[Al_U_Card]

Gee! How about the bank that gives out the "speculative" instrument is held liable for its maintenance......they can pursue the other party but in the mean time THEY are left holding the bag....they might just toe the line then.

[DrTodd13]

I wish people would stop blaming this on the "free market." We don't have a free market in this country. We have a regulated, monopolized and mandated market. Here's the quick summary for you. The US spends way more than it gets in revenues. The solution? The FED buys the debt with money created out of thin air. All this new money coursing through the system has to go somewhere and so one business segment or another will be viewed as "hot." Chaos theory probably applies here but once people see an area become warm they want to join in on the profits so they invest and the area becomes hot and then everyone invests and the area becomes red hot. At some point, it becomes clear that this area didn't need or require that much investment and then everyone runs scared and everything comes crashing down. Tech bubble or real-estate, the problem is malinvestment triggered by excess money creation.

Our market isn't free because in a free market, no one would have a monopoly on the creation of money. At some point, the government REGULATED the use of red-lining which had the effect of many people getting homes that wouldn't have previously based on their poor credit. This regulation contributed greatly to the next bubble being a real-estate bubble. The government's solution? Let's create a trillion more dollars and trigger another wave of malinvestment. The problem is whack-a-mole...you can try to regulate the last two areas that happened to fail but this money will flow somewhere new and create another bubble. It is inevitable and cannot be regulated out of existence. The beatings will continue until moral improves.

[cherdano]

Yeah if we didn't have money, there wouldn't be a financial crisis.

[DrTodd13]

cherdano, on Sep 22 2008, 02:55 PM, said:

Yeah if we didn't have money, there wouldn't be a financial crisis.

It is the rapid increase in the supply of money that is the problem, not the existence of money.

[mike777]

If the main point is the Fed kept rates too low for too long creating too much easy credit,I agree.

Easy credit caused inst. to be willing to make/want bigger loans on lower standards, I agree.

Politicians pushed for more "affordable housing" so FNMA took on roughly 600 billion in subprime loans in the last few years. No one forced these people to borrow but everyone encouraged more affordable housing.

Investment banks took on short term loans/leverage from roughly 12 bucks for every buck of capital to roughly 40-60 times for every buck of capital. They asked for the loans and inst. gave it to them.

To be fair to the Fed it always overshoots/undershoots on the issues of creating credit. I do think it tries to act in good faith.

[kenberg]

Not having the relevant training, I am not prepared to argue whether rates were or were not too low. That argument seems to me to be along the lines of "It's the other guy's fault". My views are far more primitive. At least for the last ten years I have noticed that people whom I wouldn't lend ten bucks to are able to get credit cards (plural) with $20,000 limits. Then, a few years ago, these same people or their close cousins could get loans to buy $300,000 houses with little or no money down and no particular job history. Now I said "Duh, I think this isn't going to work". Not being in the banking industry, I could not understand why on earth the banks would be making these idiotic loans. Now we know. They were making the loans, dumping them on someone who then dumped them on someone else and hid the manipulations as best they could.

Now someone, I nominate our elected representatives and the agents that they choose, was supposed to be keeping a close enough eye on banking business so that the greedy SOBs could not get away with such crap. That's what it means to be on, say, the Senate Banking Committee or at least it is what it should mean.

Bankers have been thoroughly exposed as being at least greedy fools (not illegal but certainly disastrous if unchecked) and in some cases crooks. But our elected representatives are supposed to be paying attention. They were too busy collecting campaign contributions and kissing ass to check into how the store was being run.

It's got to be fixed, but the folks on the hill have some serious explaining to do. They may be looking for new jobs next year.

[DrTodd13]

mike777, on Sep 22 2008, 04:20 PM, said:

If the main point is the Fed kept rates too low for too long creating too much easy credit,I agree.

Easy credit caused inst. to be willing to make/want bigger loans on lower standards, I agree.

Politicians pushed for more "affordable housing" so FNMA took on roughly 600 billion in subprime loans in the last few years. No one forced these people to borrow but everyone encouraged more affordable housing.

Investment banks took on short term loans/leverage from roughly 12 bucks for every buck of capital to roughly 40-60 times for every buck of capital. They asked for the loans and inst. gave it to them.

