NationStates Jolt Archive

That could have cocaine and/or stripper residue on it. *nod*

Perhaps, but i'm hungry. *Munch*

The president is a Kunt...
Actually, the Fed takes this sort of decision pretty much independently of the President. Think of it as a sort of separate institution, like the Supreme Court.

Of course, it also doesn't have the tools required to really do anything but try and keep the system on life support.

I mean, what do you expect? The economy is going to crash, the Fed can't, by virtue of its mandate, sit idly by. The FDIC can't either. Both of these institutions will spend money, and both of these types of spending will come back to cut real taxpayer wealth. But that's all band-aid stuff, the deal had always been that the treasury and lawmakers would do the structural stuff to support them.

That's now been refused, and we're staring down an abyss none of us has ever seen before. I'd wager that reading about a Depression hasn't given us anything to prepare for what it will actually be like.

Perhaps, but i'm hungry. *Munch*

Buy a McDonald's cheeseburger. It might have a lower nutritional value, but it won't give your gums papercuts. *nod*

Buy a McDonald's cheeseburger. It might have a lower nutritional value, but it won't give your gums papercuts. *nod*

I like the papercuts. Then I can feel the blood run over my tongue.

Congress decided on it. He did what he has continued to do for 8 years; going around Congress to get what he wants.

Besides, starting fresh is not bad. Everything in life is cyclical. We are bound to have depression and dooms days over and over again. It helps sort the system out, and in the end Humanity continues to live on.

Fuck humanity living on, what am I going to feed my kids.

Fuck humanity living on, what am I going to feed my kids.

Lies? :p

That's now been refused, and we're staring down an abyss none of us has ever seen before. I'd wager that reading about a Depression hasn't given us anything to prepare for what it will actually be like.

The S&L scandal in the 80's was about half this size. (the bail out converted to 2008 dollars). and affected farm more institutions over 750 I think.
Though the government did Bail them out.

What is with you Hindus and beef? Everybody likes beef. It's UNAMERICAN to not eat meat. But if we point out your strange archaic ways, suddenly WE are the bad guys. Apparently all your silly ways are immune from criticism, like some sort of "sacred cow" or something.

What a stupid expression by the way, whoever came up with that?

Hey, it could be worse. We could be Aberdeen sheep farmers. They don't just worship them sheep.

I mean, what do you expect? The economy is going to crash, the Fed can't, by virtue of its mandate, sit idly by. The FDIC can't either. Both of these institutions will spend money, and both of these types of spending will come back to cut real taxpayer wealth. But that's all band-aid stuff, the deal had always been that the treasury and lawmakers would do the structural stuff to support them.

Actually the FDIC can do a lot. Look at the way it handled WaMu. Those types of aggressive actions can go a long way to dealing with the structural stuff. Of course it sucks if you are bond holder, but the value of your investment...blah blah...blah.

CP market is the big question. A lot of companies have drawn down credit by now, so things aren't as fragile as two weeks ago. Of course this is not enough, and squeezes credit elsewhere, but I don't think anyone thought this was going to be a merry christmas anyway. It's still better than it was. So maybe not Armageddon anymore; though pretty bad.

Also, things aren't as bad as 1930. As long as the FDIC holds the line - and congress will back it - bank runs aren't going to happen the way they used. Plus banks actually have reserves now.

I do think that some type of recapitalization is necessary, but the bottom line is that any solution has to be both fiscally practical and politically possible. I really think the swedish model should be looked at again. Nobody will be happy with it, but it seems to work.

Though the government did Bail them out.
That's one thing, the other is the types of institutions affected. The problem was ultimately somewhat contained to one particular form of economic activity (building houses). The effects in that sector were huge, but overall the recession was limited as a result.

This time it's all forms of banks, thrifts and financial institutions, particularly the big ones. Interbank lending has basically stopped, but it's what allows them to balance their books and give everyone their due at the end of the business day. A good few of them are also screwed because their home loans are going bust and they can't sell the collateral for as much as the face value was. And further billions or trillions are locked up in contracts written by these institutions that are falling to pieces. With S&L, it was your local thrift going bust, in this case it's 150 year old, trillion-dollar balancesheet multinationals.

And in all that, the money market funds and other buyers of corporate debt are staying away. If companies can't borrow anymore, then they're the next in line to suffer the same balance sheet explosions that brought down the investment banks.

If I turn out wrong, and this doesn't end up as bad, I won't complain. But the stuff that's been going on in these markets doesn't bode well.

This time it's all forms of banks, thrifts and financial institutions, particularly the big ones. Interbank lending has basically stopped, but it's what allows them to balance their books and give everyone their due at the end of the business day. A good few of them are also screwed because their home loans are going bust and they can't sell the collateral for as much as the face value was. And further billions or trillions are locked up in contracts written by these institutions that are falling to pieces. With S&L, it was your local thrift going bust, in this case it's 150 year old, trillion-dollar balancesheet multinationals.

And in all that, the money market funds and other buyers of corporate debt are staying away. If companies can't borrow anymore, then they're the next in line to suffer the same balance sheet explosions that brought down the investment banks.

