The financial crisis... Who's to blame?

[BadBoy@TheWheel]

As far as the regulations go... from what I can piece together, the market needs to have certain regulations in place to keep it from making bad business decisions for short term financial gain. ie. going after as many mortgages as possible many of which are bad paper, because they know they will be bundled up and sold off. This is great for those who are writing the bad debt since they won't own it long enough for it to come back on them and they made their billions selling the bundled debt. This is where the free market concept will not correct itself. Those who initiated the bad debt have made their money and moved on leaving others holding the bag. The way to correct this is to regulate how these debts are passed on or attaching some sort of liability... Anyway you slice it, there needs to be oversite of the market to protect from unscrupolous business practices.

If the market was completely unregulated, a true free market, it would ultimately fail under its own greed.

The free market stopped being free the other day, last I heard it'll cost each of us at least $2,000 if we're lucky, and you know they won't take it in one lump sum, because if they called me today, I'd mail them a check and be done with it. Instead, they are going to milk the taxpayer in the end, for double the estimate, watch.

 

[Tim]

The free market stopped being free the other day, last I heard it'll cost each of us at least $2,000 if we're lucky, and you know they won't take it in one lump sum, because if they called me today, I'd mail them a check and be done with it. Instead, they are going to milk the taxpayer in the end, for double the estimate, watch.

$2,300.00 per person. So don't forget to pony up for your wife and kids as well. Not to mention any money you may have lost in the markets with your investments and 401K...

I heard someone put the $700 billion into perspective. It would be equivalent to winning $1,000,000.00 a day for over 2000 years. So you would have to go back to when Jesus walked the earth to accumulate that $700 billion... now that's a shit load of money.

Well not if you compare it to the public debt of the US which is around $9.6 trillion. That's over $100,000.00 of debt for every family in the US. Or $3,652.00 a second for 2000 years....

 

[BadBoy@TheWheel]

$2,300.00 per person. So don't forget to pony up for your wife and kids as well. Not to mention any money you may have lost in the markets with your investments and 401K...

I heard someone put the $700 billion into perspective. It would be equivalent to winning $1,000,000.00 a day for over 2000 years. So you would have to go back to when Jesus walked the earth to accumulate that $700 billion... now that's a shit load of money.

Well not if you compare it to the public debt of the US which is around $9.6 trillion. That's over $100,000.00 of debt for every family in the US. Or $3,652.00 a second for 2000 years....

I hope they will take a check:24:

 

[siasl]

I hope they will take a check:24:

just put it on your credit card

 

[Strauss]

this makes sense...but it unfortunately is counter intuitive.....the "bailout" is a pragmatic need at this juncture....and while the politicians argue back and forth regarding how much help individuals should recieve for their crummy choices, the money remains earmarked to help business recover from IT'S bad ones.

i glanced at an editorial today calling for punitive action for the offending businesses...this, too, seems counter intuitive, imo....but how do you structure minimizing this "adversitiy" so the economy doesn't take a big, cold shower, AND so that business willingly seeks more of a balance between human values -like integrity- and economic ones -like profit?

this would seem to be key here, as so many people made these crummy choices by following the lead of "best business practices" as they have come to be demonstrated in the last couple of decades.

and...hasn't that key been shown to lie in regulation?

I think we need to let the chips fall where they may, no bailout except as to Fannie and Freddie. The others should pound sand and file bankruptcy. Like a good enema, it'll clean out the system.

One other point, there is nothing wrong with deregulation, in fact, we need more deregulation. The problem is that you (not meaning you personally but in the general sense) think of deregulation as getting rid of all regulation (I blame the sound bite media for that) which is not what it means. Deregulation is getting rid of regulations that are outdated or counter-productive. Has anyone here actual seen the regulations that apply to investment banks? Antone? Anyone....raise your hand. Thought so, well I have, I work with them and they are massive, I mean massive. The financial industry is the second most regulated industry in the United States after the nuclear industry.

 

[Strauss]

I won't try to flat out pin this on Republicans and the Republican Party as has been pointed out that under Clinton steps were taken to increase home ownership. Were these steps risky? Maybe, but it was also the judgement of mortgage brokers to decide if a loan was risky or not. And I'm sure that judgement was mitigated by the fact that these loans could immediately be sold to another institution, hence the need for regulations and over sight.

