US GOV'T BAILOUT of Banks
- Thread starter brianpaxton
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Holy shit, now there's something I did not know, thanks for the link. Seeing that FREDDIE & FANNIE were created by democrats for democrats it would be interesting to see what, if any, contributions are made to republicans.
Someone give me a link if you can as I'm off to do some homework on economic trends through some of guerilla links.
Thanks for the awesome thread everyone including r3p1v who inspired guerilla's posts. Also, it's great seeing educational posts directed to someone without belittling them (which is very anti-WF). I don't have that ability so rep+ to guerilla for the humble lesson for us all.
If you want info, I can probably find you links. Just give me an idea of what you are looking for.
Also, I linked to Rothbard's AGD above. You want to start at section 3. He was a great economist, but I think a better economic historian. The first 2 sections are fairly technical, but the story telling and analysis kicks in during Section 3, and really makes the Depression less of a mystery (where did all the monies go?) and more of a tragic comedy.
you're all missing the boat here...
this mess is because of derivatives...
Web of Debt - IT’S THE DERIVATIVES, STUPID! WHY FANNIE, FREDDIE AND AIG ALL HAD TO BE BAILED OUT
this mess is because of derivatives...
Web of Debt - IT’S THE DERIVATIVES, STUPID! WHY FANNIE, FREDDIE AND AIG ALL HAD TO BE BAILED OUT
The market is not at bottom. Don't think the government is going to print up $700 billion and give it to Wall Street (not the people with mortgages to pay) and the market will pick up in price.
This is strictly a subsidy for the rich. The homeowners in distress are not getting much if any help. That money is going straight to the people who set up this mess as a payoff.
That article was idiotic. They did not HAVE to be bailed out. If there was any value in their assets, the market would have bought them at fair value.
The issue is, these companies are nearly worthless. Some are speculating that this is why BOA bought up Merril Lynch. So the combined companies would be "too big to fail" and also get to feed at the trough, instead of collapsing like Lehman.
The author of that article calls for a New Deal. She hasn't done her homework. FDR prolonged the Depression with the New Deal. She says that he allocated capital to the right markets to stimulate the economy. The market always allocates capital better than the government, otherwise the USSR would still be in business. What FDR did, was steal everyone's gold @ $20 an ounce, then later reopened the gold window @ $35 an ounce, which devalued the currency by 75%. That was his "new capital". He just stole savings by debasing the currency.
What stimulated the economy was women getting skilled at factory labor, massive industrial investment for the war, and unfortunately a lot of young men dying in the war, which lowered the unemployment rate (sad but true, it also happened during Vietnam).
It also didn't hurt that post WWII, America held all of the world's gold under the Bretton Woods agreement, and had the world's reserve currency. That is what has allowed the country to go so far into debt with the Saudis, Chinese and Japanese.
guess you missed the overall point about CDS contracts...
to sorta agree with you, derivatives contracts are worthless paper... and when these big companies start to have to deleverage their derivatives contracts (sell them on the market) they quickly wind up going down the toilet because of the lack of real value in them... bad paper...
the fact is the large financial companies are all interconnected with these bloated derivatives contracts so that if one large one fails, it starts off a chain reaction taking down dozen and eventually hundreds of other companies that are connected due to their CDS contracts...
the government isn't just rewarding big players here... and the government sure as hell doesn't care much enough about the mortgage market to drop a trillion dollars on it... what the government is trying to do is keep the derivatives market from melting down which would force a massive global deleveraging/liquidation on a scale never before seen...
I'm not an expert on the great depression era or what brought us out of it... I wasn't trying to argue anything of the sort by posting a link to that article... I was merely trying to raise awareness of derivatives which most people seem to gloss over or ignore these days, yet derivatives were the main underlying cause of AIG, Fannie and Freddie being bailed out...
I also agree that they should have let these companies fail and be auctioned off... but I understand the reason they won't allow that...
Erect and LotsofZeros here is a link you should read if you are into researching the problem. Its rather lengthy but well worth the read. Scroll down when it appears to go blank.
Taki’s Magazine, edited by Taki Theodoracopulos
Taki’s Magazine, edited by Taki Theodoracopulos
You think Bush responsible for all the mortgage crap?
Do you know who created Fannie Mae? Do you know who ran it? Do you know who got a ton of money from them for their political campaigns? Do you know who voted to bail them out?
Read: FOXNews.com - Barack Obama's Fannie Mae/Freddie Mac Connection - John Gibson Radio
Do you know who created Fannie Mae? Do you know who ran it? Do you know who got a ton of money from them for their political campaigns? Do you know who voted to bail them out?
