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

[Alien Allen]

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.

I said there is an argument that it could be socialism. Not saying that was my view on it. As you said it is supposed to be paid back. That assumes the entities don't fold after getting bailed out.

You know a lot more on this stuff than me. I get the bad public policy part. It sets a precedent.

But then what we are going thru is somewhat unprecedented isn't it? I did not study up on the particulars of what caused the depression but is this not different?

If no bailout then what GB? Can this house of cards still stand without one? Or you thinking enough foreign investors might prop it up? Other than Buffet I don't see a lot here ready to do that. And with all of Bill Gates money why does he not step up and help given he made his billion off playing the system here.

 

[Strauss]

I said there is an argument that it could be socialism. Not saying that was my view on it. As you said it is supposed to be paid back. That assumes the entities don't fold after getting bailed out.

You know a lot more on this stuff than me. I get the bad public policy part. It sets a precedent.

But then what we are going thru is somewhat unprecedented isn't it? I did not study up on the particulars of what caused the depression but is this not different?

If no bailout then what GB? Can this house of cards still stand without one? Or you thinking enough foreign investors might prop it up? Other than Buffet I don't see a lot here ready to do that. And with all of Bill Gates money why does he not step up and help given he made his billion off playing the system here.

The chips need to fall where they may. BTW, has anyone noticed that these "bad" loans haven't failed yet? In other words, there is an expectation that they will fall and because under current GAAP the companies have to write them down but they haven't failed.
There will be assets to pay back the loans, maybe not just all of it but that comports with what I just posted above. No one really knows what we will get back because these loans haven't folded. And even if they did they still have a value, may only be pennies on the dollar but they still have some worth.

If these companies went belly up their assets would be purchased very very quickly. See Barclay's as an example. These companies have just an intrinsic value that no other financial services company can match, it has to be bought. Again, see Barclay's quick move.

Besides I think the financial system needs a good financial enema, cleans out the system/dead wood/crappy CEOs etc etc and is eventually is a plus to the system.

 

[Alien Allen]

thanks for your perspective GB

 

[Minor Axis]

Speaking of bad CEOs, when did the concept of Golden Parachutes really get started? And better yet is it a just reward?

 

[Alien Allen]

Speaking of bad CEOs, when did the concept of Golden Parachutes really get started? And better yet is it a just reward?

I am sure it goes back long before it and I never paid attention but the first one I recall locally was Burroughs Corporation. The guy got a big pay off.

don't most of these start with the person taking stock in exchange for wages? with the theory being they will have more interest in making things profitable?

regardless they are crazy. you get no argument from me that some of these CEO's are being over compensated.

 

[Strauss]

Speaking of bad CEOs, when did the concept of Golden Parachutes really get started? And better yet is it a just reward?

World War II and it started with the every day line worker.

 

[Alien Allen]

World War II and it started with the every day line worker.

how about politicians

look at the damn retirement they get.

 

[Fox Mulder]

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.

We already have that--they can be civilly sued and worse, they can be prosecuted under any number of statutes, federal and state.

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.

Yes--I agree--you cannot leave capitalism unregulated, but here is where the devil is in the details. I like to use the example of referrees in a football game. If you had no referees, the game would suck-everyone would cheat. With referees, it is a much better game--there is still cheating, it still isn't perfect, people still get screwed on bad calls and it will ALWAYS be that way. More regulations or rules can't change it. But you don't want government participating in the game--only regulating it and only to the extent it keeps it as fair as possible.

BTW--and I don't want to get into all the details because few would understand it, but part of the problem we have is actually the backlash from unnecessary and counter-productive regulations and changes in Accounting rules and regulations that came about after Enron.

 

[Strauss]

BTW--and I don't want to get into all the details because few would understand it, but part of the problem we have is actually the backlash from unnecessary and counter-productive regulations and changes in Accounting rules and regulations that came about after Enron.

I'll discuss those details......Sarbanes-Oxley and the creation of new account rules under GAAP. Better yet, let's get Minor involved as he surely can give us the details.

 

[Fox Mulder]

I'll discuss those details......Sarbanes-Oxley and the creation of new account rules under GAAP. Better yet, let's get Minor involved as he surely can give us the details.