If I turn out wrong, and this doesn't end up as bad, I won't complain. But the stuff that's been going on in these markets doesn't bode well.

It's really about the Fed, I think. That's the big unknown at this point.

The facts haven't stopped the Chicken Littles of this forum before.

And while the "bailout" is, I hope, being stalled by the GOP (with some Democrat help but don't let that stop the bluster) the reason we are in this mess is the Democrat party itself. Look up the lending practises of FMae and FMack and who benefitted most from this whole thing. Some names to look for: Raines, Gorelick, Frank, and Dodd.

Ahh why should this be relevant any more ffs, it just doesn't matter. Shit like this, added with the spread of doomsday hysteria, do real harm to the economy.

so your claim is that republican senators didn't vote for the plan, not because they didn't like the details, but because someone was rude to them?


Even still, she should have fucking known how the Republicans would have reacted.

Just read Pelosi's speech...that was pretty stupid, and more often than not factually inaccurate.

Still no excuse though.

Also, when people are talking about how much the Dow is down, U have to remember that there are no short rules in operation, so it is going to fall faster on bad news than it otherwise would.

Any comparison now with earlier times is apples and oranges.

The economy at current:

http://everestwu.files.wordpress.com/2008/06/oh_noes.jpg

Just read Pelosi's speech...that was pretty stupid, and more often than not factually inaccurate.

Still no excuse though.

True, it doesn't excuse the republicans, but it does justify criticism of Pelosi, it was just negligent and was the worst time to bring party politics into this.

Even still, she should have fucking known how the Republicans would have reacted.

http://www.waswatching.com/archives/LucyFootball.jpg

The economy at current:

-image-

Image unceremoniously swiped.

Lol!

http://www.waswatching.com/archives/LucyFootball.jpg

Haha, jolly good.

Lies? :p

Hmm.. so we're good till November then...

*badum tisch*

Teh Lulz!

all your money is in places safe from meltdown.
:)

*builds Chernobyl MKII and staffs it with Somalian techs next to LG's stash of cash*

*builds Chernobyl MKII and staffs it with Somalian techs next to LG's stash of cash*

You're building a fifth-rate nuclear reactor next to a pharmaceutical plant and yet I'm the evil one? :confused:

You're building a fifth-rate nuclear reactor next to a pharmaceutical plant and yet I'm the evil one? :confused:

Yep, sounds about right. :)

Is this sounding like a viable career option to anyone else yet?

http://www.youtube.com/watch?v=8G_L9tXEwmc&feature=related

At least it would get me in good with the FSM, and I do live near Lake Michigan.

I'd say the fact their constituents are super pissed about having to bail out rich fat Wall Street types, leads them to think "Hmmm, I'd like to keep my job come next election... I'd better listen to 'em."

Anyone know what in the hell happens now? Is it just "Bank X collapses" ?

While representative democracy is all well and good, there are times when you have to say fuck you, this is better than what you want.

And to KOL, thank you.

You're building a fifth-rate nuclear reactor next to a pharmaceutical plant and yet I'm the evil one? :confused:

No, you're the crazy one. Being evil is my forte. Evil prospers. :)

of course there will be. there were elections during the great depression werent there?

You guys would hold elections during the middle of a nuclear war.

Yeah, we haven't actually seen a full on savings bank failure.

Yet.

Can anyone say Northern Rock.

Though it was nationalised by the Bank of England to prevent a system wide crash of deposit taking institutions.

No, you're the crazy one. Being evil is my forte. Evil prospers. :)

hey now evil only prospers temporarily crazy is forever!!!

Well, I suppose it's time to buy gold now and hold on.

Looking at the ASX gold mining companies are really the only ones with a rising share price.

May I just point out that if the bank you keep your dollars in goes bust, you have more than just your taxes at stake?

In America IIRC they have deposit insurance up to a total of $100,000. Of course I may be wrong.

You guys would hold elections during the middle of a nuclear war.
damned straight we would

In America IIRC they have deposit insurance up to a total of $100,000. Of course I may be wrong.
Not sure about the number, but you're right. The problem is that if the failures keep on coming, the FDIC needs to spend more and more money. It's been great that they've managed to sort out WAMU and Wachovia without having to spend anything themselves, but it's feasible that the FDIC's budget has to be increased by quite a bit, which will ultimately be paid by the taxpayer.

hey now evil only prospers temporarily crazy is forever!!!

Observe the countless people lining up to give their money away to obvious scams, their dogmatic adherence to total market deregulation despite decades of evidence of it's long term failures, and tell me again how evil only prospers temporarily.

Of course, what ever the government did, the final destination would be the same. It's just a matter of trying to manage the transition at this point.

The global trade imbalances made this crisis inevitable, as I am sure Neu L will tell people if they ask, so the idea that somehow we can just go back to Nov. 2006 is not feasible.

What surprises me is how few people could recognize this was inevitable.

The end result is though, if you are doing something that depends largely upon those trade imbalances, you'd better start thinking about a different way to spend your time in the future.

Fuck humanity living on, what am I going to feed my kids.

Politicians.

