactly the same as mine - they are both crooks.

I can see why Republicans always want to just insist to everyone that all the parties are all equally corrupt. It works in their favor, since by and large, Republican politicians and the GOP are MUCH more in the pockets and in line with the interests of large corporations and the ultra-rich than the Democrats are. So insisting over and over again that they're all equally corrupt and crookish lets the Republicans continue to do what they're doing while insisting it's nothing out of the ordinary, and no worse than their opposition party.


On the list paints a bigger picture then the one your wanting to see, it paints a picture of widespread corruption with the political process that has influence both parties. So it seems your focusing on what influence lobbiest have on the Campaign of McCain where I am focusing on the overall corruption of the system as it relates to both parties. You do realize that in 2001 there was a complaint filed against Fannie Mae and Freddie Mac for just his issue, sadly I dont know the result of the complaint on that it was done, and it pointed to the corruption that such contributions were doing to the political process

Pointing out that both parties have received money from Freddie and Fannie falls a little flat if you can't show that the Democrats have ceaselessly worked for deregulation of the financial markets just as the Republicans have. There's blame on both sides but to pretend that the blame is equally bipartisan despite the Republicans basing their whole ideology around free market deregulation and the Democrats basing theirs around responsible protection of American workers and accountability together with a robust marketplace, is just like Wall Street privatizing the profits of operating off the books and then publicizing the liabilities and making the taxpayers cough up a bailout. It's a crooked equation.


Then you might want to try being thoughtful on the voting process versus party politics. Care to focus on the corruption that both parties have created? Or do you want to focus on McCain?

Are you a Nader supporter now? Because if you are, I fail to see why you are defending the Republican Party. You're not getting Sasaki's point apparently--- Republicans have always insisted that both parties are corrupt because it creates a general apathy, because low voter turnouts benefit Republicans running for office, and because they are far more corrupt and far more in the pockets of large corporate and elite interests than the Democratic party is, on the whole. Look at who Chevron and Exxon and Wal Mart are giving money to. Look at who has paid Wall Street lobbyists working in their campaign while calling himself a "reformer." As soon as McCain worked "drilling" into his campaign speeches the oil contributors quadrupled the money they were giving him. But I'm sure Obama, with his fancy talk about alternative energy and windfall profits taxes and such, is equally enslaved to big oil lobbyists right? He's just pretending.

Yes yes, all equal same old same old, both sides are just as corrupt nothing to see here, there is no man behind the curtain.

[PanzerJaeger]

Pointing out that both parties have received money from Freddie and Fannie falls a little flat if you can't show that the Democrats have ceaselessly worked for deregulation of the financial markets just as the Republicans have. There's blame on both sides but to pretend that the blame is equally bipartisan despite the Republicans basing their whole ideology around free market deregulation and the Democrats basing theirs around responsible protection of American workers and accountability together with a robust marketplace, is just like Wall Street privatizing the profits of operating off the books and then publicizing the liabilities and making the taxpayers cough up a bailout. It's a crooked equation.


You seem gleefully unaware of the existence of Barney Frank... among other democrats who played key roles in the current situation. :dizzy2:

[Idaho]

You gotta love the land of the free.

Can't get a job because blue collar manufacturing has been dissassembled and moved to China? Can't survive and feed a family on the money that the mall will pay for casual staff? You're a scrounging low-life and the few thousand a year you claim on welfare is bringing the country to it's knees.

Pi55ed away the entire economy by inflating an economic bubble that made you and all your cronies multi-millionaires? Well that's serious and *requires* collossal public money and a comfy seat on the board of whatever "non-partisan" (read as: don't worry boys, we'll all get a cut so play nice) committee that will oversee it all.

This my org friends is capitalism. When unemployment and the depression really hit in 2 years - you just wait to see how the unemployed are villified.

[Lemur]

The first article I've read on this subject (http://www.usnews.com/blogs/capital-commerce/2008/9/24/are-paulson-bernanke-overhyping-the-danger.html) that made any sense.


[Global Insight] just released an economic forecast that assumes Congress does nothing:


Although the U.S. financial crisis is bringing sweeping changes to Wall Street, parallels to the Great Depression are overblown. The U.S. economy is far more resilient today, thanks to income support policies, federal deposit insurance to prevent banking panics, and flexible exchange rates. From 1929 to 1933, real GDP contracted 27%, prices fell 25%, and the unemployment rate climbed from 3% to about 25%. Even in our pessimistic alternative forecast, the peak-to-trough decline in real GDP is just 1.5% and the unemployment rate peaks below 7.5%.

Me: I'm sorry. Spending $700 billion (which is really $2.5 trillion since you are borrowing the money) to stop a recession—no worse that what we saw in 1990-91 (one quarter of -3 percent growth and one quarter of -2 percent growth) or even 2001 (one quarter of -1.4 percent growth)—seems nutsy. If they want to get this thing passed, Paulson and Bernanke better be more explicit about the risks.

[Fragony]

This my org friends is capitalism. When unemployment and the depression really hit in 2 years - you just wait to see how the unemployed are villified.

Equality industry is to blame, not capitalism, or do you think banks like loaning money to people who can't pay it back? They had to because of the Carter administration. Bravo, way to go.

[Ser Clegane]

Equality industry is to blame, not capitalism, or do you think banks like loaning money to people who can't pay it back? They had to because of the Carter administration. Bravo, way to go.

The problem is that the banks thought that the rising prices for real estate would cover their risk sufficiently.
If banks beleive the risk is limited they will be very keen on loaning money to customers with a lower credit rating as they will charge them a higher interest rate.
The second issue was that further "selling" these loans to other banks who thought they would make a great deal they rather multiplied the risk instead of minimizing it.

The "equality industry" might have to take part of the blame - pure greed is responsible for a good chunk of the blame though.

BTW, you also see a trend here in Germany that banks are offering loans equivalent to 100% or even slightly above the value of a house (20 years ago banks would not have done such a thing).
The banks certainly were not forced to do so - they do so because the want to get the business and the higher interest rates, thinking that they have the risk under control - which now turns out to be a mistake, at least in some countries.

[ICantSpellDawg]

Well you're right in that this isn't the election thread and I was treating it as such. When it comes to voting obviously degree of crookedness is important.

Thank you. Lets keep this thread about the crisis and how it happened/how we can fix it. Maybe we can learn something. If you feel the urge to rip into Obama (who most likely had little to nothing to do with it) or McCain (who doesn't focus on economic policy) - shoot it over to the election thread unless it directly applies.

I just don't beleive that this is a Republican or Democrat issue - it has resulted from the gluttonous failure of the US financial system and political short sightedness.

[Fragony]

The problem is that the banks thought that the rising prices for real estate would cover their risk sufficiently.

Mistake yes but out of all mistakes the most forgivable, let's not forget what really happened here, disastrous government interevention into something that needs to be unregulated to function properly.

[Ser Clegane]

Mistake yes but out of all mistakes the most forgivable

I guess we have to agree to disagree on this one. Please keep in mind that a number of banks went down the gutter not primarily for giving the actual loans but because they thought they could make a lot of quick money with asset backed securities based on these loans.
Greed - and too much money on the market from investors that were not happy with single digit returns on their investment.

[drone]

I can only imagine the fun sound-bites we would be getting now if Ron Paul was the GOP nominee at the moment. :bounce:

[Ser Clegane]

To add one point:
The greed was not just on the banks' side - certainly also a lot of people who took the loans to buy a house they realistically could not afford are to blame.
If you make such a big investment you should not just rely on what the bank is telling you what you can afford but perhaps also take the time to sit down and to realistically calculate what you can really afford without making wild assumptions about how things will only go up in the next 20 years...