To be fair to the Fed it always overshoots/undershoots on the issues of creating credit. I do think it tries to act in good faith.

That's like saying that Robin Hood always stole exactly the right amount of money from the rich man. We sit around and argue about how much he should have stolen but never question the fact that it is theft nonetheless. Of course the FED always overshoots or undershoots...they don't have perfect knowledge. No one does and no one can. That is why central planning is always doomed to failure. All that should be necessary to know about them is that the FED is a private institutions and we taxpayers borrow money from them and pay interest to them when we could just print the money ourselves and pay no interest. Whose interests do you think a private bank serves, their own or ours? They have everyone brainwashed that there can be no other way. You try telling this to people on the street and that won't believe that the system actually functions this way. Hell, something like 20% of the members of the house of representatives banking committee think we're still on the gold standard!

[hrothgar]

I strongly recommend the Diane Reim show for some serious discussion on this subject.

http://wamu.org/programs/dr/

I just listened to Monday morning's 10:)) AM show while I was in the gym. I thought that both the main speakers raised some very interesting points.

This morning's show will feature a noher round table discussion on the same topic.

[hrothgar]

DrTodd13, on Sep 23 2008, 04:12 AM, said:

mike777, on Sep 22 2008, 04:20 PM, said:

If the main point is the Fed kept rates too low for too long creating too much easy credit,I agree.

Easy credit caused inst. to be willing to make/want bigger loans on lower standards, I agree.

Politicians pushed for more "affordable housing" so FNMA took on roughly 600 billion in subprime loans in the last few years. No one forced these people to borrow but everyone encouraged more affordable housing.

Investment banks took on short term loans/leverage from roughly 12 bucks for every buck of capital to roughly 40-60 times for every buck of capital.  They asked for the loans and inst. gave it to them.

To be fair to the Fed it always overshoots/undershoots on the issues of creating credit. I do think it tries to act in good faith.

That's like saying that Robin Hood always stole exactly the right amount of money from the rich man. We sit around and argue about how much he should have stolen but never question the fact that it is theft nonetheless. Of course the FED always overshoots or undershoots...they don't have perfect knowledge. No one does and no one can. That is why central planning is always doomed to failure. All that should be necessary to know about them is that the FED is a private institutions and we taxpayers borrow money from them and pay interest to them when we could just print the money ourselves and pay no interest. Whose interests do you think a private bank serves, their own or ours? They have everyone brainwashed that there can be no other way. You try telling this to people on the street and that won't believe that the system actually functions this way. Hell, something like 20% of the members of the house of representatives banking committee think we're still on the gold standard!

Who controls the British crown?
Who keeps the metric system down?
We do! We do!

Who leaves Atlantis off the maps?
Who keeps the Martians under wraps?
We do! We do!

Who holds back the electric car?
Who makes Steve Gutenberg a star?
We do! We do!

Who robs cave fish of their sight?
Who rigs every Oscar night?
We do! We do!

[Al_U_Card]

Doh!

Not THEM again......

[y66]

s'up Bo?

Stopping a Financial Crisis, the Swedish Way

[kenberg]

hrothgar, on Sep 23 2008, 07:36 AM, said:

I strongly recommend the Diane Reim show for some serious discussion on this subject.

http://wamu.org/programs/dr/

I just listened to Monday morning's 10:)) AM show while I was in the gym. I thought that both the main speakers raised some very interesting points.

This morning's show will feature a noher round table discussion on the same topic.

Diane Rehm is an extraordinary national asset. I hadn't heard this show but I just listened to it from the net. It is very good. Thanks.

There are some very smart people out there. I hope that they all can get us through this.

[PassedOut]

A Bailout Above the Law

Quote

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

Quote

“The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this act,” the proposed bill read when it was first presented to Congress, “without regard to any other provision of law regarding public contracts.”

I certainly hope the congress is not so cowed by the current propaganda stampede to vote for stuff like this. And even if, as I suppose it is, the original draft is just a stake in the ground for negotiating purposes, it is a reprehensible opening shot.