Not sure about the number, but you're right. The problem is that if the failures keep on coming, the FDIC needs to spend more and more money. It's been great that they've managed to sort out WAMU and Wachovia without having to spend anything themselves, but it's feasible that the FDIC's budget has to be increased by quite a bit, which will ultimately be paid by the taxpayer.

Well yes, that is quite true.

Politicians.

Eww! The family dog might be a better choice ... fewer toxins or parasites.

The FDIC gets its money back. Always. It might take a long time, but it is coming out of someone's hide. What will happen is that it will access a line of credit from the treasury (already has $30 billion, this will go up a lot), and use this to continue what it is doing as needed. To offset this, the FDIC 'insurance' premium that member banks will be raised until such time as the treasury loans are paid off with interest. As banking will not come to an end, it will eventually make out on the deal.

What is going to happen is that the really sick institutions are going to be taken out and shot by the FDIC and the good assets in them fed to the big five banks until the big five are healthy. All the rubbish will be put in a bag, and fed to the bagholders, the bond and stock holders. This eliminates the liabilities to stockholders and bondholders and had the effect of recapitalizing the system.

If things get really bad they'll shoot GS and MS and feed them into the hungry mouths of the likes of WFC and HSBC. (Maybe becoming bank holding companies was not the genius plan). Because there is lots of meat on those bones.

It's not a bad plan, unless you happen to have bank stocks or bonds. Yeah, it does bring up the ugly CDS monster, but that is something that is going to have to be lived with. And since the FDIC has declared that such actions do not constitute a credit event with respect to the good bits liabilities, it contains the meltdown.

It might work even.

I think wall street has to accept at this point that in order to preserve the system, some scapegoats - over and above Dick Fuld - are going to have to be found. I think politically recapitalization is feasible if the financial industry throws some individuals under a bus so the public doesn't feel they are getting away with it. Blaming 'short sellers' and hedge funds isn't going to do it. People aren't that dumb.

It's also time to stop the protectionism rubbish too. The asians - specifically the Chinese - and the arabs have lots of dollars and they are quite desperate to get their hands on US financial institutions. But right now they aren't allowed to get a controlling stake. Nor is private equity.

Drop those rules and get some money off the sidelines. That would do a great deal of good. Goldman to Nomura say. Or CIC. Would bring a lot of stability.

Spreads are blowing out again. Teh clock is ticking.

It's also time to stop the protectionism rubbish too. The asians - specifically the Chinese - and the arabs have lots of dollars and they are quite desperate to get their hands on US financial institutions. But right now they aren't allowed to get a controlling stake. Nor is private equity.

Drop those rules and get some money off the sidelines. That would do a great deal of good. Goldman to Nomura say. Or CIC. Would bring a lot of stability.

Government bailouts bad! Government not competent to control market! No to corporate welfare!

Oh, Chinese government. That's alright then ...

Government bailouts bad! Government not competent to control market! No to corporate welfare!

Oh, Chinese government. That's alright then ...

Haha!

Yehbutt, over here the chinese government is just another market participant. They don't, in theory, write the legislation that controls these things. So it's not the same.

And what the hell, they actually want these things. Nobody else does, so let them have them.

Haha!

Yehbutt, over here the chinese government is just another market participant. They don't, in theory, write the legislation that controls these things. So it's not the same.

And what the hell, they actually want these things. Nobody else does, so let them have them.

I don't really "get" economics, and I won't argue with you. But surely someone will.

Nationalists are often concerned about the "export" of manufacturing capacity to Asia ("sending our jobs overseas") and surely they won't sit still for "their" money coming back to take another strategic asset, that being big lenders.

Can you show me a link that shows a prospective buyer for GS or MS, who would buy them but for foreign ownership restrictions?

The DOW is still over 10K. So a few rich folk have to learn to live on more than I will ever make in a year, and some people won't be able to retire as early as they thought.

The paper economy collapses and people with no tangible survival skills suffer.

And all because the US government won't spend my tax money (actually, considering the governments habit of deficit spending, my descendants tax money) to bail out the stock market?

Welcome to the real world, where you pay your dues and takes your chances. If you can't stand to take a loss, you damn sure shouldn't be investing in the first place.

P.S. In this entire thread, LGs posts are the wisest. That should tell you something about how serious the entire issue is.

Edit: Bolded should have read "more than I will ever make in my life."

I loved watching CNBC and listening to the crooks on wall street moan as the 700 billion dollar theft went down in flames but criminals and shiesters have no fear the fed has pumped 630 billion dollars into the market with out any congressional oversight. I guess congress is just a dog and pony show!

Eww! The family dog might be a better choice ... fewer toxins or parasites.

But people LIKE the family dog.

I don't really "get" economics, and I won't argue with you. But surely someone will.

Nationalists are often concerned about the "export" of manufacturing capacity to Asia ("sending our jobs overseas") and surely they won't sit still for "their" money coming back to take another strategic asset, that being big lenders.

Can you show me a link that shows a prospective buyer for GS or MS, who would buy them but for foreign ownership restrictions?

