NationStates Jolt Archive

http://www.foxnews.com/story/0,2933,425201,00.html
I have paid my bills. I have worked hard to get a very good credit rating. I pay my taxes and I am paying for my house and land. Now the Congress wants to use my tax money to buy up bad loans so I will have to pay for someone else? Don’t get me wrong, I don’t mind helping out people who, through no fault of their own lose their home, but the current crisis was caused by people and financial institutions who acted irresponsibly. It was created by people who bought a home they knew they could not afford, or bought more home than they could afford. These people were “helped” by greedy mortgage companies that gave loans to people without verification of financial status. They gave these people interest only loans or variable rate mortgages to tease them into buying these homes knowing the people would default when the time came to start paying on the principle or the interest rate reset.
So, now you and I have to pay for their homes as well. Now we have “corporate welfare” big time. It is time to clean out Washington DC and start over. A pox on both political parties and what they have become. End of rant.

Not in the slightest.

No.

But if they didn't then the economic fallout (and it's effect on you) would be worse.

What concerns me more is the dual role of banks as financial advisers and sellers. People believe that if they discuss their situation with a bank and a bank offers them a mortgage it's a sensible financial decision to take it, and that often isn't so.

Not in the slightest.

So you don't care that you are going to have to pay for your home and someone the home of someone else? You don't care that people were irresponsible and took out loans they could not afford that you will now pay? You don't care that financial institutions gave loans to people they knew could not afford them and now you will have to pay?

Wow! Maybe I can get you to pay my mortgage.

But if they didn't then the economic fallout (and it's effect on you) would be worse.

What concerns me more is the dual role of banks as financial advisers and sellers. People believe that if they discuss their situation with a bank and a bank offers them a mortgage it's a sensible financial decision to take it, and that often isn't so.

The fact that they bailed them out does bother me somewhat but I can understand why it may have been necessary. What pisses me off to no end is that it did happen when it never should have and I have to pay for it even though I was not a part of it. :mad:

I knew this was coming. What else would Washington do? Try to prevent it before it happened? Why do that when you can wait until the last minute, pull out some welfare, and push it all on the taxpayer while parading around as heroes who have saved the economy?

What pisses me off to no end is that it did happen when it never should have and I have to pay for it even though I was not a part of it. :mad:

Welcome to having a government.

It certainly annoys me. They fucked millions and when it came back to bite them in the ass they get to fuck us all again.

Well, with any luck this plan will turn out like the Resolution Trust Corporation did back in the 1990's and end up producing a net profit on the assets it purchases. These companies will thankfully be eliminated in the process, providing yet another clear example of what happens when you allow greed to take the place of sound business sense and good investment control. However, one can only imagine the further ballooning deficits that will occur in the meantime; truth be told, I seriously wonder whether or not the global economy will be able to swallow any more debt from any source given the liquidity drought stemming from this crisis.

All I know is that interest rates are likely to shoot up considerably over the next few years. This is something that's badly needed, though, to finally cure the overhang of excess liquidity and debt of the past 10 years. The 1998-2008 period has seen such a flood of liquidity compared to previous periods that it's going to produce quite a hangover in the credit markets as the needed stringency brings it back to healthy levels. Unfortunately, a side-effect will likely be prolonging the housing slump but I would say we need a period of depressed activity in that industry to purge the remaining bad mortgages and to absorb the huge supply overhang.

So you don't care that you are going to have to pay for your home and someone the home of someone else? You don't care that people were irresponsible and took out loans they could not afford that you will now pay? You don't care that financial institutions gave loans to people they knew could not afford them and now you will have to pay?

Wow! Maybe I can get you to pay my mortgage.

You're pissed off at the wrong people. Instead of being angry at the "deadbeats" (and no, I'm not saying you used that word) who lost their homes, why not be angry at the banks and loan companies whose unfair and dishonest practices got us into this mess?

*doesn't live in the US*
*thinks this is a little funny*

Get the government out of the economy entirely!!! It's at least as much the fault of the federal reserve as it is the fault of business, banks, and borrowers.

You're pissed off at the wrong people. Instead of being angry at the "deadbeats" (and no, I'm not saying you used that word) who lost their homes, why not be angry at the banks and loan companies whose unfair and dishonest practices got us into this mess?

To be fair, it's both of their faults, and he should be pissed at both of them.

http://www.foxnews.com/story/0,2933,425201,00.html
I have paid my bills. I have worked hard to get a very good credit rating. I pay my taxes and I am paying for my house and land. Now the Congress wants to use my tax money to buy up bad loans so I will have to pay for someone else? Don’t get me wrong, I don’t mind helping out people who, through no fault of their own lose their home, but the current crisis was caused by people and financial institutions who acted irresponsibly. It was created by people who bought a home they knew they could not afford, or bought more home than they could afford. These people were “helped” by greedy mortgage companies that gave loans to people without verification of financial status. They gave these people interest only loans or variable rate mortgages to tease them into buying these homes knowing the people would default when the time came to start paying on the principle or the interest rate reset.
So, now you and I have to pay for their homes as well. Now we have “corporate welfare” big time. It is time to clean out Washington DC and start over. A pox on both political parties and what they have become. End of rant.
Its the governments roll to try to curb economic impact by the most effective means. Hopefully this is an effective means and further regulation or simply attention is paid that will reduce further instances

I may think some of the people and banks are at fault for getting themselves into this mess and there is some indignation over that but I cant really get angry or fault the government for trying to resolve it.

The government had little choice. What would you have them do? Allow AIG, and with it, huge numbers of pensions, collapse, taking a huge part of the global insurance industry with it? Allow these toxic elements of portfolios (many of which have yet to be fully, or even partially, identified) to infect good investments?

While I don't like it, there are precious few options, and even fewer decent ones. Allowing the problem to continue would only exacerbate the situation, and lengthen the recovery process.

Get the government out of the economy entirely!

Enjoy your rampant monopolies.

Enjoy your rampant monopolies.

^ baseless assumption.

You're pissed off at the wrong people. Instead of being angry at the "deadbeats" (and no, I'm not saying you used that word) who lost their homes, why not be angry at the banks and loan companies whose unfair and dishonest practices got us into this mess?

Many of those people knew they wouldn't be able to afford those homes when they had to start paying on the principle or when the interest rate reset. They are just as guilty as the financial institutions that duped them into the loans.

Many of those people knew they wouldn't be able to afford those homes when they had to start paying on the principle or when the interest rate reset. They are just as guilty as the financial institutions that duped them into the loans.

Proof, not talking points please.

Proof, not talking points please.

Okay.

Adjustable-rate mortgage with no down payment & interest-only monthly payments + FINANCIAL DISASTER!!! If that's too hard to understand, then the homeowners deserve foreclosure.

Fractional reserve banking where the fractional reserve consists mostly of repackaged bad debt = financial disaster for the banks! You deserve to fail, you moronic bankers!

Constant government bailouts with fiat currency and increasing national debt = massive inflation! This is the biggest problem of all, and both dems and Pubbies are to blame for this mess. It's the biggest danger of all, with far worse consequences than the failure of some companies here and there.

^ baseless assumption.

More like slightly educated guess. It's in the interest of any company to monopolise their niche in the market. They can charge whatever the hell they want that way. Without the government to stop them they have one less reason to try and form a monopoly.

More like slightly educated guess. It's in the interest of any company to monopolise their niche in the market. They can charge whatever the hell they want that way. Without the government to stop them they have one less reason to try and form a monopoly.

Perhaps, but in the age of the internet, we can easily see that sort of thing happening and find ways to circumvent it on our own. besides, many of these companies with monopolistic tenancies enjoy unjust advantages from government support and legislation.

It bothers me from an ethical standpoint, in that we're essentially letting them get away with the bad practices that lead to this in the first place.

But on the same token, we have to, because if we don't, we'll have a second Great Depression. It really is that potentially bad.

It bothers me from an ethical standpoint, in that we're essentially letting them get away with the bad practices that lead to this in the first place.

But on the same token, we have to, because if we don't, we'll have a second Great Depression. It really is that potentially bad.

Government intervention in the market CREATED the depression. What should have been no more than a year-long recession became the Great Depression due to governmental meddling. let the market do its job and it will tend toward equilibrium.

Prior to the GD, there were several panics in US history. None of them were very long or very severe. The GD was the first time the gov't really tried to end one through policy, and it became the mess we all know about now. Coincidence? No.

^ baseless assumption.

You mean history counts for nothing, then?

^ baseless assumption.

Right...because when we lacked regulation, we didn't see tons of monopolies such as Standard Oil, United Fruit, US Steel...

And the lack of regulation on banking practices? No, that had nothing to do with this current crisis.

Right...because when we lacked regulation, we didn't see tons of monopolies such as Standard Oil, United Fruit, US Steel...