[barmar]

kenberg, on Sep 23 2008, 01:33 PM, said:

hrothgar, on Sep 23 2008, 07:36 AM, said:

I strongly recommend the Diane Reim show for some serious discussion on this subject.

http://wamu.org/programs/dr/

I just listened to Monday morning's 10:)) AM show while I was in the gym.  I thought that both the main speakers raised some very interesting points.

This morning's show will feature a noher round table discussion on the same topic.

Diane Rehm is an extraordinary national asset. I hadn't heard this show but I just listened to it from the net. It is very good. Thanks.

There are some very smart people out there. I hope that they all can get us through this.

The little bits of her show that I've listened to seem interesting (I'm usually driving home frmo the bridge club Tuesdays at 10pm, when it's rebroadcast), but her voice makes my skin crawl and I can't stand to keep it on.

[barmar]

Al_U_Card, on Sep 22 2008, 04:08 PM, said:

Will no one accept blame or be punished (except the faithful taxpayer) for these transgressions? Who must pay the price? How should they be punished? How can we define the nature of the deed? (As we must to avoid its future occurance.)

I don't think the blame can be pinpointed on any one institution. The problem is systemic.

[Al_U_Card]

So then the system must be blamed and changed! The whole problem is that speculation is endemic and encouraged as a source of profit and a motor of growth.

Regulations could be vastly simplified if the fundamental approach was streamlined down to productivity, efficiency and value. Only when we allow the subterfuge and the deception to become anathema will we be able really profit from our endeavor.

[kenberg]

barmar, on Sep 24 2008, 12:48 AM, said:

kenberg, on Sep 23 2008, 01:33 PM, said:

hrothgar, on Sep 23 2008, 07:36 AM, said:

I strongly recommend the Diane Reim show for some serious discussion on this subject.

http://wamu.org/programs/dr/

I just listened to Monday morning's 10:)) AM show while I was in the gym.  I thought that both the main speakers raised some very interesting points.

This morning's show will feature a noher round table discussion on the same topic.

Diane Rehm is an extraordinary national asset. I hadn't heard this show but I just listened to it from the net. It is very good. Thanks.

There are some very smart people out there. I hope that they all can get us through this.

The little bits of her show that I've listened to seem interesting (I'm usually driving home frmo the bridge club Tuesdays at 10pm, when it's rebroadcast), but her voice makes my skin crawl and I can't stand to keep it on.

I had the same reaction initially but the quality of her program overrode this eventually. She makes every effort to get high quality guests with informed opinions on important topics and then asks probing questions that they are encouraged to answer fully. It makes these shows where everyone is talking at once look like a sick joke,

Anyway, the show cited above has a guest host.

A morning comment, not all that thoughtful, on the Paulson plan: Basically he seems to be asking Congress to say: "It's too deep for us, you do it". There seems to be lots of evidence for the opening clause. It may not be so clear the conclusion is valid.

[Al_U_Card]

When someone that you love and/or trust yells, "Duck!" you probably should.

When someone who has cheated you and cost you your livelihood and/or your home tells you "Bend over, or else!" I would be inclined to defer and instead to scrutinize their motives and intentions.

Once a liar, always a liar.

The Bush legacy (the boy who cired Wolfowitz!)...giving new meaning to the phrase "I don't recall having been told that I said or did whatever it might have been..."

[PassedOut]

Federal Reserve Weakens Transparency Rules

Quote

On Tuesday, the Federal Reserve announced that it was relaxing rules that require investors who take large stakes in banks to submit to longstanding regulations on transparency and managerial control. Private equity firms have pushed for the changes because they would like to become big investors in beaten-down banks but do not want to be regulated.

In my opinion, this action goes in the wrong direction. I hope the congress refuses to be stampeded on the bailout legislation.

[DrTodd13]

"Speculators" are always the scapegoats but the term is not definable. In essence, anything you do with your money is speculation. If you buy something now you are speculating that it won't be cheaper in the future. If you hold dollars then you are speculating that dollars will appreciate against other currencies or that gains in productivity will lower prices in some market segment in which you wish to buy. Anything you do with money that you don't have an immediate need for like buying food or shelter is an investment and investment is indistinguishable from "speculation."