CIC wants MS (http://www.bloomberg.com/apps/news?pid=20601087&sid=ao0BD9Zuhy3E&refer=home)

They have said they want 49%. But there are procedural hurdles to clear. It's not so much that foreign ownership is prohibited, HSBC could buy for example, but rather a case of how CIC is structured. Being a sovereign wealth fund it is subject to private equity type rules. And as I said, private equity is also stopped from getting a controlling stake.

CIC wants MS (http://www.bloomberg.com/apps/news?pid=20601087&sid=ao0BD9Zuhy3E&refer=home)

Thanks! Bloomberg is a good source I believe ... should probably have thought of that myself.

They have said they want 49%. But there are procedural hurdles to clear. It's not so much that foreign ownership is prohibited, HSBC could buy for example, but rather a case of how CIC is structured. Being a sovereign wealth fund it is subject to private equity type rules. And as I said, private equity is also stopped from getting a controlling stake.

My head hurts. Think I'll just go water that money tree I bought at the markets. :confused:

But people LIKE the family dog.

I guess ... with enough spices and a good long stew time.

Isn't it odd that people whose primary aim is to be liked and trusted, to get elected ... are so widely disliked and distrusted?

My head really does hurt. In fact, I'm logging off before it becomes a Splitting Headache. :(

What was really interesting was that when equity stakes and executive payouts were first brought up, Paulson gave some sort of song and dance about not making the bailout deal too punitive on the companies participating because they might not participate if they do. Doesn't that nicely demonstrate just how vital this bailout is? They might not participate. Sometimes I wonder if they even listen to themselves when they speak. :p

Indeed.

There is a silver lining. The last depression toughened everyone up. And just in time too. I am thinking that will be useful this time also.

I've been saying such for well over a year now.

No, you're the crazy one. Being evil is my forte. Evil prospers. :)

hey now evil only prospers temporarily crazy is forever!!!

The world has enough evil. It needs more crazy. When the US sends a team of Navy Seals into the heart of Tehran in the dark of night where they saran wrap toilets, short sheet beds, prop buckets of oatmeal over doorways, fill Mahmoud Ahmadinejad's hand with shaving cream, paint half of Ayatollah Ali Khamenei's face bright purple and then release a million ping-pong balls into the heart of the city before scampering back to the helicopter to deal with those sourpusses in Afghanistan, I will know that the World is truly a better place. *nod*

What was really interesting was that when equity stakes and executive payouts were first brought up, Paulson gave some sort of song and dance about not making the bailout deal too punitive on the companies participating because they might not participate if they do. Doesn't that nicely demonstrate just how vital this bailout is? They might not participate. Sometimes I wonder if they even listen to themselves when they speak. :p
Well it certainly demonstrates where those executives' priorities lie: Not at fixing their companies, Not at fixing the World economy but at fixing their own personal bank a/c's.
Which tells us a great deal about the sort of people running these companies - and also explains a lot about how they got into such a mess in the 1st place.

Eww! The family dog might be a better choice ... fewer toxins or parasites.

This ^^

The world has enough evil. It needs more crazy. When the US sends a team of Navy Seals into the heart of Tehran in the dark of night where they saran wrap toilets, short sheet beds, prop buckets of oatmeal over doorways, fill Mahmoud Ahmadinejad's hand with shaving cream, paint half of Ayatollah Ali Khamenei's face bright purple and then release a million ping-pong balls into the heart of the city before scampering back to the helicopter to deal with those sourpusses in Afghanistan, I will know that the World is truly a better place. *nod*

You know the funny thing? I'd really be all up for something like that. As much of an incident as it would cause, it'd be damn funny.

We'd need some way to video tape all of it as it goes down. Not just them setting it all up, but people tripping on ping pong balls, and Ahmadinejad slamming himself with a handful of shaving cream.

Of course, I'm not sure sure the Navy Seals are cut out for this. We need to call in a bona fide group of Frat Boys for the job.

Actully it was a 700 billion dollaer bill. And the sacry thing wasent the number but how they got to it " the numbers not based around any spacific data, we just wanted to pick a big number" that was i belive the speker of the house Nancy Palocey. Im sure i spelt the last name wrong but who cares.

You know the funny thing? I'd really be all up for something like that. As much of an incident as it would cause, it'd be damn funny.

We'd need some way to video tape all of it as it goes down. Not just them setting it all up, but people tripping on ping pong balls, and Ahmadinejad slamming himself with a handful of shaving cream.
I'd be happy with just the post-incident angry television speeches with the one leader with shaving cream smears still in his hair, around his ears, and the other leader half purple and all pissed off. :D

Of course, I'm not sure sure the Navy Seals are cut out for this. We need to call in a bona fide group of Frat Boys for the job.
I know some frat boys who think they're the same thing.

Actully it was a 700 billion dollaer bill. And the sacry thing wasent the number but how they got to it " the numbers not based around any spacific data, we just wanted to pick a big number" that was i belive the speker of the house Nancy Palocey. Im sure i spelt the last name wrong but who cares.

that was the treasury dept, actually. and it sort of makes sense in a "quit panicking, we've got this" kind of way.