[Fragony]

I guess we have to agree to disagree on this one. Please keep in mind that a number of banks went down the gutter not primarily for giving the actual loans but because they thought they could make a lot of quick money with asset backed securities based on these loans.
Greed - and too much money on the market from investors that were not happy with single digit returns on their investment.

Fair enough I guess, but do bear in mind that company's need a steady cashflow and have to make due when presented with insecurities, and they got mightily burdened by the restrictions that got slapped on them. Government should have sticked at what they do best, doing poorly, and stop summoning what they can't control.

The greed was not just on the banks' side - certainly also a lot of people who took the loans to buy a house they realistically could not afford are to blame.

Yes. Good thing I could run to daddy when I made the same mistake.

[Xiahou]

Mistake yes but out of all mistakes the most forgivable, let's not forget what really happened here, disastrous government interevention into something that needs to be unregulated to function properly.:yes: In the US, you had GSEs, which are inherently anti-free market, buying up and repackaging lousy mortgages -giving them the appearance of being government backed- with approval and even encouragement from their supporters in congress.

Unsurprisingly, investment banks and other financial institutions eagerly bought up these repackaged mortgages, thinking them a sure money-maker. And banks eagerly made mortgages to unworthy debtors, knowing that Fannie/Freddie would take the mortgage off their hands.

[ICantSpellDawg]

I've seen more people driving mercedes benz and BMW over the past 5 years than ever before in the entirety of my life. I know that they can't afford it. If you lied or through ignorance took out loans that you could not afford to pay back, I understand the temptation of salesmen, but you deserve to burn. You eat food you can't afford, drive a car you can't afford and live where you can't afford; you've slathered yourself in BBQ sauce and throw yourself on the grill. I have contempt for these people and feel sorry for thier kids.

[Tristuskhan]

I've seen more people driving mercedes benz and BMW over the past 5 years than ever before in the entirety of my life. I know that they can't afford it. If you lied or through ignorance took out loans that you could not afford to pay back, I understand the temptation of salesmen, but you deserve to burn. You eat food you can't afford, drive a car you can't afford and live where you can't afford; you've slathered yourself in BBQ sauce and throw yourself on the grill. I have contempt for these people and feel sorry for thier kids.

Replace the word "people" by the word "nations" and we're all likely to roast soon.

Edit; sorry I'm back after two weeks of hollidays in my homeland, by the ocean (a trip in which I've burned much gas I can't afford...) And I'm really pleased to read about what you, US citizens, proud members of the most important communist country on earth (well, North Korea IS an important country but does not use a tenth of the money USA uses for communism), think about this marvellous events. Could everyone read TuffStuffMcGruff's post and replace the word "people" by the word "nations", please? He said everything I'd like to be able to say en anglais. Especially the last sentence: I'm sorry for our kids....

[Lemur]

Stuff like this (http://www.forbes.com/home/2008/09/23/bailout-paulson-congress-biz-beltway-cx_jz_bw_0923bailout.html) does not inspire confidence:


In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.

"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."

Well then, by all means, allow us to hand you a bottomless budget and unchecked power. Who can resist such reasoning?

[Koga No Goshi]

Equality industry is to blame, not capitalism, or do you think banks like loaning money to people who can't pay it back? They had to because of the Carter administration. Bravo, way to go.

Absolutely they loved it--- loan officers and banks took the commission fees, and then sold off the mortgage to someone else (most ended up owned by Freddie and Fannie.) They weren't getting rich off giving bad loans to people who couldn't pay them, they were just getting rich off the COMMISSION FEES for signing the loans, and then throwing away having to collect the loan itself.

I would not be entirely against some form of regulation that if a bank issues a loan, THEY have to be the one to collect it, unless the person who took out the loan chooses to refinance with another company. That would force banks to take responsibility for the loans that they give and not simply give a bad loan, knowing its bad, collect the commission fee and then dump the loan on the Feds or the taxpayer, ultimately. Which is exactly what happened in this case.

[Koga No Goshi]

Thank you. Lets keep this thread about the crisis and how it happened/how we can fix it. Maybe we can learn something. If you feel the urge to rip into Obama (who most likely had little to nothing to do with it) or McCain (who doesn't focus on economic policy) - shoot it over to the election thread unless it directly applies.

I just don't beleive that this is a Republican or Democrat issue - it has resulted from the gluttonous failure of the US financial system and political short sightedness.

I agree it's not a Democrat or Republican issue, with the caveat that Republicans have been insisting deregulation is the solution to all ills in the marketplace. So I think that Republican voters need to keep that in mind in light of all the crises--- NOT just this one, Enron and the energy scandals and many others are the direct result of this laissez faire ideology and I think the GOP has some soulsearching to do about whether or not they are going to continue to ideologically hardline on this, or admit that yes, uncontrolled marketplaces result in uncontrolled greed with zero responsibility. And change. If that doesn't happen, and people keep voting Republican, we're just going to see this go on, and on, and on.

[ICantSpellDawg]

I agree it's not a Democrat or Republican issue, with the caveat that Republicans have been insisting deregulation is the solution to all ills in the marketplace. So I think that Republican voters need to keep that in mind in light of all the crises--- NOT just this one, Enron and the energy scandals and many others are the direct result of this laissez faire ideology and I think the GOP has some soulsearching to do about whether or not they are going to continue to ideologically hardline on this, or admit that yes, uncontrolled marketplaces result in uncontrolled greed with zero responsibility. And change. If that doesn't happen, and people keep voting Republican, we're just going to see this go on, and on, and on.

I appreciate that you recognize this as a bi-partisan issue, but I don't know any Republicans who believe in de-regulation in the way you are referring. I know Republicans who want to remove or re-write crazy regulations that obstruct progress and are hypocritical (ie. the offshore drilling issue and other domestic energy supplies), but I don't know anyone who thinks that cooking books and selling criminally underestimated risk is a good idea.

[Koga No Goshi]

I appreciate that you recognize this as a bi-partisan issue, but I don't know any Republicans who believe in de-regulation in the way you are referring. I know Republicans who want to remove or re-write crazy regulations that obstruct progress and are hypocritical (ie. the offshore drilling issue and other domestic energy supplies), but I don't know anyone who thinks that cooking books and selling criminally underestimated risk is a good idea.

Well as far as voting Republicans, yes, you are probably right that the majority don't think things like safety regulations or fraud regulations are bad. But the leadership of the party, and the corporatists, and the elites, absolutely do believe that there should be no regulation and they don't believe it, I think, REALLY because they think the marketplace would be a utopia without regulation. I think that's an ideology piecemealed together after the fact to make the package look nice. I think it's really just a matter of big corporate owners don't like to have to spend money to make sure their factories don't put out 5x more pollution than they should be, or spend money on payroll taxes, or spend money doing credit checks when they want those commission fees, or ANYTHING that in any way gets in the way of making maximum short term profit. (There is ample evidence to believe that they don't care if the whole thing collapses tomorrow, they operate on a by quarter profits basis, look at all the CEO's who inflated stocks temporarily, parachuted out with multi-million dollar goodbye packages, and the company ran aground six months later.)

And regarding drilling, the oil companies are simply lying if they act like regulation is the reason they can't do more. They have millions of acres they could already drill on and AREN'T. Because exploration and finding the oil and setting up the infrastructure costs a lot of money. They have no vested interest in seeing America less dependant on foreign oil, they could care less, they barely refine any oil themselves anyway, they just distribute it. Oil being rare and high priced works in their favor, because it has inelastic demand. Now, if what you're implying is that companies should have to follow absolutely no safety or environmental regulations whatsoever (this is, incidentally, the reason that whole ridiculous Alaska Independent/Secession party exists, it is not a redneck organization, it is oil elites who want to break off so that they dont' have to follow Federal environmental regulations) then that I disagree with. But I think even if you got rid of those you would not see oil companies drilling much more than they are.