And the lack of regulation on banking practices? No, that had nothing to do with this current crisis.

Basically what I said, only with nifty examples. Cool.

Right...because when we lacked regulation, we didn't see tons of monopolies such as Standard Oil, United Fruit, US Steel...

And the lack of regulation on banking practices? No, that had nothing to do with this current crisis.

Even now, go research where America's sugar comes from.

im not happy about it but its better than all of us suffering a major depression and economic chaos (which might happen anyway)

Even now, go research where America's sugar comes from.

Haven't heard much about sugar...I'll have to look into it.

However, the monopolies of today (AT&T, Microsoft) aren't on the level of US Steel and Standard Oil

Perhaps, but in the age of the internet, we can easily see that sort of thing happening and find ways to circumvent it on our own. besides, many of these companies with monopolistic tenancies enjoy unjust advantages from government support and legislation.

Just because the internet says something doesn't mean people will believe it. I bet if you went to the google you could find any number of websites and blogs about how Wal*Mart is evil. With a little more searching you could probably find the Penn & Teller: Bullshit episode about how boycotting Wal*Mart is bullshit, and how people that do so are in some cases stupid and demonstrably wrong. Maybe there are blogs saying Wal*Mart isn't evil too.

What are the facts in all this hubub about Wal*Mart? I don't know. It's pretty difficult for the average guy on the street to investigate any company. I can't just walk in and ask to see their hiring policy or something and expect them to do it(lets just ignore the fact that I can't really walk from Ireland to America anyway).

Now the government, they can walk into Wal*Mart and demand to see shit. And I can walk into the government and demand to see shit. Useful thing, that gubburnmint.

Government intervention in the market CREATED the depression. What should have been no more than a year-long recession became the Great Depression due to governmental meddling. let the market do its job and it will tend toward equilibrium.

Prior to the GD, there were several panics in US history. None of them were very long or very severe. The GD was the first time the gov't really tried to end one through policy, and it became the mess we all know about now. Coincidence? No.

Through faulty policy, perhaps.

Taking government entirely out of the economy isn't going to do anything either, because there never has been a truly free economy in the sense you're talking about, and even if there was, it would eventually build up its own sort of regulations. They'd work differently, but they'd amount to the same thing.

The key is the right kind of intervention at the right levels at the right time, rather than going willy nilly on ideology and slapping regulation or removing regulations without any concern for what they actually DO.

Through faulty policy, perhaps.

Taking government entirely out of the economy isn't going to do anything either, because there never has been a truly free economy in the sense you're talking about, and even if there was, it would eventually build up its own sort of regulations. They'd work differently, but they'd amount to the same thing.

The key is the right kind of intervention at the right levels at the right time, rather than going willy nilly on ideology and slapping regulation or removing regulations without any concern for what they actually DO.

If we've never had a true free market, how do you know it won't work? we've seen enough examples of massive inflation and stagnant economies from socialism, and we've seen it happening here as more and more government control is exerted over the market and the people here in the US. I'll take the risks of freedom over the threats of totalitarianism any day.

No point being angry about it at this late date. The banking cartel won. They sail off into the sunset with their billions and everyone else will have to face a reduced standard of living to pay for it.

On the bright side, no more college.

If we've never had a true free market, how do you know it won't work? we've seen enough examples of massive inflation and stagnant economies from socialism, and we've seen it happening here as more and more government control is exerted over the market and the people here in the US. I'll take the risks of freedom over the threats of totalitarianism any day.

We know it doesn't work from lassiez-faire style economies of the past. Because humans are, by nature, greedy. Because we've already seen the abuse of workers and the expansion of monopolies at the cost of the consumer, and we've seen the abuse of power to make a quick dollar. Need proof? Look to history. Standard Oil, US Steel, the sub-prime scandal, savings and loans, the great depression...these were all permissable only in a system that did not have proper government regulation. This is not to say that governmental influence can have its issues (definatly hurt in the great depression), but it is necessary to a smooth-running economy (while the depression was partly exacerbated by US fiscal policy, the situation that created the initial situation was created by lack of regulation)

Calling governmental regulation "totalitarianism", by the way, is a wonderful strawman. No one here is arguing for totalitarianism. Just some regulation.

let the market do its job and it will tend toward equilibrium.
And what would the equilibrium be? Banks with little leverage and few to no mortgage-backed securities on their assets. Those don't exist right now, and given that the current crop of banks is doomed. As Lacadaemon said in another thread: if the government hadn't suggested some sort of solution, your credit cards, ATMs and so on might have stopped working on Monday afternoon.

Sometimes moving from one equilibrium to another comes with adjustment costs big enough to think about intervention. It's not as though they're setting out to create an artificial equilibrium - the outcome will be those more conservative banks largely free of the toxic assets. It's just that rather than waiting for those to appear from scratch, they facilitate the current ones to transform into them.

Ultimately there is even a chance that, when the housing market recovers, some of those assets could have some value left in them. And it thus seems likely that this comprehensive package will actually end up cheaper than the ad hoc, 'save one after another' thing they've been doing so far.

As for Celtlund: as much as it sucks, the choice isn't between the people at fault taking the fall and you having to bail them out, the choice is between you bailing them out or the economy you're existing in imploding. Bush may have a point when he says this bail-out is cheaper than the alternative. By all means be angry at all the people responsible, but by not doing this rescue you're just hurting yourself.

Look to history. Standard Oil, US Steel, the sub-prime scandal, savings and loans, the great depression...
Fun fact: it's possible that the Standard Oil break-up wouldn't actually be valid according to our modern monopoly laws. There's been some research into this, and there seemed to have been little to no effect on the pricing from the firm's position. There are those who suggest that the motives for the Standard Oil trial were political rather than economic...

If we've never had a true free market, how do you know it won't work? we've seen enough examples of massive inflation and stagnant economies from socialism, and we've seen it happening here as more and more government control is exerted over the market and the people here in the US. I'll take the risks of freedom over the threats of totalitarianism any day.

1. Because in order to work it would have to ignore reality.

2. Because it has never developed, either forced or otherwise.

3. Soviet-style socialistic planned economies are not the same as regulation. I'm seriously getting sick of this equating of any sort of regulation or government intervention as identical to Soviet-style full control. Believe you me, it's not, not even remotely.

4. Stop the emotive crap. Seriously. This hand waving of ideology ignores reality.

http://www.foxnews.com/story/0,2933,425201,00.html
I have paid my bills. I have worked hard to get a very good credit rating. I pay my taxes and I am paying for my house and land. Now the Congress wants to use my tax money to buy up bad loans so I will have to pay for someone else? Don’t get me wrong, I don’t mind helping out people who, through no fault of their own lose their home, but the current crisis was caused by people and financial institutions who acted irresponsibly. It was created by people who bought a home they knew they could not afford, or bought more home than they could afford. These people were “helped” by greedy mortgage companies that gave loans to people without verification of financial status. They gave these people interest only loans or variable rate mortgages to tease them into buying these homes knowing the people would default when the time came to start paying on the principle or the interest rate reset.
So, now you and I have to pay for their homes as well. Now we have “corporate welfare” big time. It is time to clean out Washington DC and start over. A pox on both political parties and what they have become. End of rant.

Nope.

I'm pissed off at the people who made such a fuss about how less regulation was needed not more... about how business can regulate itself... about how the less government involvement the better. The sort of people who say inane things like 'the market will balance itself'... (or, 'democratic government works because voters won't re-elect a party that screws them once - clearly ignoring the current one').

Yes, if you leave the market to itself, it WILL balance itself. It will also lurch wildly, fall over, and occassionally explode. It will make and break political borders. It will swell and destroy nations. Why? Because 'the market' doesn't care about any of those things.

We've had a little experiment in letting the market dictate. And, hopefully, people have noticed that - while things MAY balance out down the line, it's the 5 years when you can't afford to eat that are the REAL problem.

Poor people don't piss me off. People who spent too much on debt don't piss me off - we're bombarded with attempts to make us do that daily. The people who piss me off are the people who are predatory on the poor, the people who encourage nationwide debt spending, and those who look at that system as though it were a good thing.

Anger is good, but only if you direct it at the right people.

I'll take the risks of freedom over the threats of totalitarianism any day.

I won't.

And, what's unfair is - I've been forced to. My medical care is expensive, because you claim some moral highground. My job security is less-secure than it should be - because you claim a moral highground. Prices are jumping up, and wages are dropping... because you claim some moral highground.

The stupid thing is - this isn't news. The reason Europe had guilds for centuries, was to regulate industries to certain acceptable practices, to make sure jobs were done right, and - yes - even to protect the customer... (or at least, the reputation of the industry - which works out to much the same thing). We have regulation because lack of regulation doesn't work. It allows a few predators to get rich at the expense of everyone else.