Read: FOXNews.com - Barack Obama's Fannie Mae/Freddie Mac Connection - John Gibson Radio
I agree with the pure capitalism play and letting these companies die off and face liquidation. Sure there is the argument of job losses diminishing the tax base, etc but I believe we need to take our medicine now and let the market decide so that we don't just prolong the inevitable. I care about the future we pass off to our children.
Thanks for the link. I read the first half and skimmed the rest as it got more convoluted. This article is a good read into the bi-partisan pressure to lend more to the unqualified in the name of 'fairness'. It's just another in the long list of examples of how the affirmative action movement is killing this country.
As stated before, I tend to lean more towards the pure capitalist ideals: If they can't afford it, they don't get the loan. I don't care what color they are. Let the banks decide what is a good risk for their lending standards and keep the government out of it. The government pressure to loan to unqualified purchasers has backfired immensely and we will all pay for that. My taxes will go to bail out Fannie, Freddie and others, the inflation is going to kill me at the grocery store (see devaluation of the dollar when we keep printing 'funny money'), and the house I own is now most likely worth less than when I purchased it due to the ever-softer real estate market (see 'appraisal comparable sales' and vacant houses).
It's now becoming a domino effect.
Regulation is in some markets and industries very important. It is not an ex post facto law by definition or practice. It does not necesarily go back into the past and regualte those times. That is what ex post facto means.
It may be correcting a problem that has already happened but realistically what problem has not happened before in some way or place?
The drug war is not regulation, it is increased federal sentencing guidleines for criminals and hype. I dont think it is effective but also not regualtion per se.
The FDA is an example of regulation done to increase the power and wealth of doctors and the medical field at the expense of the public. I think it is necesary but should be severly shrunk in size, scope and power. The fact that Codex laws are coming into power is proof that there are severe conflicts of interest in the FDA and US and International laws. People cant decide what vitamins to take?
Not all regulations are bad. Enron is an example of what can happen when regualtions are taken off. Also the utility prices for electricity and gas service in developing areas like South America. When someone wants regulations taken off be very afraid. Look into who they are and why they want it. Usually it is not market oriented and is basically subjecting people to a monopoly on something they cant live without.
When the regulations are removed instead of lower prices and competition often there is price gouging and worse service.
What these markets needed / may need were real regulations that were in the govt and public interest. Unfortunately we have not been getting that lately.
The whole system is corrupt as shit and that is why we are getting fucked no matter where we run. Vote them all out.
There needs to be changes to the campaign finance and lobbyist laws so that special interests dont run DC.
Right, but that's the issue. They have constructed a game where if several fail, all fail, so it means that an entire segment of the global economy is allowed to play a game of no-lose capitalism that is subsidized by everyone else.
Right. It's not just capitalism, it's free market economics. You have to allow cause and effect to play out. What's happening now, is moral hazard. The effect is being transferred onto people who had little or nothing to do with the failure. In every other aspect of our lives, we would consider such actions unacceptable.
Sorry, I meant that regulation is not ex post facto, it cannot fix what has happened. My bad.
Monopolies only exist where there is no competition. The best way to limit competition, is to regulate an industry. Regulation always raises the price of entry, making it more costly for small players to emerge and challenge an established order. That is why most regulation is actually written by the industry, and not consumers or legislators. It's more profitable to limit competition through regulation (bang for the buck) than to compete in an open and free market.
Think about this. It's true.
Imagine how many fewer offers and products there would be if AM was regulated. Consider how many fewer AMs there would be if they had to get a license and perform industry specific reporting on their tactics for government oversight.
I'm sure one could make the argument, but the industry would be safer and there would be less dirtbags and shady (no offense xmcp123) characters.
Perhaps. But at the cost of lower payouts (because the affiliate companies would have to hire staff to meet regulatory paperwork expectations, and potentially limit the number of programs they carry), more challenging entry into the industry, and rules that limit ways to generate leads?
Intervention has costs. If you believe in a free market (and I do), then you want the market to regulate, based upon consumer choices. It's the most efficient and moral model.
I certainly trust myself and all of you more than I trust politicians. Trusting in politicians is really dumb.
More competition equals price gouging and worse service? This is counter-intuitive. I think we all know that more competition leads to innovation, product and service improvements and lower prices.
What you're repeating are fallacies that a lot of people seem to believe, but have no rational basis to believe. Normally, as soon as people bring up natural monopolies and such, my first instinct is to say, "show me one" but these days, I just shutdown on the conversation, because it's hard to argue rationally with people who repeat things without having thought them through themselves.
Now that is very true. Unfortunately, you can't vote them all out. The lobbyists have more money than you. Incumbents are rarely defeated, and the two party duopoly will not allow outside challenges.
Ron Paul's idea is better. Follow the Constitution. Then there is little money or power in Washington, and lobbyists have to lobby either 50 states, or 500 cities or 300 million consumers.