[ICantSpellDawg]

Well as far as voting Republicans, yes, you are probably right that the majority don't think things like safety regulations or fraud regulations are bad. But the leadership of the party, and the corporatists, and the elites, absolutely do believe that there should be no regulation and they don't believe it, I think, REALLY because they think the marketplace would be a utopia without regulation.

Who believes that? You are calling these people fiscal anarchists - these people who revere guys like Teddy Roosevelt for busting trusts and monopolies. These people who have dedicated their lives to the federal government and writing its laws are against protecting people and industry from natural and negative occurrences? I don't buy it. Republicans are not all financial libertarians - I am not one. I like balance and if that balance needs de-regulation, I seek it - if it requires new regulation, I favor that. I don't like our debt culture or irresponsible lending practices and I've always believed that variable rates in the way they've been implemented are corrupt and predatory in nature.

[Koga No Goshi]

Who believes that? You are calling these people fiscal anarchists - these people who revere guys like Teddy Roosevelt for busting trusts and monopolies. These people who have dedicated their lives to the federal government and writing its laws are against protecting people and industry from natural and negative occurrences? I don't buy it. Republicans are not all financial libertarians - I am not one. I like balance and if that balance needs de-regulation, I seek it - if it requires new regulation, I favor that. I don't like our debt culture or irresponsible lending practices and I've always believed that variable rates in the way they've been implemented are corrupt and predatory in nature.

We know they're not fiscal anarchists because look at them now. These were people who paid HUGE MONEY for deregulation and now are crybaby capitalists running for a bailout. No one is forcing a bailout on them. I see in this thread and others that Spino and other koolaid sippers are already trying to reinvent this as a Democratic idea. They are insisting the world is going to end without one. These are people who spend the last 30 years and millions of dollars paying lobbyists to get themselves deregulated. The Democrats didn't force deregulation on them. And then when they run the market into the ground suddenly all those laissez-faire, no government intervention! arguments cease and it becomes please, please sir, can I have some more? This is hypocrisy. And if you, personally, believe in regulation, you are a wise person. But you do not represent the leadership of your party or what they have been working for tirelessly for the past 30 years. You probably don't have 30 million a year to give to the Republicans for your agenda to get airtime in legislation. Wall Street did. :)

[gaelic cowboy]

Mistake yes but out of all mistakes the most forgivable, let's not forget what really happened here, disastrous government interevention into something that needs to be unregulated to function properly.

Unregulated financialism was what got the world into this there was nothing wrong with selling debt to people who could not pay for it

[Ironside]

The first article I've read on this subject (http://www.usnews.com/blogs/capital-commerce/2008/9/24/are-paulson-bernanke-overhyping-the-danger.html) that made any sense.


[Global Insight] just released an economic forecast that assumes Congress does nothing:


Although the U.S. financial crisis is bringing sweeping changes to Wall Street, parallels to the Great Depression are overblown. The U.S. economy is far more resilient today, thanks to income support policies, federal deposit insurance to prevent banking panics, and flexible exchange rates. From 1929 to 1933, real GDP contracted 27%, prices fell 25%, and the unemployment rate climbed from 3% to about 25%. Even in our pessimistic alternative forecast, the peak-to-trough decline in real GDP is just 1.5% and the unemployment rate peaks below 7.5%.

Me: I'm sorry. Spending $700 billion (which is really $2.5 trillion since you are borrowing the money) to stop a recession—no worse that what we saw in 1990-91 (one quarter of -3 percent growth and one quarter of -2 percent growth) or even 2001 (one quarter of -1.4 percent growth)—seems nutsy. If they want to get this thing passed, Paulson and Bernanke better be more explicit about the risks.

Keeping one very important part of the economic sector, namely banks alive is quite useful, unless you want a considerble depression and when handled properly the state will actually gain most of it back when they sell out the sanitasied parts that they took over originally.

Of course, considering the finincial record of the Bush adminstration, a blank check would probably cost the state $2-3 billions (that's trillions for your Americans ~;p ) and end up even worse off.


Who believes that? You are calling these people fiscal anarchists - these people who revere guys like Teddy Roosevelt for busting trusts and monopolies. These people who have dedicated their lives to the federal government and writing its laws are against protecting people and industry from natural and negative occurrences? I don't buy it. Republicans are not all financial libertarians - I am not one. I like balance and if that balance needs de-regulation, I seek it - if it requires new regulation, I favor that. I don't like our debt culture or irresponsible lending practices and I've always believed that variable rates in the way they've been implemented are corrupt and predatory in nature.

That "free-market is holy" group in the goverment did show its face in the Iraqi rebuilding, so they are certainly existing and connected... That or they were unleashed to cover up some "friendly" profits, wich I guess would count as malice instead of stupidity.

[ICantSpellDawg]

That "free-market is holy" group in the goverment did show its face in the Iraqi rebuilding, so they are certainly existing and connected... That or they were unleashed to cover up some "friendly" profits, wich I guess would count as malice instead of stupidity.

Right. Almost everybody believes in the free market. The degree or ratio of freedom/not freedom is the real question.

[Lemur]

I'm sorry to hear that some sort of compromise bill is being reported. I really, really don't want to see anything hasty thrown together here. I just want to grab the Congress, shake them by their collective shoulders and yell, "Don't just do something! Stand there!"

[Koga No Goshi]

Right. Almost everybody believes in the free market. The degree or ratio of freedom/not freedom is the real question.

Even if it's a minority, it's still the minority presently in control of the GOP, and since the Republicans don't exactly have a problem with revolts among their voting base (well except Harriet Meiers, which was really strange seeing as how no one seemed to mind any other ideological but completely inept Bush appointment) the distinction is rather meaningless. Pepole can say they disagree with x till the cows come home but if they keep voting for a cadre of elites who advocate the opposite, well...

(Edit: By minority I mean the "financial anarchists", or "crybaby capitalists" as you choose.)

[Koga No Goshi]

I'm sorry to hear that some sort of compromise bill is being reported. I really, really don't want to see anything hasty thrown together here. I just want to grab the Congress, shake them by their collective shoulders and yell, "Don't just do something! Stand there!"

I would love to see that too. But don't forget that McCain is refusing to participate in the debates until a bill is reached. So basically democracy is being held hostage. ;)

[Mangudai]

The first waves of deregulation in the 80's were necessary. In the 70's we had lots of anti-competitive regulation. For example, airlines and trucking companies were not permitted to go wherever they wanted. There was price fixing. Farm quotas (you cannot plant more than x acres of wheat). And, many other stupid regulations. Here is an example of good deregulation.

http://en.wikipedia.org/wiki/Airline_Deregulation_Act

The system of regulation in Britain was even dumber. Maggie did a darn good job.

[Redleg]

I can see why Republicans always want to just insist to everyone that all the parties are all equally corrupt. It works in their favor, since by and large, Republican politicians and the GOP are MUCH more in the pockets and in line with the interests of large corporations and the ultra-rich than the Democrats are. So insisting over and over again that they're all equally corrupt and crookish lets the Republicans continue to do what they're doing while insisting it's nothing out of the ordinary, and no worse than their opposition party.

Good thing I am not a republician then - I can blame all parties with equal contempt .



Pointing out that both parties have received money from Freddie and Fannie falls a little flat if you can't show that the Democrats have ceaselessly worked for deregulation of the financial markets just as the Republicans have. There's blame on both sides but to pretend that the blame is equally bipartisan despite the Republicans basing their whole ideology around free market deregulation and the Democrats basing theirs around responsible protection of American workers and accountability together with a robust marketplace, is just like Wall Street privatizing the profits of operating off the books and then publicizing the liabilities and making the taxpayers cough up a bailout. It's a crooked equation.