It does anger me however I think the government did the right thing to curb a major depression in America. In the end it may be a profit for us taxpayers depending on how they set it up. Buy at a discount hold and sell slowly is the ideal situation.

Lest anyone be confused though, this bailout does not 'save' the economy. The choices lie between extremely nasty recession and zimbabwe. This is not something that can just be shrugged off because the credit markets are damaged, probably for a long time.

Real interest rates are going to go up for borrowers. Government programs are going to be cut, consumer spending (70% of GDP) is going to fall with all the knock on that that entails.

Personally, in addition to restoring solvency to the banks, I think the additional step should be taken of giving help insolvent over leveraged households. Maybe offering tax credits to pay down household debt, as this would do more to actually slow the rate of default - which is the heart of this problem - than all the other cack handed plans proposed thus far. Naturally, the tax credits would only be available to those that retire debt and lines of credit, not just pay the bill. I'd also limit it to sub $200,000 income households, to be phased out above that. (Those are napkin figures).

And, I would take already existing regulatory powers and force the recapitalized banks to actually start taking down leverage.

I worry about the CP market too. That goes again and it is game over.

I worry about the CP market too. That goes again and it is game over.

Problems with the CP market, you say? (http://www.lolsauce.com/RandomBS/Pedo%20bear.png)

Fun fact: it's possible that the Standard Oil break-up wouldn't actually be valid according to our modern monopoly laws. There's been some research into this, and there seemed to have been little to no effect on the pricing from the firm's position. There are those who suggest that the motives for the Standard Oil trial were political rather than economic...

Really? Do you happen to have a source on that? I'd be interested in reading up on it.

Nope.

I'm pissed off at the people who made such a fuss about how less regulation was needed not more... about how business can regulate itself... about how the less government involvement the better. The sort of people who say inane things like 'the market will balance itself'... (or, 'democratic government works because voters won't re-elect a party that screws them once - clearly ignoring the current one').

Yes, if you leave the market to itself, it WILL balance itself. It will also lurch wildly, fall over, and occassionally explode. It will make and break political borders. It will swell and destroy nations. Why? Because 'the market' doesn't care about any of those things.

We've had a little experiment in letting the market dictate. And, hopefully, people have noticed that - while things MAY balance out down the line, it's the 5 years when you can't afford to eat that are the REAL problem.

Poor people don't piss me off. People who spent too much on debt don't piss me off - we're bombarded with attempts to make us do that daily. The people who piss me off are the people who are predatory on the poor, the people who encourage nationwide debt spending, and those who look at that system as though it were a good thing.

Anger is good, but only if you direct it at the right people.

I won't.

And, what's unfair is - I've been forced to. My medical care is expensive, because you claim some moral highground. My job security is less-secure than it should be - because you claim a moral highground. Prices are jumping up, and wages are dropping... because you claim some moral highground.

The stupid thing is - this isn't news. The reason Europe had guilds for centuries, was to regulate industries to certain acceptable practices, to make sure jobs were done right, and - yes - even to protect the customer... (or at least, the reputation of the industry - which works out to much the same thing). We have regulation because lack of regulation doesn't work. It allows a few predators to get rich at the expense of everyone else.

You've hit it on the head here. Businesses could self-regulate, but they won't. Their goal is to maximize profit, not maximize protection or affordability for the consumer.

You've hit it on the head here. Businesses could self-regulate, but they won't. Their goal is to maximize profit, not maximize protection or affordability for the consumer.

I like to remind people of this when they complain about some company "only doing X to make more money". Well no shit, sherlock, that's how capitalism works.

You've hit it on the head here. Businesses could self-regulate, but they won't. Their goal is to maximize profit, not maximize protection or affordability for the consumer.

There's nothing wrong with that in principle though.

Ultimately, the fault for all this lies at the feet of the American public. They keep on voting in the same asshats, obsessing about trivia and silly issues: as if there is any difference between democrats and republicans when it comes to the important stuff. Just look at the positive glee on barney frank's face as he carves up the american taxpayer on behalf of his pigmen friends.

The fact that they bailed them out does bother me somewhat but I can understand why it may have been necessary. What pisses me off to no end is that it did happen when it never should have and I have to pay for it even though I was not a part of it. :mad:

Dude must hate communism.

There's nothing wrong with that in principle though.


On the contrary, there is something very much 'wrong with that in principle', unless your argument is purely about maximising profit.


Ultimately, the fault for all this lies at the feet of the American public. They keep on voting in the same asshats, obsessing about trivia and silly issues: as if there is any difference between democrats and republicans when it comes to the important stuff. Just look at the positive glee on barney frank's face as he carves up the american taxpayer on behalf of his pigmen friends.

The American public is very much complicit, those who vote, lobby, or legislate for less regulation in industry, moreso.

On the contrary, there is something very much 'wrong with that in principle', unless your argument is purely about maximising profit.


I am saying that it is unreasonable to expect management to do anything other than maximize profit (well, value really) because expecting otherwise sets up conflicting interest and duties.

Regulation should be solely the responsibility of the government entities.

And no lobbying.

Those damn liberals want my money to help the less fortunate? How dare they!!!!!!

let the market do its job and it will tend toward equilibrium. Sadly you seem to miss the absolute finality in free market and Capitalism. Without regulation, the more effective (or the less honorable companies) will inevitability crush all competition.

Meaning monopolies would form, and if the businesses started expanding into other monopolies and iif it was ever allowed to go on long enough, in the end one business would own everything.

As for Celtlund: as much as it sucks, the choice isn't between the people at fault taking the fall and you having to bail them out, the choice is between you bailing them out or the economy you're existing in imploding. Bush may have a point when he says this bail-out is cheaper than the alternative. By all means be angry at all the people responsible, but by not doing this rescue you're just hurting yourself.

I'm not as up on the issue as Neu Leonstein or our two Ohioan economists (Andaluciae and Vetalia) are but this is pretty much what I think of the issue. Paying for an ounce of prevention rather than a pound of cure. Or perhaps more accurately treating the disease early on while it's still treatable.

Sadly you seem to miss the absolute finality in free market and Capitalism. Without regulation, the more effective (or the less honorable companies) will inevitability crush all competition.


Actually, in this particular iteration of the free market game, it seems as if the absolute finality is that everyone goes bankrupt.

I blame the moral harzardy stuffs for that though.

Actually, in this particular iteration of the free market game, it seems as if the absolute finality is that everyone goes bankrupt.

I blame the moral harzardy stuffs for that though.
Kind of sounds like Communism then doesn't it?

Kind of sounds like Communism then doesn't it?

That capitalism would collapse in on itself? I guess. I would imagine it could end either way.

It's a moot point thought b/c as in the 1930s, governments usually survive. Then the whole thing starts again. Unless you get hitler.

I am interested in how this will fold into the recent (used lightly here) regulations and 'laws' passed requiring the repayment of debt even under the circumstances of bankruptcy. While I am familiar with how this applies on a person-by-person basis, what of a corporation?

While I am no economist, and will never claim ability in anything beyond breathing and directing food into my gullet (both of which I manage to fail on occasion as well), to me stepping back and looking at the combination of the regulations in effect, recently put into effect, and planed to be in effect; all seem to be heading in the right direction.

Blame the dominant paradigm - the economic roller coaster of economic rationalism that the Neo-cons thought they could ride with no hands, eyes closed and with the guard on a short-term contract.

Fuck being angry, I own 80% of AIG.

My question is why do you only have two posts in this thread?


http://www.foxnews.com/story/0,2933,425201,00.html
I have paid my bills. I have worked hard to get a very good credit rating. I pay my taxes and I am paying for my house and land. Now the Congress wants to use my tax money to buy up bad loans so I will have to pay for someone else? Don’t get me wrong, I don’t mind helping out people who, through no fault of their own lose their home, but the current crisis was caused by people and financial institutions who acted irresponsibly. It was created by people who bought a home they knew they could not afford, or bought more home than they could afford. These people were “helped” by greedy mortgage companies that gave loans to people without verification of financial status. They gave these people interest only loans or variable rate mortgages to tease them into buying these homes knowing the people would default when the time came to start paying on the principle or the interest rate reset.
So, now you and I have to pay for their homes as well. Now we have “corporate welfare” big time. It is time to clean out Washington DC and start over. A pox on both political parties and what they have become. End of rant.

You here identified the first rung of the current economic situation, but that is not the only one. Bad loans, along with other stimulus (like naked shortselling, more sellers than buyers, low confidence) caused repercussions which eventually let to even perfectly good securities (like packaged mortgage securities with no defaults) losing value without merit - and THAT then caused the big slide we all saw last week..

As far as you 'paying' for this - I wouldn't lose sleep over it. The probability is very high that these 'toxic' securities will net the government a big profit sooner than you might think - which they will quietly spend on the fantastic pork projects we all know and love.

isnt it up to the consumer to make sure they take part in the best bank loans. Saddly there are taxes for earning money which is a dissinsentive and worst of all there are taxes on saving.