Remember all the libs running around after Enron screaming for government regulation -- we discussed that at length about how it would fuck things up more than it would help. Same here--you know it GB--bad law always follows a crisis and it takes years to refine it and undo the harm that's done initially.

 

[Fox Mulder]

I'll discuss those details......Sarbanes-Oxley and the creation of new account rules under GAAP. Better yet, let's get Minor involved as he surely can give us the details.

Do you think he knows what "GAAP" is?

 

[Minor Axis]

Why not be adults and just admit your precious lets-deregulate Republicans are a huge part of the problem we face today. Noooo, can't do that because we like their values no matter what kind of screw ups they are.

 

[BadBoy@TheWheel]

Why not be adults and just admit your precious lets-deregulate Republicans are a huge part of the problem we face today. Noooo, can't do that because we like their values no matter what kind of screw ups they are.

Have you ever considered the concept that if you regulate free trade to closely, it ceases to be free trade?

I'm a genius, you can thank me later

Right now, as irritated as I am with the whole thing, I am grateful to live in a country that has $700billion to throw at a problem that could unravel the economy across the globe.

I'm not happy, and I think heads should roll, but let's pass this fucking bill, get the cash flow moving again, and go back to doing what we do

 

[Tim]

I'm not happy, and I think heads should roll, but let's pass this fucking bill, get the cash flow moving again, and go back to doing what we do

Don't be too hasty in wanting a bill rushed through the senate. It seems that every time that I hear an economist talking about this, they say wait and get it right. DO NOT RUSH this through. Just throwing money at the problem won't fix it.
Here is a letter that was sent to the Senate yesterday and I am more inclined to align myself with the suggestions made within it since it was signed by over 100 leading economists, including three Nobel Laureate winners in economics.

To the Speaker of the House of Representatives and the President pro tempore of the Senate:

As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:

1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.

2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.

3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America's dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.

For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.

 

[BadBoy@TheWheel]

Don't be too hasty in wanting a bill rushed through the senate. It seems that every time that I hear an economist talking about this, they say wait and get it right. DO NOT RUSH this through. Just throwing money at the problem won't fix it.
Here is a letter that was sent to the Senate yesterday and I am more inclined to align myself with the suggestions made within it since it was signed by over 100 leading economists, including three Nobel Laureate winners in economics.

I agree, do it right, I guess the point I'm making is let's not turn this into another political grand standing event, let the folks who truly undertstand the economy make the right decisions, not a bunch of sotch drinking red noses.....Not that I am opposed to scotch

What I am reading is that essentially, it wouldn't matter if they threw twice that much money at it, if the do not select the proper funds to support, it could still fail:willy_nilly:

So yes Tim, absolutely let's get it right this time, there might not be a next time, but let's do it I swear on my mother, if this turns partisan/political and keeps it going with the political grandstanding...


Imma punch babies:mad


Sorry but I think the bullshit that both McCain AND Obama pulled revolving around this was just sickening.:thumbdown

 

[Alien Allen]

yeah both parties are using this selfishly. no great surprise. spewing partisan bull shit is what got them elected.

damn sockcuckers

 

[Strauss]

Do you think he knows what "GAAP" is?

Let's find out:

So Minor now that the federal appeals court has validated the creation of PCOAB under Sarbanes-Oxley, should PCOAB have any say in the GAAP standards? And now that we on the subject should FINRA have oversite of the SRAs on Wall Street?

 

[Minor Axis]

Outstanding article on Newsweek on success in sub-prime lending. They are not all greedy bastards...

 

[kelvin070]

I have been hearing from both sides of the isle that it's the fault of the other side... Well I don't want to hear the partisan bullshit on this bailout. I want good hard evidence and good information explaining exactly how we got to this point. I want the viewpoint of a world renowned economist that isn't spouting partisan bullshit. I want to know if this 700 billion is really needed or not.

Please, if anyone has any good links to an in depth analysis that gets to the root cause of this economic disaster, post them up. We can play the partisan blame game later, I just want facts right now and I'm having a hard time finding any.

Read many longwinded bullshits about the crisis but this is the best link I came across so far - Common Market Myths.......

 

[sophie0028]

People, I think its time for action rather then playing a blame game.... the one who comes out of this time healthy is the winner.