Explain the fillbuster of the Democratic Party against the attempt to do some reform to the two agencies back in 2005. However you are correct there is a very crooked equation being done in this situation, however the democratics dont base their efforts around protection of American workers and accountablity when one begins to look at which memeber of congress take money from which special interest groups.



Are you a Nader supporter now? Because if you are, I fail to see why you are defending the Republican Party. You're not getting Sasaki's point apparently--- Republicans have always insisted that both parties are corrupt because it creates a general apathy, because low voter turnouts benefit Republicans running for office, and because they are far more corrupt and far more in the pockets of large corporate and elite interests than the Democratic party is, on the whole. Look at who Chevron and Exxon and Wal Mart are giving money to. Look at who has paid Wall Street lobbyists working in their campaign while calling himself a "reformer." As soon as McCain worked "drilling" into his campaign speeches the oil contributors quadrupled the money they were giving him. But I'm sure Obama, with his fancy talk about alternative energy and windfall profits taxes and such, is equally enslaved to big oil lobbyists right? He's just pretending.

LOL defending the Republican party - not at all notice I said that they have a greater responsibility because they were in the leadership role, I refuse to give the Democratics a pass on their responsiblity in the creating the situation. One can point out how many democratics get big money contributions from Special Interests to include corporate interests also. Now as before if you want to discuss the candidates go to the election thread, To ignore the fact that both parties have a somewhat similiar and equal responsiblity in this mess is extremely naive, just like ignoring the fact that the crisis was started because of bad consumer debt in regards to mortages is a goofy stance to take.




Yes yes, all equal same old same old, both sides are just as corrupt nothing to see here, there is no man behind the curtain.

LOL someone is upset with the process - how funny. I find politicians are basically corrupt because I am a cynic that doesnt prevent me from casting my vote to whom I think has the best course for the country. Unfortunately for the United States no politican or government official has a solution that actually solves the issue - only delays it for another day.

[Koga No Goshi]

Explain the fillbuster of the Democratic Party against the attempt to do some reform to the two agencies back in 2005. However you are correct there is a very crooked equation being done in this situation, however the democratics dont base their efforts around protection of American workers and accountablity when one begins to look at which memeber of congress take money from which special interest groups.

You really want to get into a list of who takes money from big corporations? Go look up even the most basic information about where most of McCain's money vs. where most of Obama's money comes from. And as for attempted reforms, in 2005 Congress was Republican controlled and they were still threatening vetoes and nuclear options left and right. They controlled Congress and you're blaming the Democrats for non passage of a regulation?


LOL defending the Republican party - not at all notice I said that they have a greater responsibility because they were in the leadership role, I refuse to give the Democratics a pass on their responsiblity in the creating the situation. One can point out how many democratics get big money contributions from Special Interests to include corporate interests also. Now as before if you want to discuss the candidates go to the election thread, To ignore the fact that both parties have a somewhat similiar and equal responsiblity in this mess is extremely naive, just like ignoring the fact that the crisis was started because of bad consumer debt in regards to mortages is a goofy stance to take.

Both have responsibility, Clinton did some deregulation too. Both parties have done deregulation. But it is still b.s. to say they're same same same everyone's equal blame. Deregulation is practically the religion of the right. Any argument that the Democrats are just as on board with the deregulation obsession as Republicans have been for the past 30 years is just absolute falsehood.


LOL someone is upset with the process - how funny. I find politicians are basically corrupt because I am a cynic that doesnt prevent me from casting my vote to whom I think has the best course for the country. Unfortunately for the United States no politican or government official has a solution that actually solves the issue - only delays it for another day.

Believing both parties are total crap so we might as well just make a superficial decision putting aside ideology and platform is the reason we had two terms of Bush. And that worked out GREAT.

[Mangudai]

I'm mad as hell at the investment banks who leveraged 40:1 on crap securities.

This is like a hostage situation, if we don't cooperate, lots of innocent people get hurt. When money markets broke the buck last week, and people paid up for T-bills, we were facing the worst crisis since 1929.

So we have to do this. But, I want a pound of flesh from every director of every board of every company that participates in this bailout.

I have to congratulate Chuck Shummer and Barney Frank. They are doing their jobs much better than Hank and Ben are doing theirs.

[Xiahou]

I have to congratulate Chuck Shummer and Barney Frank. They are doing their jobs much better than Hank and Ben are doing theirs.
Are you serious? Both of them stood in the way of any meaningful reform of the GSEs.

[Husar]

On the topic of top management being held responsible for that, i was told the reason that managers earn more than some street sweeper who actually works harder, is that they have so much responsibility. But where is that responsibility when something goes wrong? Yeah right, noone talks about it and they often even get money to leave. :wall:
It's like building a nice little condo for Saddam on a carribean island and giving him some money, then telling him with his past as leader of a country he will be very welcome to lead yet another country. :wall:

If those guys are not responsible for anything, then what the heck do they get so much money for every month? :inquisitive:

[Koga No Goshi]

On the topic of top management being held responsible for that, i was told the reason that managers earn more than some street sweeper who actually works harder, is that they have so much responsibility. But where is that responsibility when something goes wrong? Yeah right, noone talks about it and they often even get money to leave. :wall:
It's like building a nice little condo for Saddam on a carribean island and giving him some money, then telling him with his past as leader of a country he will be very welcome to lead yet another country. :wall:

If those guys are not responsible for anything, then what the heck do they get so much money for every month? :inquisitive:

That nicely sums up why the "personal responsibility" argument makes my rear end clench. It only ever applies to poor people with the least amount of power in our society. It's really used as nothing more than a victim-blaming game most of the time today.

[Crazed Rabbit]

I have to congratulate Chuck Shummer and Barney Frank. They are doing their jobs much better than Hank and Ben are doing theirs.

Perhaps you should read Frank's remarks on the Fan and Fred back in '03:
http://www.taxfoundation.org/blog/show/23617.html

CR

[KukriKhan]

I'm just happy that the guys in power have finally learnt to read email: america is frickin' furious(!) left, right, and center.

"We've sent/given you everything you've asked for: our son's lives, our treasure (however humble), our world-wide reputation, our own personal freedoms, due process, our very constitution... and now you want our future - having taken our past and present and squandered it. Stop. Now. Explain. Or fuggedaboudit.".

The negotiators are trying to make it more palatable - but the fact is: we've been raped. Repeatedly. And we're being made ready for the next violation.

I'm not having it. This time, I bite.

[Mangudai]

Barney changed his view between '03 and '08.

Hank changed his view between monday and tuesday.

[Hosakawa Tito]

Yeah, I wouldn't put much stock in Schummer or Frank's understanding of anything except how to be a politician and stay one. They'll read whatever is on the cue-card and hope the staff who researched and wrote it didn't :daisy: up. However, Hank, Benny, and the rest of the supposed Federal Regulators, watchdogs, and the perps involved had to know this overleveraged stinkin' sack of bad loans on over-priced properties was soon to explode, and they probably waited and hoped it wouldn't happen till after the elections like a high stakes game of hot potato. Now those running for re-election have to decide between these multinational corporate giants and the rest of us average joes. Imagine the message sent if most all the incumbents got thrown out. Bah, just another pipe-dream. where's me bottle?

[KukriKhan]

Yeah, I wouldn't put much stock in Schummer or Frank's understanding of anything except how to be a politician and stay one. They'll read whatever is on the cue-card and hope the staff who researched and wrote it didn't :daisy: up. However, Hank, Benny, and the rest of the supposed Federal Regulators, watchdogs, and the perps involved had to know this overleveraged stinkin' sack of bad loans on over-priced properties was soon to explode, and they probably waited and hoped it wouldn't happen till after the elections like a high stakes game of hot potato. Now those running for re-election have to decide between these multinational corporate giants and the rest of us average joes. Imagine the message sent if most all the incumbents got thrown out. Bah, just another pipe-dream. where's me bottle?