But it occurs on many other things. Eg Taxes pay for the health of smokers who use the health system. The arts get money from people who dont wish to pay to see it. The same with sport.

The problem is there are too many votes too lose for a politician to say "See what happens when you live above your means"

Many of those people knew they wouldn't be able to afford those homes when they had to start paying on the principle or when the interest rate reset

You have proof of this?

You might define "many" while you're at it.

Fact is that the real bail out is for the well educated, well paid, and fairly fucking comfortable assholes who lobbied for de-regulation, lobbied for it to stay that way, and actively pushed those dodgy derivatives and sub prime loans. Its American socialism - government cash for the rich - and it has to be done because if they collapse, their mess will drag the world down with it.

It doesn't anger me, it pisses me off.

"Paulson said the U.S. government is pressuring financial authorities in other countries to adopt similar financial stabilization plans.

'We have a global financial system and we are talking very aggressively with other countries around the world, and encouraging them to do similar things, and I believe a number of them will,' he said.

Paulson said the sudden crisis was stunning but he expressed hope in U.S. economic resilience.

'I wouldn't bet against the long-term fundamentals of this country,' he said on NBC's 'Meet the Press.' 'But this is a humbling experience to see so much fragility in our capital markets, and ask how did we ever get here.'

'I'm confident Congress will move and move quickly,' Paulson he added."

http://news.yahoo.com/s/nm/20080921/bs_nm/financial_bailout_paulson_dc


Now it's tax payers from all over the world who are "pressured aggressively" into contributing money to a mismanagement that the U.S. market has caused? Well thank you oh-so-fucking-very much!

So you don't care that you are going to have to pay for your home and someone the home of someone else? You don't care that people were irresponsible and took out loans they could not afford that you will now pay? You don't care that financial institutions gave loans to people they knew could not afford them and now you will have to pay?

Wow! Maybe I can get you to pay my mortgage.
You'd be weeping into your bargain bin beer if they didn't effect the bailout and you know it. The consequences of NOT doing this would kick your ass way harder than the bailout possibly could.

Try seeing beyond your own nose.

Isn't Celtlund the guy who had a whole bunch of money invested into property during the bubble? Or was that someone else?

You'd be weeping into your bargain bin beer if they didn't effect the bailout and you know it. The consequences of NOT doing this would kick your ass way harder than the bailout possibly could.

Try seeing beyond your own nose.Quite honestly, he's not going to feel it unless taxes are getting raised, which, if it does happen, will probably have more to do with the expensive shooting spree going on in the middle east than the bailouts.

Quite honestly, he's not going to feel it unless taxes are getting raised, which, if it does happen, will probably have more to do with the expensive shooting spree going on in the middle east than the bailouts.

Yes...much ado about nothing...for him.

The alternative would be manifestly worse, but admitting that would probably make him feel foolish since it's apparently the principle of the thing.

Well he's got two choices. The free market, or democracy, because right now, the latter is calling the shots.

Dude must hate communism.

How did you ever guess. :rolleyes:

I'll be angry, unless the people who for the last few year have got rich selling these loans they know are dodgy, have to pay. But most likely, as it usually happens, they'll keep their mansion and luxury yacht, etc while all the little people get screwed and the taxpayer bails out the rich guy.

Yes...much ado about nothing...for him.

The alternative would be manifestly worse, but admitting that would probably make him feel foolish since it's apparently the principle of the thing.

Well he's got two choices. The free market, or democracy, because right now, the latter is calling the shots.All things considered, I do find it funny that the guy whose voters were lambasting Kerry as flip-flop has been flipping back and forth between the flops. Talk about getting the government you deserve...

Isn't Celtlund the guy who had a whole bunch of money invested into property during the bubble? Or was that someone else?

No. I have a home in which I am currently living. I own one acre of land that I am purchasing to build my retirement home. I have never invested in land or property as an investment.

The consiquences of doing nothing are likely to be worse, I suppose. What I'm more pissed off about is the City bankers who get their millions of pounds in payoffs, fuck off to the Caymans and ride it out for a few years, come back, get their jobs, and the whole thing starts again. What I'm really, really pissed off about is my bank closing (there's a Lloyds the other side of town, so I assume my Halifax branch will close) as a result of poor practice and short selling. What I'm absolutely fucked off about is my parents losing thousands in HBOS shares for their retirement.

As an afterthought, we've been turning a blind eye to the City for far too long.

The credit crunch is bringing out the whiner in all of us, I suppose.:p

Isn't Celtlund the guy who had a whole bunch of money invested into property during the bubble? Or was that someone else?
That might have been Myrmi, but I'm not too sure.

Ah yes. White collar crime is much more acceptable than muggings, because it doesn't really hurt people as much. Not when the government is there to bail us all out. Huzzah!

That might have been Myrmi, but I'm not too sure.

Yeah, Myrmi. That's the guy.

I'm more interested in seeing what the combined impact of having so many foreign landlords is going to have on the social/political makeup of the US. That's right...we're in yer country buying up all yer foreclosed houses.

I'm more interested in seeing what the combined impact of having so many foreign landlords is going to have on the social/political makeup of the US. That's right...we're in yer country buying up all yer foreclosed houses.

Hey, if the foreign landlords have more integrity and concern for their tenants than the former owners, I'll welcome them with a plate of my cinnamon-chocolate-chip cookies!

Ah yes. White collar crime is much more acceptable than muggings, because it doesn't really hurt people as much. Not when the government is there to bail us all out. Huzzah!

Yup. Conservatives are worried about street crime, provided that street isn't Wall Street.

It doesn't anger me, it pisses me off.

"Paulson said the U.S. government is pressuring financial authorities in other countries to adopt similar financial stabilization plans.

'We have a global financial system and we are talking very aggressively with other countries around the world, and encouraging them to do similar things, and I believe a number of them will,' he said.

Paulson said the sudden crisis was stunning but he expressed hope in U.S. economic resilience.

'I wouldn't bet against the long-term fundamentals of this country,' he said on NBC's 'Meet the Press.' 'But this is a humbling experience to see so much fragility in our capital markets, and ask how did we ever get here.'

'I'm confident Congress will move and move quickly,' Paulson he added."

http://news.yahoo.com/s/nm/20080921/bs_nm/financial_bailout_paulson_dc


Now it's tax payers from all over the world who are "pressured aggressively" into contributing money to a mismanagement that the U.S. market has caused? Well thank you oh-so-fucking-very much!
Missed the first part of your own article where the US will be buying bad assets from foreign banks, didn't you?

Treasury Secretary Henry Paulson said Sunday that foreign banks will be able to unload bad financial assets under a $700 billion U.S. proposal aimed at restoring order during a devastating financial crisis.

It wasn't just US banks that have these bad assets. Any bank with operations within the US could potentially have made these trades. So yes, it makes sense that citizens of countries with banks with operations in the US should consider giving money.

Or they can sit there and continue to point fingers and complain about how this is all the US's fault. That's done a lot to help so far, no?

Hey, if the foreign landlords have more integrity and concern for their tenants than the former owners, I'll welcome them with a plate of my cinnamon-chocolate-chip cookies!

Oh, we'll start off nice.

Before you know it, we'll be taking your firstborns to pay the rent.

Oh, we'll start off nice.

Before you know it, we'll be taking your firstborns to pay the rent.

And those of us who haven't yet spawned?

And those of us who haven't yet spawned?

There's a great market for white folk organs.

There's a great market for white folk organs.

But I only have a Yamaha keyboard! :(

THis angers me, does it anger you?

Nope. That's the price you pay for deregulating the market and allowing this to happen in the first place. And it's a small price to pay compared to the price of doing nothing.

http://www.foxnews.com/story/0,2933,425201,00.html
I have paid my bills. I have worked hard to get a very good credit rating. I pay my taxes and I am paying for my house and land. Now the Congress wants to use my tax money to buy up bad loans so I will have to pay for someone else? Don’t get me wrong, I don’t mind helping out people who, through no fault of their own lose their home, but the current crisis was caused by people and financial institutions who acted irresponsibly. It was created by people who bought a home they knew they could not afford, or bought more home than they could afford. These people were “helped” by greedy mortgage companies that gave loans to people without verification of financial status. They gave these people interest only loans or variable rate mortgages to tease them into buying these homes knowing the people would default when the time came to start paying on the principle or the interest rate reset.
So, now you and I have to pay for their homes as well. Now we have “corporate welfare” big time. It is time to clean out Washington DC and start over. A pox on both political parties and what they have become. End of rant.