I'd be happy with just the post-incident angry television speeches with the one leader with shaving cream smears still in his hair, around his ears, and the other leader half purple and all pissed off. :D


I know some frat boys who think they're the same thing.

Hmm....You know, I could live with that.

And yeah, I've met a few myself.

For those of you who are wondering why this "bipartisan" bill failed, take a look at Pelosi's pre-vote speech.

http://www.breitbart.tv/html/184803.html

Does this sound non-partisan to you? Is this the right way to go if you don't wish politics to enter the picture?

Pelosi is a train-wreck. Nice job.

Ahahaha! Yeah, I'm sure the republican voted against the expressed will of Bush, McCain and Boehner and what they felt was the best solution for the crisis because Pelosi hurt their feelings.

Fortunately, the republicans aren't really the crybabies that you want to make them out to be:

Republican Rep. John Shadegg said Tuesday that House Minority Leader John Boehner and other Republican leaders made a “stupid claim” by alleging that Nancy Pelosi’s speech changed any minds on the bailout.
On Monday evening, Rep. Darrell Issa (R-Calif.), a lead opponent of the bailout, told the Crypt that the notion was "nonsense" and mocked the possibility that a Republican would be shocked or offended by the partisan nature of a Democratic speech.
Rep. Michele Bachmann (R-Minn.) also douses the GOP leadership rationale. Her rebuttal makes three members so far rejecting their own leadership on the record
http://www.politico.com/blogs/thecrypt/0908/Shadegg_Boehner_made_a_stupid_claim_by_blaming_Pelosis_speech.html

Haha, 1000 for the two days combined. Estimates are in the 1000-1200 range.

I guess the pessimists are wrong again, so far DOW up today 245 pts. Of course theres still much more to today's trading, but it doesn't look like there will be a 1000 point downswing.

I'd be happy with just the post-incident angry television speeches with the one leader with shaving cream smears still in his hair, around his ears, and the other leader half purple and all pissed off. :D


I know some frat boys who think they're the same thing.

I know some Seals who think they're the same thing. ;)

how the fuck is it at all a good thing to base our economy on a system that is dependent on perceptions? it's a huge gamble.

For those of you who are wondering why this "bipartisan" bill failed, take a look at Pelosi's pre-vote speech.

http://www.breitbart.tv/html/184803.html

Does this sound non-partisan to you? Is this the right way to go if you don't wish politics to enter the picture?

Pelosi is a train-wreck. Nice job.

If youre right, even Fox News think they should grow the fuck up.

http://foxforum.blogs.foxnews.com/2008/09/30/bnewmark_0930/

I guess the pessimists are wrong again, so far DOW up today 245 pts. Of course theres still much more to today's trading, but it doesn't look like there will be a 1000 point downswing.
More like 350 at 1:30 pm.

I'm starting to think that we could ride this out, or at least get by with a much less aggressive (read expensive) bail-out.

Maybe some guarantees, maybe a little pot of money to assist mortgage payers, and a lot of co-operation between banks.

Here's what I think would be interesting to consider... Any of you know what an assigned risk pool is for insurance? How about something similar for these crappy mortgage securities? Let the lenders cover their own bad risks by spreading the risk around.

If youre right, even Fox News think they should grow the fuck up.

http://foxforum.blogs.foxnews.com/2008/09/30/bnewmark_0930/
Y'all have a tough time distinguishing ( telling the difference ) between Fox News and the many opinions that may reside at that site... Here's a clue. The page is an opinion page -- kind of like editorials, but by others -- not the editorial staff.

Okay?

And someone should tell Pelosi that the best way to seal a lousy deal isn't to rub salt in the wounds of your opponents. And while they're at it, they should tell her that if you are going to salt the wounds, at least use true facts to do it with.

Maybe some guarantees, maybe a little pot of money to assist mortgage payers, and a lot of co-operation between banks.

I say keep the $700 billion figure, but set aside $100 billion (or $50 billion or whatever) to assist in the restructuring of foreclosure-risk mortgages, to stop the bleeding.

Y'all have a tough time distinguishing ( telling the difference ) between Fox News and the many opinions that may reside at that site... Here's a clue. The page is an opinion page -- kind of like editorials, but by others -- not the editorial staff.

Okay?

And someone should tell Pelosi that the best way to seal a lousy deal isn't to rub salt in the wounds of your opponents. And while they're at it, they should tell her that if you are going to salt the wounds, at least use true facts to do it with.

What did she say that wasn't accurate?

And, to be honest, I've no patience for this idea that Republican politicians are so petty that they'd queer a deal just to spite a Democrat... and neither, apparently, have those Republicans that are choosing to speak about it.

Y'all have a tough time distinguishing ( telling the difference ) between Fox News and the many opinions that may reside at that site... Here's a clue. The page is an opinion page -- kind of like editorials, but by others -- not the editorial staff.

Okay?

And someone should tell Pelosi that the best way to seal a lousy deal isn't to rub salt in the wounds of your opponents. And while they're at it, they should tell her that if you are going to salt the wounds, at least use true facts to do it with.