Heh. From your lips (er, fingertips) to God's ear, mate.

May your incarceration facility soon house a new breed of white-collar 3-card Monte perps. Amen.

[Koga No Goshi]

This brings to mind that old question that always comes up in discussions about law and law school and such....

why is it that if you steal a purse with 40 bucks in it, you go to prison for three years while
when you steal millions/billions from the public, you get promoted to CEO and stock options and a Cayman Islands bank account?

[Strike For The South]

This brings to mind that old question that always comes up in discussions about law and law school and such....

why is it that if you steal a purse with 40 bucks in it, you go to prison for three years while
when you steal millions/billions from the public, you get promoted to CEO and stock options and a Cayman Islands bank account?
https://img263.imageshack.us/img263/7180/powervi0.th.jpg (https://img263.imageshack.us/my.php?image=powervi0.jpg)https://img263.imageshack.us/images/thpix.gif (http://g.imageshack.us/thpix.php)

[Koga No Goshi]

https://img263.imageshack.us/img263/7180/powervi0.th.jpg (https://img263.imageshack.us/my.php?image=powervi0.jpg)https://img263.imageshack.us/images/thpix.gif (http://g.imageshack.us/thpix.php)

For all I know Strike we disagree on every other possible issue. But I'd love to see these white collar guys in maximum security prison. San Quentin baby. Just multiply the prison time for stealing $100 bucks and spread that time out among all of them.

[Strike For The South]

For all I know Strike we disagree on every other possible issue. But I'd love to see these white collar guys in maximum security prison. San Quentin baby. Just multiply the prison time for stealing $100 bucks and spread that time out among all of them.

Doubtful I have very very very socially liberal views.

[Koga No Goshi]

Doubtful I have very very very socially liberal views.

The South is coming along, I see. ;)

[Strike For The South]

The South is coming along, I see. ;)

Im not a southerner Im a TEXAN. Never compare with those inbred people.

[Hosakawa Tito]

This brings to mind that old question that always comes up in discussions about law and law school and such....

why is it that if you steal a purse with 40 bucks in it, you go to prison for three years while
when you steal millions/billions from the public, you get promoted to CEO and stock options and a Cayman Islands bank account?


Quite elementary. I believe the equation goes: $$$campaign$$$donations$$$ = $$$free$$$speech$$$. And that's straight from the Supremes lips so it's gotta be true.

So, big$$$campaign$$$donations$$$ = $$$freer$$$speech$$$.

And therefore biggest$$$campaign$$$donations$$$ = $$$free-est$$$speech$$$.

[Redleg]

You really want to get into a list of who takes money from big corporations? Go look up even the most basic information about where most of McCain's money vs. where most of Obama's money comes from. And as for attempted reforms, in 2005 Congress was Republican controlled and they were still threatening vetoes and nuclear options left and right. They controlled Congress and you're blaming the Democrats for non passage of a regulation?

LOL you still miss the point - they all take money, regardless of the amount, the taking of money from lobbiest and special interest groups leads to corruption. If it was just campaign contributions I wouldn't have a problem with it, since it takes those contributions to get into office, however you ever asked what they do with the money that is left over after the campaign? Again you do know that the Democrates fillbustered the attempt back in 2005? You do understand what a fillibuster in congress is do you not? Why would the democratic party fillibuster an attempt to put some type of regulation and reform into the mortage market? If the party has a significant group that takes money from the group that wanted to prevent the legislation in the first place, are they truely acting in the best interest of the nation or their own pocketbooks? You correctly point out the problem with the republican party - but you play the partisan hack by ignoring the fault of the Democratic Party on the issue. Your attempt at arguing degrees of blame is like prono stars comparing the size of their pricks - each and everyone of them have a prick and each and everyone of them stuck it into the hole, that was infected with the STD. Which equates to the point that they all catch the diesase from their own actions.

Again attempting to place blame on only one group is a naive position when all are guilty in varing degrees.




Both have responsibility, Clinton did some deregulation too. Both parties have done deregulation. But it is still b.s. to say they're same same same everyone's equal blame. Deregulation is practically the religion of the right. Any argument that the Democrats are just as on board with the deregulation obsession as Republicans have been for the past 30 years is just absolute falsehood.


And as before you fail to actually read what is written, I clearly state the republicans have the leadership blame on the issue since they were the controling party. However each and every member of congress shares equally in the blame that can be leveled squarely on their body of government. If a group decides to fillibuster a needed reform to the regulation what would you call it - oh wait, your a party hack. But what the hell ignore the democratic prick that is infected with the STD hoping that it goes away......



Believing both parties are total crap so we might as well just make a superficial decision putting aside ideology and platform is the reason we had two terms of Bush. And that worked out GREAT.

We got to terms of Bush because the Democrates could not put up a viable centerist candidate - they pandered to the left and lost the elections. Which demonstrates how special interests and lobbiests ruin a party, just like we are seeing the same exact impact in a different extreme with the current situation.

So what we have is the republicans asked for deregulation, the democratic party fillibustered the one attempt to reign in the issue with reform, and the greed of the market place combined to created the economic crisis.

[Koga No Goshi]

LOL

LOL back.


You correctly point out the problem with the republican party - but you play the partisan hack by ignoring the fault of the Democratic Party on the issue. Your attempt at arguing degrees of blame is like prono stars comparing the size of their pricks - each and everyone of them have a prick and each and everyone of them stuck it into the hole, that was infected with the STD. Which equates to the point that they all catch the diesase from their own actions.

Find me saying the Democrats hold no fault in this. You won't, because I didn't. What I have maintained from the beginning is that the clarion call of the Republican Party since Reagan is deregulation, deregulation, deregulation, deregulation. Let the market self-correct and fix all ills itself. It's screwed up national economics several times, this being the biggest example, but it's screwed up local and state politics too, the California Energy Crisis being an example. My problem with you and every other hack who claims to not defend the Bush Admin is that if something is 98% in line with Republican ideology, platform, action and voting record, and 6% Democrat, it's the Democrats' fault equally. (Or more!)


And as before you fail to actually read what is written, I clearly state the republicans have the leadership blame on the issue since they were the controling party.

Yet somehow one THREAT to filibuster by Democrats (need I remind you that the Republicans threatened to filibuster/veto left and right, including the damn G.I. Bill, yeah, and we're the ones who don't support the troops) makes them as liable for this as 30 years of concentrated intentional effort on the part of the GOP. That's where your balance is off despite your "admission" that the Republicans were in leadership here. Stop ascribing to me your own personal conviction that I think the Democrats have done no wrong, you will find me stating multiple times in this thread alone that they have, and that I don't approve of how they vote on every occasion. But it wasn't the DNC shoving deregulation and only deregulation and must have deregulation or we'll block this bill since the 1980's. That's been your party. ;)


We got to terms of Bush because the Democrates could not put up a viable centerist candidate - they pandered to the left and lost the elections. Which demonstrates how special interests and lobbiests ruin a party, just like we are seeing the same exact impact in a different extreme with the current situation.

This argument I've heard many times and I reject it. The Republicans consider anyone to the left of Wal Mart to be a "radical liberal." Hillary Clinton is probably as close as you can get to the Republican Party without being Joe Lieberman and for the last 12 years she's been called Satan's left-wing testicle in every form of right-wing print, radio and TV media. The only acceptable "centrist enough" Democratic candidate for the hard right ideologues would be Lieberman, and that is unacceptable, and it's not centrist. And anyway, when was the last friggin time YOUR party ran a centrist? Goldwater?