I am as outraged as you are. There are also instances where lenders intentionally defrauded people. I am one of those people. After having someone tell me I needed to take a combo loan with a higher interest rate I continued to shop around. I had some people who say they wanted to give me all sorts of "deals." I finally got a 30yr fixed at a lower rate than the "deals' people wanted to give me. You see, I actually qualified for a better loan and they wanted to give me the teaser loan anyway. This was not an isolated case, as many of these honest lenders tried to do the same thing. The lenders intentionally tried to put me into a risky loan just to make more $.

So you don't care that you are going to have to pay for your home and someone the home of someone else? You don't care that people were irresponsible and took out loans they could not afford that you will now pay? You don't care that financial institutions gave loans to people they knew could not afford them and now you will have to pay?

Wow! Maybe I can get you to pay my mortgage.

they are not giving anyone their homes. They are saving the bank. saving the person who has saved money in amounts of over 100k from losing that money. the people who have failed in their mortgage payments still lose their homes.

A lot of it has to do with the drop in property values. lots of people suddenly found themselves owing more then their home is worth and decided it would be easier/cheaper to tell the bank to take their home and take a hit on their credit.

http://www.foxnews.com/story/0,2933,425201,00.html
I have paid my bills. I have worked hard to get a very good credit rating. I pay my taxes and I am paying for my house and land. Now the Congress wants to use my tax money to buy up bad loans so I will have to pay for someone else? Don’t get me wrong, I don’t mind helping out people who, through no fault of their own lose their home, but the current crisis was caused by people and financial institutions who acted irresponsibly. It was created by people who bought a home they knew they could not afford, or bought more home than they could afford. These people were “helped” by greedy mortgage companies that gave loans to people without verification of financial status. They gave these people interest only loans or variable rate mortgages to tease them into buying these homes knowing the people would default when the time came to start paying on the principle or the interest rate reset.
So, now you and I have to pay for their homes as well. Now we have “corporate welfare” big time. It is time to clean out Washington DC and start over. A pox on both political parties and what they have become. End of rant.

Hold on let me ge this straight. Your goverment has asked you for how much more, over and above the tax you normaly have to pay?

Nope, was never bothered at all. Better than letting the industry collapse. The debt will go down once the budget is balanced, which both canidates want to do...Just no further taxes cuts.

I am as outraged as you are. There are also instances where lenders intentionally defrauded people. I am one of those people. After having someone tell me I needed to take a combo loan with a higher interest rate I continued to shop around. I had some people who say they wanted to give me all sorts of "deals." I finally got a 30yr fixed at a lower rate than the "deals' people wanted to give me. You see, I actually qualified for a better loan and they wanted to give me the teaser loan anyway. This was not an isolated case, as many of these honest lenders tried to do the same thing. The lenders intentionally tried to put me into a risky loan just to make more $.


Makes you wonder if that should be legal.

Missed the first part of your own article where the US will be buying bad assets from foreign banks, didn't you?
No, I didn't. Just wanted to make sure you read the article. :p

And buying bad assets from foreign banks that you guys sold in the first place? Seems only fair to me.
It wasn't just US banks that have these bad assets. Any bank with operations within the US could potentially have made these trades. So yes, it makes sense that citizens of countries with banks with operations in the US should consider giving money.
Actually, it doesn't. The banking system in the U.S. under U.S. government oversight allowed for this to happen. I honestly don't see why other nations should pay for something the U.S. willfully created.
Or they can sit there and continue to point fingers and complain about how this is all the US's fault. That's done a lot to help so far, no?
I'd rather be doing that than putting my money into a lost cause.

I mean, the money ain't really lost, someone has made quite a fortune. Why not have them pay for it? Oh, right, because when they made their profits, it was legal. And now the community has to pay for the mess a few have created? And foreign communities, too? Nuh-uh.

Look, I don't see how some people don't get this.
If the gov't hadn't bailed these businesses out, our problems would be 100 times worse, so just be thankful that they're finally taking some action. Sure the companies fucked up, but this is what you get with the kind of de-regulation that republicans have wet dreams about.

And buying bad assets from foreign banks that you guys sold in the first place? Seems only fair to me.
Right. We sold it to them. The American public, which in general barely understands how the banking system works, sold these assets.

No. One multinational corporation sold them to another multinational corporation.

Actually, it doesn't. The banking system in the U.S. under U.S. government oversight allowed for this to happen. I honestly don't see why other nations should pay for something the U.S. willfully created.
Because your corporations participated.

I'd rather be doing that than putting my money into a lost cause.
interesting
I mean, the money ain't really lost, someone has made quite a fortune. Why not have them pay for it? Oh, right, because when they made their profits, it was legal. And now the community has to pay for the mess a few have created? And foreign communities, too? Nuh-uh.Actually, yes. Exactly. In order to prevent a much worse banking crisis, the public has to take up the slack for what we allowed our companies to do. As we allowed other nations corporations to participate, we are willingly buying up their bad assets. And we are requesting help, seeing as we are saving those companies with little obligation to do so (face it, we aren't even obligated to save our own companies). No, I don't see why this shouldn't be an international effort, considering it will impact the international economy.

No, I didn't. Just wanted to make sure you read the article. :p

And buying bad assets from foreign banks that you guys sold in the first place? Seems only fair to me.

Actually, it doesn't. The banking system in the U.S. under U.S. government oversight allowed for this to happen. I honestly don't see why other nations should pay for something the U.S. willfully created.
the US banking system is one of the least regulated in the developed world. I think only Hong Kong is less regulated and maybe the Swiss and few other tiny European countries that act as tax havens. there are advantages and disadvantages to such systems. The disadvantages is things like this, the advantages is though when times are good growth is higher. Your investors choose to gamble in this system knowing the risk, more over your government allows said investors/banks to invest in said system. If you cant take an occasional bloody nose then don't come outside to play and tell your investors/bankers to stay in Germany.


I'd rather be doing that than putting my money into a lost cause.

I mean, the money ain't really lost, someone has made quite a fortune. Why not have them pay for it? Oh, right, because when they made their profits, it was legal. And now the community has to pay for the mess a few have created? And foreign communities, too? Nuh-uh.
These are mortgages we are talking about. The people who made money were those who sold their homes and likely used it to buy new homes. So you propose we should null and avoid the mortgages of people who are actually paying them off to seize what ever equity is in the homes to try and float this bank. Sir your solution would make a bad problem into Banking collapse, and more over ranks of the plans of the Fiance minister of Zimbabwe. Just because your a Foreign investor does not exempt you from lost, in my opinion the bail out should only pay off Debts to domestic investors unless the governments of those investors shoulder their fair share of the buy out.

If we've never had a true free market, how do you know it won't work? we've seen enough examples of massive inflation and stagnant economies from socialism, and we've seen it happening here as more and more government control is exerted over the market and the people here in the US. I'll take the risks of freedom over the threats of totalitarianism any day.

The U.S. is not a true free market. It's a Corpotate Welfare State where profits are privatized but losses are socialized in the form of government bailouts and tax increases. In a true free market AIG, Fanny and Freddy would have been allowed to completely self-destruct with a farewell party thrown in to boot. Unfortunately AIG has a Dead Man's Switch that'll blow up the U.S. economy if the government lets it die.

Look, I don't see how some people don't get this.
If the gov't hadn't bailed these businesses out, our problems would be 100 times worse, so just be thankful that they're finally taking some action. Sure the companies fucked up, but this is what you get with the kind of de-regulation that republicans have wet dreams about.
By bailing out the companies that failed in their business, you are rewarding the mismanagement that worked for some time but was doomed to fail in the long run.

Rewarding those managers and companies by bailing them out now when things got screwed up will only lead to one thing: Once they're doing a little bit better, they will continue on the same track.

That's why contributing with tax money to a problem created by the private sector is such a bad idea. One I don't support.
Right. We sold it to them. The American public, which in general barely understands how the banking system works, sold these assets.
Another reason to restrict what those bankers can do behind closed doors and another incentive to improve the government control and oversight. But no, the U.S. government did not want to do that. Instead, they are now trying to distribute the losses by making the people pay for the mistakes of the private sector.
No. One multinational corporation sold them to another multinational corporation.
Because your corporations participated.
Right. Ever wonder why our corporations and banks are not as hard-hit with the crisis as are yours? Because Germany has implemented one of the harshest oversights in the banking business. And still way too many banks trusted the AAA ranking that some of those toxic papers carried.

The system itself doesn't work to the public's favor - why in the world should it now be the public's money that should fix it?
Actually, yes. Exactly. In order to prevent a much worse banking crisis, the public has to take up the slack for what we allowed our companies to do. As we allowed other nations corporations to participate, we are willingly buying up their bad assets. And we are requesting help, seeing as we are saving those companies with little obligation to do so (face it, we aren't even obligated to save our own companies). No, I don't see why this shouldn't be an international effort, considering it will impact the international economy.
You know, I'm more than willing to see the market straighten out all by itself. Yours especially. Because ours ain't involved in such a deep level and is regulated way more strictly to prevent exactly that which has happened overseas!