Im well aware what it is genius, but the point stands. If you vote down a bill to jump start a destroyed economy because the mean lady hurt your feelings, youre a fucking child and dont deserve reelection.

I know in your fantasy land everything that ever goes wrong is the fault of the evil democrats and the Clinton administration and all that typical right wing apologetics inability to take personal responsibility BS, but thats not how it is in the real world.

What did she say that wasn't accurate?

And, to be honest, I've no patience for this idea that Republican politicians are so petty that they'd queer a deal just to spite a Democrat... and neither, apparently, have those Republicans that are choosing to speak about it.
In this excerpt, the last sentence is the only true statement.

Policies that were built on budget recklessness when Pres. Bush took office, he inherited Pres. Clinton's surpluses - four years in a row budget surpluses on a trajectory of $5.6 trillion in surplus. And with his reckless economic policies, within two years, he had turned it around. And now 8 years later, the foundation of that fiscal irresponsibility, combined with an "anything goes" economic policy, has taken us to where we are today.

They claim to be free-market advocates, when it's really an anything goes mentality. No regulation, no supervision, no discipline. And if you fail, you will have a golden parachute and the taxpayer will bail you out.

Here's what I think would be interesting to consider... Any of you know what an assigned risk pool is for insurance? How about something similar for these crappy mortgage securities? Let the lenders cover their own bad risks by spreading the risk around.

That is the thinking that caused this mess in the first place. Anyway, nobody will want to sign up for that, and if you make it mandatory you only punish the good lenders, which is the exact opposite of what recessions are supposed to do. Unless we are all socialists now.

Here's what you do:

1. Everybody gets audited by the OCC. If your bank is insolvent, the stocks and bonds are crammed down until it is solvent. Only then do you get government money. You would also be nationalized in the latter event.

2. At the same time CDS are all put on an exchange traded through a middleman counter party with margin/reserve requirements. Any CDS that isn't reserved/fully margined is busted. If this effects solvency and capital adequacy see 1.

3. Remove the non-recourse provision from mortgages to prevent jingle mail. Those people made mistakes, so now they are going to have to suck it up.

4. Foreclose, not forebear, and insist that housing stock is liquidated in an orderly fashion. Price. Discovery. Period. This will find the floor in house prices. Nothing can be done until people know what that is.

5. Robust criminal investigations at all levels, showing that the US financial system is intent on running a clean house.

The above would keep the financial system intact, restore confidence more quickly that any other plan - because people would no longer worry about the solvency issue, unfreeze the credit market to the functioning part of the economy, and take care of moral hazard.

It's not a pain free solution, but nothing is. And the quicker that people realize that the losses are already there and have just not been recognized yet, then the quicker growth can restart.

That is the thinking that caused this mess in the first place. Anyway, nobody will want to sign up for that, and if you make it mandatory you only punish the good lenders, which is the exact opposite of what recessions are supposed to do. Unless we are all socialists now.

Here's what you do:
[deleted]

It's not a pain free solution, but nothing is. And the quicker that people realize that the losses are already there and have just not been recognized yet, then the quicker growth can restart.
None of those steps were bad. I'd rather see an equity stake than nationalization, but all were better than just throwing $700 billion at the problem, and later throwing another $700 billion, etc. I would bet that Congress could put together a decent plan, if they would all grow up enough to leave the partisan crap out of it.

We, the tax payers, need to continue to revolt until those clowns (sorry LG) see the error of their ways.

I don't mean that the government should run them, just that it should become the majority owner until such time as it gets its money back thru dividends/floating the company on the private market.

And of course, all senior management is fired without pension/golden parachute.

I don't think these steps should be done overnight either. There should be a thirty day window for the banks as warning. I think you'd be surprised how quickly a lot of them could raise their own capital with this sort of threat hanging over their heads. At least that's what they found in sweden.

I don't mean that the government should run them, just that it should become the majority owner until such time as it gets its money back thru dividends/floating the company on the private market.

And of course, all senior management is fired without pension/golden parachute.

I don't think these steps should be done overnight either. There should be a thirty day window for the banks as warning. I think you'd be surprised how quickly a lot of them could raise their own capital with this sort of threat hanging over their heads. At least that's what they found in sweden.
Wouldn't you know that I was just reading an article about how the Swedes dealt with the same issues from 1985, when they deregulated credit, until the early 1990's when credit crumbled and the interest rates increased 500% overnight. They solved it by sinking money into the banking system for an equity stake. At one point, the Swedish government owned about 20% of the banking system. I underlined the part that I like best...

The government tried several stop-gap measures to no effect and in late 1992 opted for a complete re-booting of Sweden's financial system. Conservative Prime Minister Carl Bildt's administration sat down with the center-left opposition and came up with a bipartisan, multi-tiered approach. The government issued blanket insurance for a period of four years to creditors in all the country's 114 banks. It established an agency to oversee all banks that needed recapitalization and told them to immediately write down their losses.