[Koga No Goshi]

Washington Mutual just went belly up, by the way everyone.

[Divinus Arma]

Im not a southerner Im a TEXAN. Never compare with those inbred people.

The irony of Strike for the SOUTH saying this. yuck yuck.

Sorry. Off topic I know.

BTW, We're screwed. That housing boom sure was fun though, wasn't it? :laugh4:

[Strike For The South]

The irony of Strike for the SOUTH saying this. yuck yuck.

Sorry. Off topic I know.

BTW, We're screwed. That housing boom sure was fun though, wasn't it? :laugh4:

I was young and watching the history channel I regret the decision. REGRET I SAY

[ICantSpellDawg]

Washington Mutual just went belly up, by the way everyone.

Not entirely. A real bank bought their assets. That real bank won't be able to buy everyone's assets.

We have a very short time to get this 700 Billion into the investment sector. Everyday that we dilly-dally the price will go up until there is no possibility of a financial return - just expense. That pattern might go on until it bottoms out and leave us only slightly poorer as a nation; or we could do a pretty continual fall until our industry is wiped out and we have unemployment rates of 15% or more and an unbelievable national debt anyway.

I'm for a bailout of sorts similar to the Paulson/democrat plan without the transparency problems PLUS a few bits of the G.O.P. plan to elicit bank kick backs into our insurance plan.

[Xiahou]

Conservative Republicans offer their alternative (http://news.yahoo.com/s/ap/20080926/ap_on_go_co/bailout_alternative) that doesn't involve printing $700 billion for Wall Street.

The administration and the Democrats don't like the plan, but that's almost an endorsement at this point isn't it? :dizzy2:

[Koga No Goshi]

Conservative Republicans offer their alternative (http://news.yahoo.com/s/ap/20080926/ap_on_go_co/bailout_alternative) that doesn't involve printing $700 billion for Wall Street.

The administration and the Democrats don't like the plan, but that's almost an endorsement at this point isn't it? :dizzy2:

No.


KATIE COURIC: And, Bob, I understand that John McCain actually floated an alternative plan. What can you tell us about that?

BOB ORR: We're told at the White House Senator McCain offered an alternative plan that would include fewer regulations and more corporate tax breaks for businesses, kind of a private solution. But we're also told those ideas angered and surprised Democrats like banking chairman Chris Dodd who now says he thinks the White House summit was more of a political stunt for McCain.

Republicans ALWAYS leave little details like this out when they go "SEE! SEE! IT'S THE DEMOCRATS THAT STOPPED IT!" Politics unfortunately requires more than headlines and an ADHD attention span.

So much for McCain "really" changing his mind about deregulation between Monday and Tuesday, ey?

(Thanks to Count Arach for posting that little snippet)

[ICantSpellDawg]

Conservative Republicans offer their alternative (http://news.yahoo.com/s/ap/20080926/ap_on_go_co/bailout_alternative) that doesn't involve printing $700 billion for Wall Street.

The administration and the Democrats don't like the plan, but that's almost an endorsement at this point isn't it? :dizzy2:

How much does it suggest we part with in the short term?

[Oleander Ardens]

Well I studied economy and I can not tell of the hand with no clear numbers which plan will work. All I know is that the American economy needs a plan of action which keeps its financial system from melting down but places the longterm burden on Wall Street and keeps the longterm profit for Main Street. And I say that as an investor.

I find it plainly offensive to logic and reason to even try to blame both parties for this meltdown. While Bill Clinton must earn part of the blame by far more must go to the Republicans, which have driven relentlessy for deregulation for so many years.

P.S: The best example for such a crisis is here (http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?em)

[Husar]

Conservative Republicans offer their alternative (http://news.yahoo.com/s/ap/20080926/ap_on_go_co/bailout_alternative) that doesn't involve printing $700 billion for Wall Street.

The administration and the Democrats don't like the plan, but that's almost an endorsement at this point isn't it? :dizzy2:

My financial english isn't the best but the way I understand it they watn those bankrupt banks to pay into some insurance pot so that investors will buy the same old bad mortgages again and then everyone will be happy? :dizzy2:

[Sasaki Kojiro]

Satirical version--


Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.

I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transaction is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully Minister of Treasury
Henry Paulson

[Tristuskhan]

My financial english isn't the best but the way I understand it they watn those bankrupt banks to pay into some insurance pot so that investors will buy the same old bad mortgages again and then everyone will be happy? :dizzy2:

I think you have just summed up the essence of financial capitalism there...

[Mangudai]

Well I studied economy and I can not tell of the hand with no clear numbers which plan will work. All I know is that the American economy needs a plan of action which keeps its financial system from melting down but places the longterm burden on Wall Street and keeps the longterm profit for Main Street. And I say that as an investor.

I find it plainly offensive to logic and reason to even try to blame both parties for this meltdown. While Bill Clinton must earn part of the blame by far more must go to the Republicans, which have driven relentlessy for deregulation for so many years.

P.S: The best example for such a crisis is here (http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?em)


https://www.youtube.com/watch?v=VgctSIL8Lhs






Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.
I'm all for that.

[ICantSpellDawg]

https://www.youtube.com/watch?v=VgctSIL8Lhs





I'm all for that.

That is a great video, but it is from Fox news, which means that it is fabricated and never happened.

[Xiahou]

That is a great video, but it is from Fox news, which means that it is fabricated and never happened.Wait what's this? Barney Frank said that Fannie&Freddie should do more to get low-income families home loans? Who'd have thunk it....

Special Report is the only TV news show I watch with any regularity and I've been waiting for that segment to make it to YouTube. I thought it was striking how the same congressional figures that are now calling for a trillion dollar bailout are most of the same one's who helped coax the mortgage market off the cliff just as recently as a few years ago.

But yeah, it's FoxNews and therefore all lies- please dismiss any video or direct quotes in that clip. :yes:

[Koga No Goshi]

Wait what's this? Barney Frank said that Fannie&Freddie should do more to get low-income families home loans? Who'd have thunk it....

Special Report is the only TV news show I watch with any regularity and I've been waiting for that segment to make it to YouTube. I thought it was striking how the same congressional figures that are now calling for a trillion dollar bailout are most of the same one's who helped coax the mortgage market off the cliff just as recently as a few years ago.

But yeah, it's FoxNews and therefore all lies- please dismiss any video or direct quotes in that clip. :yes:

The majority of this problem was not people in West Virginia making 34,000 trying to buy a 90,000 dollar house. The majority of this problem was middle and upper middle class white Republicans (generally) getting greedy, already having a house (or two) and wanting a third in high-priced, postured to keep increasing in home value areas that they knew they couldn't afford, but calculated the value to rise so fast that they could turn around and get out of the loan in six months and make a big profit on what they put into it. I work in accounting in southern California and we have all kinds of customers (we're public accounting, so it's mostly individuals, not businesses, and most of our businesses are small sole proprietorships like family run restaurants) ranging from unemployed and disabled or retired to people in the million dollar range. And the people walking away from these mortgages? I don't know of a single one who is a part time janitor or in some way just absolutely doesn't make enough money to try to buy their first home. Every single person I have encountered walking away from a mortgage is someone greedy who did this purely as a houseflipping/short term investment hoping to get rich quick because all their friends were doing it too. And most of them jumped into these subprime loans really quick, and THEN asked advice from their accountants about it. (Much to the eyerolling of many of my coworkers.) The big money was not being made off signing loans for a 68,000 house in Altoona for a low income couple. The big money was being made off signing loans for 600,000 dollar houses in posh areas that people making about 90 or 100k figured they would just pay on the mortgage for six months and then turn around and sell the house for 680,000 and get a year's salary in profit off the deal.