Besides, don't forget that not only have our banks subsidiaries in the States, but your banks do business over here as well. And in doing so, they are involved in our banking security systems, too. Therefore, funds from our country have already been pumped into your failing market.
the US banking system is one of the least regulated in the developed world. I think only Hong Kong is less regulated and maybe the Swiss and few other tiny European countries that act as tax havens. there are advantages and disadvantages to such systems. The disadvantages is things like this, the advantages is though when times are good growth is higher.
Yes. And? The advantage pays off and the money goes into private hands. The disadvantage calls for the public to save the private sector's ass? Right. That sounds like a perfectly normal system to me. :rolleyes:
Your investors choose to gamble in this system knowing the risk, more over your government allows said investors/banks to invest in said system.
Actually, the risk they were exposed to was not expressed in the ranking those papers received.
If you cant take an occasional bloody nose then don't come outside to play and tell your investors/bankers to stay in Germany.
Stay in Germany or do business in other, for example Eastern markets? Like China? China who already owns huge debts of the U.S.?

Better get off the high horse, because it's already shying and when you fall, it might very well break your neck instead of giving you a bloody nose.

These are mortgages we are talking about. The people who made money were those who sold their homes and likely used it to buy new homes.
One of the problems is that people received mortgages who should never have received them in the first place, with the new-built home as the only security. And once they couldn't pay their rates any longer, they had to sell their houses, and the whole real estate market went down.

It really is a self-made crisis. Don't see why I should pay the mortgage rates for some foreign person who couldn't afford to buy a house in the first place.
So you propose we should null and avoid the mortgages of people who are actually paying them off to seize what ever equity is in the homes to try and float this bank.
No, I didn't propose that.
Sir your solution would make a bad problem into Banking collapse, and more over ranks of the plans of the Fiance minister of Zimbabwe.
Hell, looks like investing my money in a Nigerian prince for him to receive his fortune would've been safer than to invest in the oh-so-mighty market of the U.S., eh?
Just because your a Foreign investor does not exempt you from lost, in my opinion the bail out should only pay off Debts to domestic investors unless the governments of those investors shoulder their fair share of the buy out.
Our banks have already shouldered their fair share of loss when the papers they have bought turned out to be worth nothing.

You've made your bed, now you must lie in it. Even though the house in which it stands might no longer belong neither you, nor your banks...

Another reason to restrict what those bankers can do behind closed doors and another incentive to improve the government control and oversight. But no, the U.S. government did not want to do that. Instead, they are now trying to distribute the losses by making the people pay for the mistakes of the private sector.
Now THERE is the key difference I was waiting on. You, thus far, have been blaming Americans in general. I didn't do this. Hell, I couldn't even vote when the oversights were removed in '98 (I was 12 then). The US government messed up. Big time. I don't disagree. I also don't disagree that there needs to be regulation and oversight.

However, these are major financial institutions. With shrinking credit lines, it wiould take a decade or longer before there was any hope of recovery, if it was even possible. As stated earlier, there were risks that credit and debit cards would have stopped working as recently as a week ago. Some of these do need to be propped up, and the only way to do this with the lack of credit is through money (which is already tight, and investing in a company about to collapse is...well, not the most financially savy idea). So it needs to be through public money.
Right. Ever wonder why our corporations and banks are not as hard-hit with the crisis as are yours? Because Germany has implemented one of the harshest oversights in the banking business. And still way too many banks trusted the AAA ranking that some of those toxic papers carried.No question.

The system itself doesn't work to the public's favor - why in the world should it now be the public's money that should fix it?
The US market is still very tied in to that of just about every country. Our economic issues have already spilled into other countries. As such, helping to save us also helps to save you. Again, the US has accepted that this is our fault, and has said it will buy up your banks debts. We are simply asking for aid.

You know, I'm more than willing to see the market straighten out all by itself. Yours especially. Because ours ain't involved in such a deep level and is regulated way more strictly to prevent exactly that which has happened overseas!
And yet, your banks are still involved.

I find it astounding how much this rings back to Gordon Sinclair's monologue.
Besides, don't forget that not only have our banks subsidiaries in the States, but your banks do business over here as well. And in doing so, they are involved in our banking security systems, too. Therefore, funds from our country have already been pumped into your failing market.

Lets say the situation was reversed. Lets say it was Germany that fucked up, and the US that was only tertiarily impacted. I, personally, would have no problem with some public funds going to aid the economy of another country in crisis. Not only to protect others from entering recession/depression, but also to protect from spillover. Economies are fundamentally intertwined. Notice that, when Lehman collapsed, markets around the world crashed. When the recovery package was announced, markets around the world rose. Expect that to end tomorrow, just because "the US caused this"?

Again, the US has acknowledged fault and is taking responsibility. I don't find it irrational that they have said "This is a huge burden, and any help would be appreciated". It isn't like they said "Well, you have to help us or close all your business interests here" or "Give us money or perish from the Earth". They made a request for aid. Not dissimilar to the requests of many other nations in financial crisis, or countries impacted by natural disaster.

Just heard that there could be a bailout in store for the automobile industry. Goody, now they get rewarded for their failure at proper management.

Just heard that there could be a bailout in store for the automobile industry. Goody, now they get rewarded for their failure at proper management.
See, that's where it crosses over. The financials have some justification, because they are conduits that are necessary to move people's money to where it can be used effectively.

The car industry doesn't do that, and so the fallout from a bankruptcy or a cheap takeover isn't anywhere near as bad. Ask Britain, they've lost pretty much all their car manufacturers, and they're doing okay.

Fun fact, by the way: http://www.ft.com/cms/s/0/222e75ec-894e-11dd-8371-0000779fd18c.html
Eurozone falls into recession

The eurozone has fallen into recession, with industry particularly badly hit by the fall-out from global economic turmoil, results of a closely watched survey indicated on Tuesday.

Private sector output in the 15-country region contracted in September for the fourth consecutive month, according to eurozone purchasing managers’ indices. The pace of decline was the fastest since the aftermath of the September 2001 terrorist attacks in the US, with manufacturing faring worse than services.

The latest data indicated that, even if the crisis on Wall Street has yet to have a direct impact on eurozone economies, global economic storms have pushed the region into a technical recession – two quarters of contracting gross domestic product.

If we've never had a true free market, how do you know it won't work? we've seen enough examples of massive inflation and stagnant economies from socialism, and we've seen it happening here as more and more government control is exerted over the market and the people here in the US. I'll take the risks of freedom over the threats of totalitarianism any day.

Ahh libertarian.

A "true free market" does not exist and will never exist.

Human nature makes it impossible.

Just heard that there could be a bailout in store for the automobile industry. Goody, now they get rewarded for their failure at proper management.

Welcome to the US! :)

We reward failure at the highest levels and call it golden parachutes.

Now THERE is the key difference I was waiting on. You, thus far, have been blaming Americans in general. I didn't do this. Hell, I couldn't even vote when the oversights were removed in '98 (I was 12 then). The US government messed up. Big time. I don't disagree. I also don't disagree that there needs to be regulation and oversight.
I did not blame Americans in General. I blame their government and the banks' managers, as well as those Americans who built a house while they should've known they'd never be able to afford it and pay it off properly.

However, these are major financial institutions. With shrinking credit lines, it wiould take a decade or longer before there was any hope of recovery, if it was even possible. As stated earlier, there were risks that credit and debit cards would have stopped working as recently as a week ago. Some of these do need to be propped up, and the only way to do this with the lack of credit is through money (which is already tight, and investing in a company about to collapse is...well, not the most financially savy idea). So it needs to be through public money.
Actually, no. There are other ways for banks to get their hands on money without putting in tremendous amounts of tax dollars.

The following article mentions such an option: http://www.spiegel.de/international/business/0,1518,579880,00.html

The US market is still very tied in to that of just about every country. Our economic issues have already spilled into other countries. As such, helping to save us also helps to save you. Again, the US has accepted that this is our fault, and has said it will buy up your banks debts. We are simply asking for aid.
Aid as in bailing out with public money those who made a huge bonus and received high pay over the years for themselves. Pardoning and rewarding those who created the mess and ultimately giving no incentive to change the way that high risk was evaluated and dealt with. Can't agree.
And yet, your banks are still involved.
And also, they've already had losses of almost $60 billion.
Lets say the situation was reversed. Lets say it was Germany that fucked up, and the US that was only tertiarily impacted. I, personally, would have no problem with some public funds going to aid the economy of another country in crisis.
Next time I go to a bar and order more than I can pay for, I'll let them put it on your tap. But not before I enjoy the party and have a personal gain. Because, that's essentially what the U.S. is asking others to do now.
Not only to protect others from entering recession/depression, but also to protect from spillover. Economies are fundamentally intertwined. Notice that, when Lehman collapsed, markets around the world crashed. When the recovery package was announced, markets around the world rose. Expect that to end tomorrow, just because "the US caused this"?
Yet I believe the bail-out is sending the complete wrong signal to the economy.
Again, the US has acknowledged fault and is taking responsibility. I don't find it irrational that they have said "This is a huge burden, and any help would be appreciated". It isn't like they said "Well, you have to help us or close all your business interests here" or "Give us money or perish from the Earth". They made a request for aid. Not dissimilar to the requests of many other nations in financial crisis, or countries impacted by natural disaster.
It's not only what you say, but how you say it also.
And the way that the U.S. government has requested, not asked for, foreign help was impudent.