Most importantly, the government stipulated that in order to become eligible for government funding, banks would have to give up something — namely equity — in return. In the case of one leading bank, the mere prospect of the government taking a stake was enough to persuade shareholders to dig deeper and raise money on their own. For the rest, the government was able, once the markets rebounded, to sell off the stakes it had acquired, making a profit that was effectively returned to taxpayers' coffers. At one point the government controlled more than 20% of the entire banking system.

http://www.time.com/time/business/article/0,8599,1843659,00.html?iid=sphere-inline-bottom

Yah. There's been about 147 of these crisis in modern banking times. There is nothing new here to see.

Based upon history, we can expect a 20% contraction of GDP over the next 2-4 years. Unemployment to triple or quadruple (20+% is possible). On average governments that recapitalize the banking system only get about 15% of the money back.

What I outlined is broadly similar to sweden, but a bit more draconian, because this one is a bit worse, and a bit more fraudy. Also, sweden didn't have to deal with the CDS issue.

But it is not the armageddon that people are scaremonger with. I don't doubt that bank holidays are a possibility, but the country isn't going to turn into Weimar Germany or some bullshit. Though it will suck if your job is in the financial industry and you are not very very good at it.

Yah. There's been about 147 of these crisis in modern banking times. There is nothing new here to see.


It has just struck me as funny -- in an ironic sort of way -- that for people that call themselves capitalists, the one thing we over control is money. We've got the Fed, with basically one guy at the wheel, exercising complete control over the most basic of all things financial -- our money.

Let's dump the Fed. We didn't need it before 1914 and we should probably let money seek its own interest rate.

I don't mean that the government should run them, just that it should become the majority owner until such time as it gets its money back thru dividends/floating the company on the private market.


I'm thinking that the government should use it's muscle to force a sale instead - compelling the 'bad debt' stuff to be sold off at a reduced rate, which would let other companies take that off their books, whilst at the same time leaving those other companies some space (because they 'bought cheap') to renegotiate repayments with all the bad debt, cutting the damage to consumers, getting the cash flowing again, getting at least SOME of the debts paid, and freeing the big names to get back on with what they were SUPPOSED to be doing.

Only this time - put some serious oversight on it.

I'm thinking that the government should use it's muscle to force a sale instead - compelling the 'bad debt' stuff to be sold off at a reduced rate, which would let other companies take that off their books, whilst at the same time leaving those other companies some space (because they 'bought cheap') to renegotiate repayments with all the bad debt, cutting the damage to consumers, getting the cash flowing again, getting at least SOME of the debts paid, and freeing the big names to get back on with what they were SUPPOSED to be doing.

Only this time - put some serious oversight on it.
Wouldn't that be an interesting idea... Renegotiate so the loan is repayable. More people win with that approach.

As far as oversight goes, putting back some of the more stringent down payment requirements wouldn't be a bad idea, either.

Wouldn't that be an interesting idea... Renegotiate so the loan is repayable. More people win with that approach.

As far as oversight goes, putting back some of the more stringent down payment requirements wouldn't be a bad idea, either.

Holy Shit! I just agreed with Myrmi on an economics issue.

*is raptured or something*

Holy Shit! I just agreed with Myrmi on an economics issue.

*is raptured or something*
Like I said to someone in another thread... It's either common sense catching up with you, or you've discovered single malt scotch.

And I believe I agreed with you...

Like I said to someone in another thread... It's either common sense catching up with you, or you've discovered single malt scotch.

And I believe I agreed with you...

So you're saying you're a fan of scotch?

Like I said to someone in another thread... It's either common sense catching up with you, or you've discovered single malt scotch.

And I believe I agreed with you...

Well, it can't be the scotch, because we'd have been agreeing for yeeeaaars... :)

Maybe you just discovered single malt scotch?

Aside from the taxpayer, there's another bunch of people who will end up with a big bill from all this. Here's an article about them and their concerns: China's dilemma: rescue or run? (http://www.businessspectator.com.au/bs.nsf/Article/Chinas-dilemma-rescue-or-run-JY3WJ?OpenDocument)

Aside from the taxpayer, there's another bunch of people who will end up with a big bill from all this. Here's an article about them and their concerns: China's dilemma: rescue or run? (http://www.businessspectator.com.au/bs.nsf/Article/Chinas-dilemma-rescue-or-run-JY3WJ?OpenDocument)

I wred that.

I don't have much sympathy I'm afraid. A linked article on the same site suggests that an US recession would only cut about 2% off the Chinese rate of economic growth.

A linked article on the same site suggests that an US recession would only cut about 2% off the Chinese rate of economic growth.
Keep in mind though that with the rate Chinese people expect jobs to appear for them to improve their lives, growth below 10% would actually start to seriously affect people's prospects, which in turn leads to questions about the party's leadership.

The reason the Chinese don't care about censorship, corruption and crappy leadership is because every year they can take home bigger paychecks, buy bigger TVs and dream of a better future. If they start doubting that, there's going to be some exciting stuff happening.

And now for some fun. I was laughing out loud at work today, but trying to explain to people at a Pizza place why this is funny just got me pushed further into the 'weirdo' category.