So, in short, don't blame all this damn greed and speculation on low income people who probably have never owned, and still don't own, a single home.

[Xiahou]

I thought you said it was the sub-prime mortgages that were causing the problem?

Dude.... sub prime lenders. Sub prime meaning less than prime. You go to your normal bank where you do checking and savings, and they would check your income and credit and expenses before giving you a loan.

Subprime: we give loans to people who really shouldn't have them. In fact lots of times we don't even check the numbers!

Subprime should not have even existed, if there had been regulation. Or it should have been MUCH more strictly structured in how it could give out loans to people who only marginally qualified. It most certainly should never have allowed any old company to give out loans and then pawn them off.

This was the banking equivalent of "convenient store medical treatment." With no one checking credentials or doing blood tests or anything. And it had predictably similar results.So, now it's the evil, rich, white GOP homeowners who are to blame?

[Strike For The South]

The Government who made these loans profitable are to blame.

[Koga No Goshi]

I thought you said it was the sub-prime mortgages that were causing the problem?
So, now it's the evil, rich, white GOP homeowners who are to blame?

Someone making 100,000 already paying on their main house mortgage trying to get another loan for a 600,000 dollar house still got it through subprime lenders. There was a LOT of that. People who took loans to buy houses they knew they absolutely could not afford did so to turn around and flip it later at a profit. Not to own permanently as a main house.

Or do you believe only the poor used subprime?

[Xiahou]

Someone making 100,000 already paying on their main house mortgage trying to get another loan for a 600,000 dollar house still got it through subprime lenders. There was a LOT of that. People who took loans to buy houses they knew they absolutely could not afford did so to turn around and flip it later at a profit. Not to own permanently as a main house.

Or do you believe only the poor used subprime?

Ok, so let me get this straight. You're saying it was greedy, predatory sub-prime lenders victimizing rich, greedy, white people that caused the problems we're having now and it wasn't about something more like ninja (http://www.telegraph.co.uk/finance/economics/2785403/%27Ninja%27-loans-explode-on-sub-prime-frontline.html) loans?

[Tristuskhan]

Ok, so let me get this straight. You're saying it was greedy, predatory sub-prime lenders victimizing rich, greedy, white people that caused the problems we're having now and it wasn't about something more like ninja (http://www.telegraph.co.uk/finance/economics/2785403/%27Ninja%27-loans-explode-on-sub-prime-frontline.html) loans?

Have a problem with WHITE people, Xiahou?:clown:

[Koga No Goshi]

Ok, so let me get this straight. You're saying it was greedy, predatory sub-prime lenders victimizing rich, greedy, white people that caused the problems we're having now and it wasn't about something more like ninja (http://www.telegraph.co.uk/finance/economics/2785403/%27Ninja%27-loans-explode-on-sub-prime-frontline.html) loans?

It was everything that results from an unregulated mess of subprime lending. But the incredible demand for housing and the rising housing prices was accelerated mostly by the fact that what was going on out there wasn't a huge army of first-time buyers. It was a huge army of people who already had a house seeing the housing market as a way to get way better returns than putting their money in savings, and thinking they could flip a huge profit by keeping a house, waiting for the value to inflate, and selling. Rinse and repeat.

The sort of people I see at work? Not poor young couples with a first time house. Those people largely bought conservatively because if they got screwed by the crisis they were set way back. The people I've seen were people juggling four, five ADDITIONAL mortgages short term, selling one house at an increased value to help them swing paying for the others, picking up another one over in Orange County, selling the one in San Diego, never keeping a house more than six months or so and just keeping it long enough to get a nice profit. If these people had to just pay the mortgages straight through they would have collapsed. And now that the values are all going down that is exactly what is happening to them.

[drone]

Or do you believe only the poor used subprime?

Your experience is confined to Cali. Check out Ohio, Michigan, and other parts of the midwest.

Around here there were a lot of interest-only loans and other shadiness, these were mainly targeted to the wealthier, but the overall high real estate costs in this area (and other major cities) caught everyone. In depressed regions (i.e. historically manufacturing based communities), the poor are the ones getting hit.

[Koga No Goshi]

Your experience is confined to Cali. Check out Ohio, Michigan, and other parts of the midwest.

Around here there were a lot of interest-only loans and other shadiness, these were mainly targeted to the wealthier, but the overall high real estate costs in this area (and other major cities) caught everyone. In depressed regions (i.e. historically manufacturing based communities), the poor are the ones getting hit.

Everyone IS getting hit. Subprime didn't loan to just one demographic. But anyone who at all had experiences with subprime housing lending would be familiar that these people hard sold at the people in between 100 and 400k or so, the people who had enough money to play with but not enough to really afford more houses necessarily, and sold them hard on the deal that they could make money on investing and getting out.

But... yes. It was the poor people. Damn them! They ruined Wall Street!

[Xiahou]

From my "ninja (http://www.telegraph.co.uk/finance/economics/2785403/%27Ninja%27-loans-explode-on-sub-prime-frontline.html)" link earlier:
Take a tour through the Bay area and before long you can see how at the heart of this economic problem is a worrying divide between the property haves and have-nots. In the core of the city itself, on the picture postcard streets that line areas such as Pacific Heights and other smart districts, prices are still healthy, in some cases still rising. But drive over the Bay Bridge to East Oakland and beyond and the mirage of well-being dissolves away. Here the streets turn from Victorian grandeur to lines of shack-like bungalows, and a disturbing number are up for sale.No matter how you slice it, this is about risky loans being made to debtors with bad credit. The very idea of a NINJA (No Income No Job & No Assets) loan is insane- and yet, you have members of congress still pushing loans for "low-income" families as recently as last year. :dizzy2:

[Koga No Goshi]

From my "ninja (http://www.telegraph.co.uk/finance/economics/2785403/%27Ninja%27-loans-explode-on-sub-prime-frontline.html)" link earlier:No matter how you slice it, this is about risky loans being made to debtors with bad credit. The very idea of a NINJA (No Income No Job & No Assets) loan is insane- and yet, you have members of congress still pushing loans for "low-income" families as recently as last year. :dizzy2:

Congress passed no law regarding greedy middle class people using the housing market like the stock market as daytraders, yet plenty of that happened too. So let's not reinvent this as purely an issue of poor people buying houses, it wasn't.

[KukriKhan]

And just to muddy up the picture of "who got these sub-prime loans?" a bit more, I'll add that in my neck of the woods, in addition to the "flippers" Koga refers to, were the ninja loans arranged by independent agents, made to immigrants (legal or illegal is unknown; no paperwork was required) who used to rent a hovel for $1,000 a month. Now they could live in a 3br, 3 bath stand-alone house, share it with 3 other families, and pay $600 a month - at least until the ARM adjusted in 2 or three years. Then they might lose it - or not; god provides sometimes, you know.

In the long run, though, what did they lose? A credit rating? HAhaha! They lived in a nice house for 3 or 4 years, before they had to finally move. Which they did. Census Bureau tells that our city population has decreased 8% in the last 2 years (http://www.northcountytimes.com/articles/2008/09/23/business/zd7019718d243a59d882574cd0079bfdd.txt) - the majority of which were "immigrants". The cash-under-the-table jobs they did for the rich "flipper" crowd went away, when the "flipped" properties got walked away from.

[Mangudai]

http://es.youtube.com/watch?v=H5tZc8oH--o

I wonder if Republicans caused the bank collapses in Japan and Sweeden too?