But if they didn't then the economic fallout (and it's effect on you) would be worse.

What concerns me more is the dual role of banks as financial advisers and sellers. People believe that if they discuss their situation with a bank and a bank offers them a mortgage it's a sensible financial decision to take it, and that often isn't so.

This was why I made a thread a while back complaining about having allowed these companies to become that big to begin with. We keep letting these giants get bigger and bigger until it gets to the point where we have to feed them just to keep them from falling on us.

The American electorate has become parents having raised spoiled toddlers now wonder why we have such violent teenagers.

The fault was not the home owners. If you listen to your doctor when he tells you you need to have your appendix out, you're not a hypochondriac. If you listen to your loan officer, whose job it is supposed to be to keep people from taking out loans they can't pay, then you're not a deadbeat or a con artist. You're a victim of fraud.

These companies shouldn't be rescued. Yes, the economic fallout should be minimized, but these companies should be nationalized and the boards of directors should all be put into bankruptcy.

See, that's where it crosses over. The financials have some justification, because they are conduits that are necessary to move people's money to where it can be used effectively.

The car industry doesn't do that, and so the fallout from a bankruptcy or a cheap takeover isn't anywhere near as bad. Ask Britain, they've lost pretty much all their car manufacturers, and they're doing okay.

Fun fact, by the way: http://www.ft.com/cms/s/0/222e75ec-894e-11dd-8371-0000779fd18c.html

Ha! Indeed. (Though there is a lesson there for GM, namely go out and write as many naked CDS as humanely possible within the next six months).

Though there is a flip side to that. If we are to accept that the financial industry has to be bailed in order to keep markets functioning, then at the same time it just can't be under the same regulatory freedom as non-financial companies. Also, it's not out of the order to establish a mandatory insurance fund which charges a %of profits to provision for the inevitable bailouts - this would also be automatically countercylical too which is doubleplusgood. Restrictions on lobbying should also be in place.

Funnily enough, there are still quite a few cars manufactured in the UK, just none of the companies are 'british' owned. Seemingly anglo-saxons just can't get it together when in comes to running car companies. Probably something to do with corporate governance, but I can't be bothered to look into it.

Aid as in bailing out with public money those who made a huge bonus and received high pay over the years for themselves. Pardoning and rewarding those who created the mess and ultimately giving no incentive to change the way that high risk was evaluated and dealt with. Can't agree.


To really find the root cause of this, you have to look back to the epic global trade imbalances and deflationary environment created by an artificially strong dollar and collapse of the dot.coms.

It caused an environment where the US was awash with liquidity but there was nothing yield wise to invest it in because of the low interest rates, so various dodgy financial instruments were created to exploit house price appreciation.

So a cycle was set up where US consumers could borrow against their house and buy imported goods. As the exporting nations wanted to 'sterilize' their own currencies against the dollar (i.e., prevent currency appreciation vs. $) in order to keep their comparative advantage in respect of manufacturing costs, they recycled their dollars back into the US financial markets: creating more liquidity, causing a greater chase for yield, causing even more housing based financial instruments to be created, causing house prices to go up even more, allowing even more borrowing, which allowed consumers to buy even more goods, causing even more dollars to be recycled back into the US financial sector.... and so on. This was considered a great plan, until it wasn't.

The bottom line is everyone ate from the dodgy mortgage table. There are no innocent parties, except maybe the french. (LOL not really, LVMH made out like bandits from this).

Just remember rapacious greed on the part of America financiers and American homedebtors created millions of jobs abroad.

I'm not saying that foreign countries should chip in of course, just pointing out that a system with such a huge volume of international transactions and the imbalances that it causes, you can't arbitrarily point to a line on a map and say that on the one side everyone is at fault, and on the other nobody is. It's just not that black and white.

Yes. And? The advantage pays off and the money goes into private hands. The disadvantage calls for the public to save the private sector's ass? Right. That sounds like a perfectly normal system to me. :rolleyes:

oh God I have to list advantages.
1st it is easier to become a home owner.
2nd the economy(and by extension wages) grows more quickly with less inflation during good times.

Actually, the risk they were exposed to was not expressed in the ranking those papers received.

So your saying they invested in American banks without reading the Laws regarding American banks especially in comparison to German banks??
I am sorry ignorance of the Law is no excuse the investors only have themselves to blame for their ignorance.
Stay in Germany or do business in other, for example Eastern markets? Like China? China who already owns huge debts of the U.S.?
Again the ignorance, Chinese banks are state owned and closed to investment. Not to mention you can't own the land in China so there really isn't a need for mortgages.


Better get off the high horse, because it's already shying and when you fall, it might very well break your neck instead of giving you a bloody nose.

Your the only one on a high horse you have practically demanded we change our banking system to be like yours. We do not assume any banking system is better. We just ask if you come here you play by our rules and take the same risk everyone else does.


One of the problems is that people received mortgages who should never have received them in the first place, with the new-built home as the only security. And once they couldn't pay their rates any longer, they had to sell their houses, and the whole real estate market went down.

Even now the vast majority of "sub prime" mortgages are not in default.
During better Economic times wages would have grown to the point that much fewer of these mortgages would have defaulted and the holders of mortgages would have made money overall. Something German banks have bought into and made money off of since the end of WWII.
It really is a self-made crisis. Don't see why I should pay the mortgage rates for some foreign person who couldn't afford to buy a house in the first place.Again, that's not who is being bailed out. When this many mortgages default Banks end up low on assets.When banks have low assets, people who have deposited money into said banks can no longer get their money. This is who is being bailed out the normal guy who just happened to deposit money in the wrong bank. Though most of these would have been covered by depositor insurance.


No, I didn't propose that.
Oh so you think the 2% profit the lender made when he sold the loan to someone else can ? hmm lets go over the math $100,000 loan. lender sells loan for 102,000 making a 2,000 dollar profit. home reduced in value by 10% so sells for $90,000 banking short fall of $10,000. $2,000 less then $10,000. the only way to make your proposal work is to go after whoever got the money for selling that home in the first place. Which of course would force them to sell where every they currently live. So pretty much you did propose that.


Hell, looks like investing my money in a Nigerian prince for him to receive his fortune would've been safer than to invest in the oh-so-mighty market of the U.S., eh?
Funny you made money off investing here for over 60 years now you cry because you just now realize there was risk. Everything with a higher return has a higher risk. That is pretty much the law of investing. If you Germans haven't figured it out by now you might as well burn all your Euros and go to a barter system.


Our banks have already shouldered their fair share of loss when the papers they have bought turned out to be worth nothing.

You've made your bed, now you must lie in it. Even though the house in which it stands might no longer belong neither you, nor your banks...
If you haven't noticed we are trying to make those papers worth something again. Its that you've been laying in this bed as well for the last 60 years eating crackers with us and only now are complaining about crumbs. All we ask what goes to bailing out Germans you pay for since this would negatively affect German banks and that would affect the common depositor.

what bothers me is this too big to let fail nonsense. bailing out those who had the party.

solving the problem? put a freeze on forclosures if you want to SOLVE the problem.
no. what the right wing loonies are doing isn't solving anything, its setting the stage for droping whatever pretense of democracy remains.

it may be perfectly true that if you're not starving you can get damd tired of beans and rice, but the two biggest lies in all of human history are that makiavellianism is sustainable and that everything that isn't makieavellanism is either procustianism or worse.

if anything actualy ends in 2012, i hope, one of the things that do, is the popularity and pervasiveness of these lies.

to me, it looks quite possibly like people who haven't figgured it out yet, are about to the same hard way they did in 1929. the only thing we have left, in america, standing in the way of a great depression style bank holiday is the f.d.i.c.

and NO, it isn't the fault of the poor bastards who got suckered into the mortgage rate bate and switch either.

housing prices are still inflated 400%. bailing out financial institutions and preventing the natural correction isn't helping anyone, other then their executives who got themselves into this mess in the first place. (and it ISN'T the most effective means of preventing the greatest and most wide spread pain either. anyone who imagines that it is, either hasn't been paying attention to reality or is lying to themselves. anyone who gets their news from fox or cnn hasn't been paying attention to reality. anyone who believes fox and cnn, both propiganda wings of that curresed union of government and corporatocracy who'se true name is fashism, has also been lying to themselves, whatever they may have expected to gain by doing so).

and low intrest loans on over priced houses never did anything to aliviate homelessness nor were they ever intended to either.

the way to do that is to set aside places in perpituity, where anyone can build and live in what they build, only for themselves or for free, without the restriction of building codes.

well this (instability of financial istitutions) is the price of the denial that has been so popular for so long. bailing them out is simply not any kind of an answer for anyone at all, other then the same ponzie scheme that pulled their enron and bate and switch mortgage schemes in the first place.

housing prices are still inflated 400%.
Have you thought about approaching what's left of Wall Street with your valuation models? They might be quite grateful to you, especially if you can help work out some sort of fair value for the securities taking into account house prices.