Maybe someone here will appreciate it.

http://www.economist.com/finance/displaystory.cfm?story_id=12305786
This newspaper story has just come to light after falling through a gap in the space-time continuum

REGS CLAMP DOWN ON NAKED LONGS!
September 26, 2021

FINANCIAL authorities in America and Europe took sweeping powers yesterday to avert a financial crisis by imposing restrictions on markets. In their sights are a peculiar brand of speculators known as “long-buyers” who buy assets not to live off the income they generate but to profit from rising prices.

[...]

Particular criticism has been reserved for people dubbed “naked long-buyers”, those who try to buy homes without putting up a deposit. “Such people are in effect renters with a free call option on rising house prices,” said one financial analyst, “but they expect to be bailed out by taxpayers when house prices fall.”

Not only is this a clear case of moral hazard (the encouragement of irresponsible risk-taking) but their activities drive up house prices, putting them beyond the reach of hard-working families who have diligently saved up to put down a deposit. Also in the speculative category are “buy-to-letters” who buy a string of houses with borrowed money in the hope of making outsize gains.

[...]

“We cannot let the long-buyers destabilise the markets again,” said the American treasury secretary. He accordingly took powers to limit the scope of future price rises, including the creation of a so-called “Revolution Trust Corporation” that will issue a trillion dollars worth of shares in financial companies that will subsequently be sold in the market. The proceeds of the sale will be used to pay down the national debt, swollen by the costs of previous bail-outs of the financial system.

The plan to cap house prices will involve the introduction of capital-gains tax on housing profits. “If taxpayers have to subsidise house-price losses, it is only fair they should share in the gains,” the secretary said. Homeowners may protest at the details of the plan but the sweeping powers taken to govern the financial system by the former Hank Paulson (now King Henry I of America) mean there is little they can do about it.

Industry analysts said that some of the damage done by long-buyers might have been prevented had a now defunct practice called “short-selling” been permitted. By speculating on falling prices, short-sellers could in theory prevent bubbles from being formed. However, their scope to trade was always limited by regulations and the tactic was killed off during the crisis year of 2008. “It drove us out of business,” recalled George Soros, a former hedge-fund manager, speaking in Central Park yesterday, before adding, “Do you want some ketchup with that?”

Before that crisis, the standard rubric on financial products said “Warning: share prices may go down as well as up.” Afterwards, the clause “but not if the authorities have anything to do with it” was added at the end. The result was the decade-long boom in house and share prices that prompted the authorities to step in yesterday.

Asked if he was blaming speculators for the inadequacy of American monetary policy, the treasury secretary abruptly ended the news conference.

Keep in mind though that with the rate Chinese people expect jobs to appear for them to improve their lives, growth below 10% would actually start to seriously affect people's prospects, which in turn leads to questions about the party's leadership.

The reason the Chinese don't care about censorship, corruption and crappy leadership is because every year they can take home bigger paychecks, buy bigger TVs and dream of a better future. If they start doubting that, there's going to be some exciting stuff happening.

Growth in china will continue until China is roughly half the size of the US economy. maybe as high as 3/4's. then they will enter a decade long recession. you want a comparable example look at the US and japan 70's and 80's. They are following an almost exact match as far as growth and demographics.

Germany passes 480 billion euro plan (that's 653 billion dollars)

http://news.asiaone.com/News/Latest%2BNews/Business/Story/A1Story20081013-93465.html

BERLIN, Oct 13, 2008 (AFP) - A German government financial rescue scheme includes 80 billion euros (108 billion dollars) in fresh capital for banks and 400 billion euros in loan guarantees, a finance ministry statement said.


European central banks on the other hand do this:
http://business.asiaone.com/Business/News/Story/A1Story20081013-93424.html

Central banks in Europe announce unlimited dollar financing

FRANKFURT, GERMANY - Central banks in Europe announced on Monday that they would provide unlimited amounts of dollar loans over periods ranging from one week to 84 days.

:eek:

Germany passes 480 billion euro plan (that's 653 billion dollars)
Most of that is in the form of government guarantees. Provided banks don't default, it won't have to be paid. Only 100 billion are direct capital injections, presumably in the form of equity stakes that pay dividends and could be sold at a profit later on.

:eek:
What's wrong with that?

Keep in mind though that with the rate Chinese people expect jobs to appear for them to improve their lives, growth below 10% would actually start to seriously affect people's prospects, which in turn leads to questions about the party's leadership.

The reason the Chinese don't care about censorship, corruption and crappy leadership is because every year they can take home bigger paychecks, buy bigger TVs and dream of a better future. If they start doubting that, there's going to be some exciting stuff happening.

They didn't seem to mind "censorship, corruption and crappy leadership" too much when they were poor.

Growth in china will continue until China is roughly half the size of the US economy. maybe as high as 3/4's. then they will enter a decade long recession. you want a comparable example look at the US and japan 70's and 80's. They are following an almost exact match as far as growth and demographics.

No one is talking about China's phenomenal growth stopping. Merely its slipping by a couple percentage points.

They didn't seem to mind "censorship, corruption and crappy leadership" too much when they were poor.
Different times and a different world, if you ask me. It's much more open now.

And besides, who knows what peasants got up to back in the day? It was just that no one outside the area would ever hear of it.