[CountArach]

A tentative deal is reached (http://www.nytimes.com/2008/09/28/business/28bailout.html?_r=3&hp=&oref=slogin&pagewanted=print&oref=slogin&oref=slogin)

Some good analysis here (http://firedoglake.com/2008/09/28/congress-reaches-a-bailout-deal-throws-in-kitchen-sink-throws-out-bankruptcy-law-fixes/):

This is a plan that assumes that the government can buy enough bad debt at above market prices to bail out the banking system. Since as long as the government is willing to spend above market prices (and by market I mean “what other banks would pay for this cr*p”) banks won’t sell it to each other, the government has taken on an open ended obligation. If the pile isn’t that large, then a trillion or so may be enough. But if the pile is much larger than that, and it is, then the government will have to keep ponying up money over and over again. It won’t be limited to the original 700 billion, or trillion, or whatever. It will be an ongoing program that the market will become dependent on. Since the fundamental problems of securitization, over-leverage and declining housing prices haven’t been fixed, there’s little reason to believe that the government could get to the bottom of the pile, since, in fact, it will still be growing. (Especially as the economy gets worse and housing prices continue to drop. And they will, since this provides no floor price for real estate.)

In short, while this plan is an improvement on the original Paulson plan, which is saying, well, almost nothing. It’s still a plan that, at the end of the day, won’t work. That doesn’t mean we won’t see some short term benefits. Throw 700 billion bucks at the economy and the financial sector and it will do something. That’s still a ton of money. But it won’t fix the problem permanently, it will only patch it for a time and even during that time, things will continue to get worse. (For example, expect this to cause oil inflation.)

It’s a bad plan that won’t fix the economy or the financial sector. So we’ll be revisiting this issue in 6 to 9 months or so when it becomes clear that the problem hasn’t been solved, and that not solving it is costing a hell of a lot of money which could have been used to actually fix things.

[Banquo's Ghost]

Looks disastrous.

How on earth can it be justified to buy the debt at higher than market value?

[Oleander Ardens]

That is a great video, but it is from Fox news, which means that it is fabricated and never happened.

It is fabricated because it constructs out of isolated statements a story line which pales in confront to a very simple fact. With all the power in their hands: Why didn't they do absolutly nothing about it?

Thus the video is just a laughable effort of a paintjob. Seems that it does the job for some.

[Lemur]

Yeah, I love how it's all the Dems fault in '03 and '05, when the Repubs had a rock-solid majority in both houses of Congress.

[Koga No Goshi]

Yeah, I love how it's all the Dems fault in '03 and '05, when the Repubs had a rock-solid majority in both houses of Congress.

A few months of power with 49 votes in the Senate (who do not vote in lockstep anyway) plus Lieberman and we're supposed to have strongarmed our way into fixing everything done in six years of Rep majority in all branches. Our fault! Our fault! ;)

[ICantSpellDawg]

Yeah, I love how it's all the Dems fault in '03 and '05, when the Repubs had a rock-solid majority in both houses of Congress.

Nobody is blaming it on the dems, are they? It is clearly a bi-partisan failure, but some are trying to pin it on one party or the other. Obama doesn't seem to have played a part and McCain was on the right side of the issue. Would you honestly put more barney franks into Congress?

[woad&fangs]

Bi-partisan failure all the way. But even saying that it is a bipartisan failure is a cop-out. This is an American failure. The people of this country, from NINJAs to CEOs and everyone in between(including the gov) is addicted to spending money they don't have. It would be nice if the country as a whole took a long look at its financial situation but I expect everyone to continue playing the blame game.:wall:

[seireikhaan]

Bi-partisan failure all the way. But even saying that it is a bipartisan failure is a cop-out. This is an American failure. The people of this country, from NINJAs to CEOs and everyone in between(including the gov) is addicted to spending money they don't have. It would be nice if the country as a whole took a long look at its financial situation but I expect everyone to continue playing the blame game.:wall:
Amen.

[Koga No Goshi]

Bi-partisan failure all the way. But even saying that it is a bipartisan failure is a cop-out. This is an American failure. The people of this country, from NINJAs to CEOs and everyone in between(including the gov) is addicted to spending money they don't have. It would be nice if the country as a whole took a long look at its financial situation but I expect everyone to continue playing the blame game.:wall:

The elephant in the room here is that the American middle class is getting squeezed, and has had steadily less disposable income since the 70's. If everyone spent strictly within their means to pay up front we would be facing a financial crisis anyway because of this, as spending would slow way down. I'm not disagreeing with the sentiment of what you are saying, I agree that spending money you don't have, be it individuals, banks, CEO's or investors, is a crap paradigm. But, it is a paradigm. And it has been encouraged and cultivated into a whole culture of credit card, take out equity from your house to pay for things, again because of the squeeze on the middle class. One of the big factors here, besides "individual irresponsibility"? The exodus of good jobs and production out of the country. Bush's response after 9/11? Go shopping. The taking out of debt to keep the economy in decent shape has blame to go all around too, but just saying it's greedy irresponsible individuals overlooks all the people who have benefitted, not just by outsourcing, but then by encouraging the domestic market to keep up the same level of consumerism with less money with which to do it.

I realize the appeal of a simple answer like "people should be more responsible." But if people did that we just would have been in a recession sooner, that's all. What we have been doing, economically, is like trying to improve the value of our house by putting on new storm shutters and paint, while the wood was termite infested. There are underlying problems which have not and STILL have not been addressed.

[Hosakawa Tito]

What I'd like to know is when do they go after the Rating Agencies, like Standard & Poor's, that gave these securities their AAA investment grades? Without those doctored securities, spinning F rated flax into AAA rated gold; banks, insurance companies, and pension funds wouldn't have bought this stuff. There's no way these banks could have gotten away with this fraud without the complicity of the rating agencies to put "lip stick on the pig". There needs to be a perp walk here, and from the looks of it this should be quite a parade.

[Husar]

What we have been doing, economically, is like trying to improve the value of our house by putting on new storm shutters and paint, while the wood was termite infested.

And there you nailed the problem, houses should be made of stone!

[Ronin]

And there you nailed the problem, houses should be made of stone!

you´re making a joke but I always found that strange about the USA, every time I see images from houses destroyed by tornadoes and hurricanes in the US I always see what looks like pretty flimsy wood constructions.....over here houses are made of bricks and cement....no body would even think of building in wood.....not really on topic...but I was just wondering.

[Husar]

it was actually a half joke because I'm thinking the same as you.

[drone]

you´re making a joke but I always found that strange about the USA, every time I see images from houses destroyed by tornadoes and hurricanes in the US I always see what looks like pretty flimsy wood constructions.....over here houses are made of bricks and cement....no body would even think of building in wood.....not really on topic...but I was just wondering.

Just because we still have forests and you don't! It probably has more to do with cost, it's easier and cheaper to build wood frame homes. What is the new home construction rate in Europe compared to the US? Over the past 50 years we have had to build lots of new homes...


Hosakawa Tito is on the right track. Moody's, S&P, et al. rated these securities incorrectly, yet nobody has really put the screws to them yet. They probably didn't really understand what they were doing.

[Big_John]

https://www.youtube.com/watch?v=EoB4BS7CGAw

oh peter.. we hardly knew ye.

[Husar]

https://www.youtube.com/watch?v=EoB4BS7CGAw

oh peter.. we hardly knew ye.

So this peter guy saw it all coming and the others laughed about him?

I would like to see them others admit on TV that he was right. :whip:

[Mangudai]

http://uk.youtube.com/watch?v=_MGT_cSi7Rs&feature=related

The race card was definitely in play in any discussion of reforming the mortgage market.

[Oleander Ardens]

What a terrible day for stocks. If they go up like that markets will go down low in the long term. Well anyhow, thanks to the American taxpayer for lifting my remaining stocks :clown: Two weeks ago

Seems that I was quite right. Stocks will keep tumbling now for a while because hardly anybody is buying and many are selling