You missed one point; once the lending standards were lowered failure of a mortgage lender to make a loan because the lender had stricter lending standards would result in a suit for discrimination. A damned if you do and a damned if you don't situation.

 

[Fox Mulder]

I think we need to let the chips fall where they may, no bailout except as to Fannie and Freddie. The others should pound sand and file bankruptcy. Like a good enema, it'll clean out the system.

One other point, there is nothing wrong with deregulation, in fact, we need more deregulation. The problem is that you (not meaning you personally but in the general sense) think of deregulation as getting rid of all regulation (I blame the sound bite media for that) which is not what it means. Deregulation is getting rid of regulations that are outdated or counter-productive. Has anyone here actual seen the regulations that apply to investment banks? Antone? Anyone....raise your hand. Thought so, well I have, I work with them and they are massive, I mean massive. The financial industry is the second most regulated industry in the United States after the nuclear industry.

I've said that 10 or 15 times and unfortunately we are probably going to get more regulation because the average citizen thinks the government can regulate business judgment, which is just absurd and this really comes down to bad business judgment.

The economy is entirely driven by credit. The country was built on credit--everyone of us bought our houses on credit (or most of us)--we went to college on credit. Some of us (includes Strauss and excludes Minor for sure) started businesses on credit, bought cars on credit--major purchases on credit--the economy is simply built on credit. If the politicians make it harder to get credit (by more regulation) they will fuck up the economy worse than it would be --that is a fact. Unfortunately, politicians make decisions on what sounds good to the Minors of the world rather than sound economic policy.

 

[Minor Axis]

My non-partisan view is that now is a good time to shake things up in Washington. Don't reward the incumbent regulation-is-bad party for this mess. :usa:

 

[Alien Allen]

if we are gonna give all that money to Wall St. maybe we would be better served to give it to ourselves

apply for what you need to bail yourself out.

which would then be mandated to go to the banks or whatever.

then cut the balls off the bosses at the banks etc.

just a thought

 

[Fox Mulder]

As far as the regulations go... from what I can piece together, the market needs to have certain regulations in place to keep it from making bad business decisions for short term financial gain. ie. going after as many mortgages as possible many of which are bad paper, because they know they will be bundled up and sold off. This is great for those who are writing the bad debt since they won't own it long enough for it to come back on them and they made their billions selling the bundled debt. This is where the free market concept will not correct itself. Those who initiated the bad debt have made their money and moved on leaving others holding the bag. The way to correct this is to regulate how these debts are passed on or attaching some sort of liability... Anyway you slice it, there needs to be oversite of the market to protect from unscrupolous business practices.

If the market was completely unregulated, a true free market, it would ultimately fail under its own greed.

Actually, this is where lawsuits are much better than regulation. It is virtually impossible to regulate bad business decisions--they happen everyday. What you need is a system to provide redress for wrongdoing.

As an example, I am repsenting a mortgage broker who made the first re-finance to an elderly man. Two of his kids took the money for their own use. Thereafter, during the increase in the real estate market over a few years or so, there were two more refinances (by two other banks) with the kids taking the money. After the real estate market collapsed--the elderly man was left with a home he should have had about $250,000 in equity in but instead was upside down by about $100,000 with the drop in value of his home. All the banks and brokers and everyone involved was sued--the kids too of course, but it really was the fault of the kids.

Now what kind of regulation would anyone propose for that? :confused You can't refinance more than once a year? Twice a year? 6 times in a year? I once re-financed 3 times in less than a year for very good reasons.

Let's not lose our heads and go clamoring to the government put in more regulation--it wont' solve a damn thing and will lead to the biggest recession since the great depression. I just hope the sound bite media and ignorance doesn't run so high as to force bad law through during a time of crisis--more often than not, bad laws come about after a crisis situation. I really hope this won't be one of those times.

 

[Fox Mulder]

My non-partisan view is that now is a good time to shake things up in Washington. Don't reward the incumbent regulation-is-bad party for this mess. :usa:

Agreed--since Congress is responsible for passing legislation and since the Democrats controlled Congress a year before this mess, let's throw their ass out!!!

Let's throw Bush out of office too--give the bastard about four months to wind up his affairs and boot him out.

 

[Alien Allen]

Let's not lose our heads and go glamoring to the government put in more regulation--it wont' solve a damn thing and will lead to the biggest recession since the great depression. I just hope the sound bite media and ignorance doesn't run so high as to force bad law through during a time of crisis--more often than not, bad laws come about after a crisis situation. I really hope this won't be one of those times.