Or maybe you don't have a fancy valuation model and you got that figure from somewhere else...

We reward failure at the highest levels and call it golden parachutes.
I'm not sure that's how it's gonna work this time.

http://money.cnn.com/2008/09/23/news/companies/fbi_finance/index.htm?postversion=2008092321
FBI probing bailout firms

Investigators start search for fraud at Fannie Mae, Freddie Mac, Lehman Brothers and AIG, sources say.

WASHINGTON (CNN) -- The FBI is investigating Fannie Mae, Freddie Mac, Lehman Brothers and AIG - and their executives - as part of a broad look into possible mortgage fraud, sources with knowledge of the investigation told CNN Tuesday.

The sources would not speak on the record because the investigation is ongoing.

And there's already been a lot of talk about bonuses paid by firms while they were technically already insolvent could be unlawful and would have to be paid back. Believe me, they're going to latch onto anything they can possibly find to get the CEOs at the very least - there are few things more useful to appear tough and distract from the monumental failings of the regulators and politicians themselves.

And there's already been a lot of talk about bonuses paid by firms while they were technically already insolvent could be unlawful and would have to be paid back. Believe me, they're going to latch onto anything they can possibly find to get the CEOs at the very least - there are few things more useful to appear tough and distract from the monumental failings of the regulators and politicians themselves.

Agreed, Congress has no spine. The fact that they're even considering the Treasury's draft of the bailout plan is evidence enough. Quibbling on CEO payouts is window-dressing.

Though I'm curious, NL -- aren't you a libertarian? Shouldn't the government be failing at regulation and handing over controls to private industry?

Or maybe you don't have a fancy valuation model and you got that figure from somewhere else...

Well, Merril just let a whole bunch of RMBS go at 35c on the dollar (of which they financed 30c), so he's in the ballpark. Maybe he has approached wall street. :p

And it's not all that difficult to work out where things are going to land (more or less). Nobody wants to talk about it though because it is terrifying.

Though I'm curious, NL -- aren't you a libertarian? Shouldn't the government be failing at regulation and handing over controls to private industry?
Well, it plainly did fail at regulation. It's not like they actually saw a problem and tried to fix it, but evil free-marketeers somehow prevented it. The laws that didn't exist were capital requirements for investment banks, but other than that there were plenty of legal tools and government agencies already available.

But the regulators around the world were just as oblivious to what was about to happen as the bankers themselves were. The idea that more regulation would have magically prevented this is a fairy tale. Don't get me wrong though - some regulation could have acted as a circuit breaker, but even then these people get paid to maximise returns, and they get paid to do it at the edges of legality. You invent a new law, they invent a new investment vehicle that gets around it.

All that being said, now that everything did go to shit, I don't really see the alternatives to the current actions. It's not like they're nationalising stuff because they want to, they're doing it because that's the only way to prevent a collapse and punish the shareholders and CEOs for their mistakes. If you let them fall, of course the market would fix itself...but when, and at what cost?

See, that's where it crosses over. The financials have some justification, because they are conduits that are necessary to move people's money to where it can be used effectively.Indeed, it's one thing to make sure all the capital stored in a bankrupt bank isn't lost all of a sudden, but a car manufacturer?

Well, it plainly did fail at regulation. It's not like they actually saw a problem and tried to fix it, but evil free-marketeers somehow prevented it. The laws that didn't exist were capital requirements for investment banks, but other than that there were plenty of legal tools and government agencies already available.

Oh, I agree that the government failed at regulation, I think it was paid to do so. The government's compromise during the 80s through now was that it would keep all of these agencies in place for appearances, but would underfund them and staff them with people who had no interest in doing their jobs. Not so much "evil free-marketeers" but plain old ordinary free-marketeers making the rational choice to pay off their overseers.

But the regulators around the world were just as oblivious to what was about to happen as the bankers themselves were. The idea that more regulation would have magically prevented this is a fairy tale. Don't get me wrong though - some regulation could have acted as a circuit breaker, but even then these people get paid to maximise returns, and they get paid to do it at the edges of legality. You invent a new law, they invent a new investment vehicle that gets around it.

Again, I agree. I just thought that your philosophy would hold that since the government shouldn't be regulating in the first place, it was a good thing they failed, and it's a good thing that they're just handing over a bag of taxpayer money rather than standing up for themselves because this will accelerate the transition of power to the proper places. This is roughly Naomi Klein's* interpretation of what Grover Norquist is preaching. I don't believe Naomi Klein so I wanted to get your take on things.

All that being said, now that everything did go to shit, I don't really see the alternatives to the current actions. It's not like they're nationalising stuff because they want to, they're doing it because that's the only way to prevent a collapse and punish the shareholders and CEOs for their mistakes. If you let them fall, of course the market would fix itself...but when, and at what cost?

I'd have to say that it doesn't seem to me that they're punishing AIG very much, and as for the rest of the bailout, I don't think "nationalize" is the right verb. They're proposing to buy assets at a premium (OK, it's sort of silly to use the word "premium" for an unvaluable asset, but they're going to pay more than what the private sector is willing to.) I can't see that as anything other than rewarding bad behavior. I don't mind that when it's Abu Dhabi taking that risk with their own funds, but I do mind when it's my funds being hazarded. At least I chose to make the investments I have; it's hard for me to make a choice not to pay taxes.

Having the market fix itself might well be very painful, but I also think that the long-term cost -- propping up this bubble-prone economy with half-measures so that we can get a bigger collapse down the road -- will be much higher.

*Edit: Naomi Klein's The Shock Doctrine, not the Naomi Klein column you already posted about.

I'm not sure that's how it's gonna work this time.

http://money.cnn.com/2008/09/23/news/companies/fbi_finance/index.htm?postversion=2008092321


And there's already been a lot of talk about bonuses paid by firms while they were technically already insolvent could be unlawful and would have to be paid back. Believe me, they're going to latch onto anything they can possibly find to get the CEOs at the very least - there are few things more useful to appear tough and distract from the monumental failings of the regulators and politicians themselves.

It's interesting but I will believe it when I see it. I am rather cynical that they will be punished much if at all. Ever hear of a CEO in the poor house? Even if they are punished at most it will be a couple years in a super minimum security prison.

It's interesting but I will believe it when I see it. I am rather cynical that they will be punished much if at all. Ever hear of a CEO in the poor house? Even if they are punished at most it will be a couple years in a super minimum security prison.

You can't punish them. If you do they won't participate and they will just let the banking system go under. One day you will wake up and your debit card won't work, payrolls won't clear and the ATMs will all be out of service.

There is a gun to everyone's head here. Actually spend some time looking at the panic this has caused with congress. They are about to pass the biggest discretionary appropriation bill in history only a week before election recess. Think about why that is.

I would suggest, though it is entirely optional, that you accede to the demands at this point, and think about how you can work your way out of the mess with all deliberate haste.

(And forget nationalizing them, they've set up a default system that will bankrupt everyone in the whole world if you try).

You can't punish them. If you do they won't participate and they will just let the banking system go under. One day you will wake up and your debit card won't work, payrolls won't clear and the ATMs will all be out of service.


Doubtful, but then again Blackwater would get their business for a long time if they did.

There is a gun to everyone's head here. Actually spend some time looking at the panic this has caused with congress. They are about to pass the biggest discretionary appropriation bill in history only a week before election recess. Think about why that is.


Yup it's all doom and gloom. We can bail out the mess but the cancer that caused it will remain. But I guess that is the way we do things in this country. Crime and incompetence are rewarded at the top.

I would suggest, though it is entirely optional, that you accede to the demands at this point, and think about how you can work your way out of the mess with all deliberate haste.


Too late. I already called my elected types and voiced displeasure. For what good that does....

(And forget nationalizing them, they've set up a default system that will bankrupt everyone in the whole world if you try).

Sounds a little slippery slope. Where would they be able to live if they did that?