That is what scares the shit out of me. You can damn near guarantee the morons will screw things up. Then years later blame they did not have the time to study it.

whatever they come up with better be damn clear, with no hidden bull shit

 

[Alien Allen]

Agreed--since Congress is responsible for passing legislation and since the Democrats controlled Congress a year before this mess, let's throw their ass out!!!

and replace them with what

more of the same sewage

 

[Fox Mulder]

and replace them with what

more of the same sewage

Well for sure we need to exclude communists. Oh, and we should also exclude members of the Communist party! Now--please don't be confused, I am talking about Democrats here!

 

[Alien Allen]

Well for sure we need to exclude communists. Oh, and we should also exclude members of the Communist party! Now--please don't be confused, I am talking about Democrats here!

well if you want socialism there is an argument that the bail out is exactly that.

not gonna say if the argument is correct but sure does give something to debate.

 

[TheOriginalJames]

After two pro-business Administrations the U.S. suffered the Great Depression. Who has been screaming for deregulation for as long as I can remember? I won't try to flat out pin this on Republicans and the Republican Party as has been pointed out that under Clinton steps were taken to increase home ownership. Were these steps risky? Maybe, but it was also the judgement of mortgage brokers to decide if a loan was risky or not. And I'm sure that judgement was mitigated by the fact that these loans could immediately be sold to another institution, hence the need for regulations and over sight.

Bottom line, if your pro-business or not, you still have a responsibility to be and act responsibly. Unfortunately as humans, we frequently come up lacking, hence the need for regulations and over sight. I think this "maximize profits", and CEO "make me rich" mentality went overboard to the extent of high risk practices and expendable employees. Prudence, caution, and moral standards were thrown out the window in the name of short term profits.

Yes and no, since Clinton and now under Bush, the federal government pushed brokers to get people into homes knowing that a lot of Americans couldn't afford to pay the loans back. Those brokers then sold the mortgages to companies like Freddy Mac and Fanny Mae, and to top it off the government basically had a gun to these brokers head saying do it or suffer legal consequences.

I'm waiting to see what happens with the CEOs of these two defunct mortgage giants in the matter of lawsuits and legal proceedings. It sounds like they're skimming from the top with CEO bonuses and other large amounts of money being privately pocketed before the collapses.

 

[Strauss]

well if you want socialism there is an argument that the bail out is exactly that.

not gonna say if the argument is correct but sure does give something to debate.

The bailout isn't socialism. The money has to be paid back and the US government isn't taking over an industry to run.
The bailout, however, is bad public policy. If the naysayers and the Chicken Littles have their way we could be headed for a severe economic down turn. Note I did not use the word depression and I don't care what Paulson is saying the chance of a depression are small at best. MY God, the economy is growing at 3.3%, how that idiot can speak of a depression with a growing economy is mind boggling.

 

[BadBoy@TheWheel]

if we are gonna give all that money to Wall St. maybe we would be better served to give it to ourselves

apply for what you need to bail yourself out.

which would then be mandated to go to the banks or whatever.

then cut the balls off the bosses at the banks etc.

just a thought

:clap Never thought about that. That would stimulate the economy..........That's an awesome idea....Seriously


What I have thought about is this though:

The current 9.7 trillion....with a "t" is actually monies that are owed to us, the taxpayer, I'm going to Washington next week and waiting until I get my piece of it back

 

[Tim]

Actually, this is where lawsuits are much better than regulation. It is virtually impossible to regulate bad business decisions--they happen everyday. What you need is a system to provide redress for wrongdoing.

I would never think of regulating bad business decisions. It's the unethical ones that worry me. There needs to be systems in place to punish those who knowingly hurt the economy to make their money in the short term. Like those who KNEW they were writing bad loans with unethical business practices. I have no interest in seeing the financial markets regulated to death, that makes no sense what so ever. The current regulations do need to be revamped and streamlined for sure but you can't just do away with them all. If you allowed the market to do anything it wanted it would only worry about it's own wealth and fuck the rest of the country. There is no such thing as a free market since all markets operate under some sort of rules and regulations.

 

[Strauss]

The current regulations do need to be revamped and streamlined for sure but you can't just do away with them all.

That's called deregulation, you conservative greedy bastard!!