Historically, centralizing power and money attracts the worst the sort of vermin. There are thousands more laws on the books now than there were 100 years ago. And yet politicians and the political process is more corrupt than ever. Maybe the power to legislate over so much, and to hand out so much money in appropriations is the problem.
Maybe, instead of feeding a drug addict more heroin, hoping it will kill him, the heroin should be taken away.
I think energy is one industry that needs to be regulated. Its a nice idea that having no monopoly on it would lower prices. Some people say as much as 25%. But that was also said in South America where prices increased after deregulation several hundred percent.
You stated above that industry writes a lot of the regualtion papers. But you really did not cite anything. I would imagine that they would want it deregulated as regulation allows a normal profit but not absurd profits. If the business is having problems they petition in front of the regulation commsion.
And did you know Enron wrote a lot of the energy deregulation here?
Internal Enron documents, which were released in 2002, revealed that the Houston-based company helped write the legislation, which was signed into law by President Bill Clinton in December 2000.
Freed from regulatory interference, Enron then used manipulative trading practices to game the California electricity market and drive up electricity prices across the state.
While California consumers were getting fleeced, the new Bush administration shielded Enron from early accusations of market manipulation. President Bush personally joined the fight against imposing caps on the soaring price of electricity, buying additional time for Enron although the company’s house of cards collapsed anyway in fall 2001. [For details, see Consortiumnews.com’s “Bush’s Enron Lies.”]
And of course you mentioned that you think a monopoly is no competition as in zero. The EU states a monopoly is 90% of the market. I personally think industries start to act in a monopolistic fashion at around 70%. ie Google in the USA. Not that they need to be stopped at that point but should merit extra attention.
And I dont think AM should be regulated. In fact I think SEO standards in general are onesided.
I just think some industries should be regulated where there is a history of no one providing a real competitor. Can you imagine your house having 5 power lines running up to it and you go unhook one and hook up another? How much would the waste be from extra lines or extra switching/metering devices?
My home town had one power company in some sections and another in other sections. You could buy a house in the section you wanted to deal with. Or not buy/rent one at all and move out of the city. It is not exactly a prison.
The market is self-correcting. As long as there are not barriers to entry, monopolies cannot maintain their market share WITHOUT (this is the caveat) providing better prices and services/goods than any competitor. Which is a win for the consumer.
Google falls into this paradigm. Yahoo and MSN are so incompetent, and their search so useless, that Google dominates the landscape. Both Yahoo (time) and MSN (OS) have had big traditional advantages over Google. And yet they lost out.
Someday, someone will challenge Google seriously, by taking on the search engine portion. Unless Google continues to have the best search engine, in which case again, the consumer wins with Google being available and pervasive.
As far as Enron, you're making my point. No regulation and deregulation are not the same thing.
Maybe there is no competition because the cost is below the price to develop an alternative? In which case, the market price (however high it may be perceived) is not higher than it should be.
Maybe no one can compete with your electric company, because there is not enough profit in it to compete! Duplicating infrastructure may not be profitable because only a portion of the existing market will be served with 100% of the capital costs. These are just economic realities, not monopolistic agendas.
The market will provide if there is demand. Just because it is a hassle to duplicate infrastructure today, doesn't mean that the free market won't create new infrastructure or find a new technique around it.
But in order to have the profit incentive to do so, the market has to have zero artificial barriers to entry. If it's too costly to get in, then it becomes even harder to develop alternatives.
It's like the so-called energy crisis. You can't drill anywhere. You can't build nuclear. There are probably a million other things you can't do. So the costs are enormous to practice any R&D and establish a new company.
So the government's solution is, spend more money. Instead, they should just cut regulatory red tape. Let people drill. Let people build nuclear. Let the market work.
You see this all day, every day. Right now, the banks are in trouble. The system is starved for genuine, real capital.
So the government will impose more regulations, force capital to flee to other markets and out of the currency. They will run up more debt, causing inflation, which will make it even harder for people to keep the homes they haven't bought yet.
When really, they should cut red tape, raise interest rates and cut spending/taxes simultaneously. That would allow the market to respond to the crisis, higher interest rates would be an incentive for people to save (savings are capital) and by cutting taxes would have the same effect. People would be more inclined to work, save and invest. The spending cuts have to come, because more debt is inflationary, so you can't cut taxes unless you cut spending, otherwise you're spinning your wheels.
Watch what the government does over the next year or two. They will do everything assbackwards, and then blame the market, price gougers, greedy capitalists etc. All while they continue to spend spend spend, and help out their buddies on Wall Street.
Google falls into this paradigm. Yahoo and MSN are so incompetent, and their search so useless, that Google dominates the landscape. Both Yahoo (time) and MSN (OS) have had big traditional advantages over Google. And yet they lost out.
Someday, someone will challenge Google seriously, by taking on the search engine portion. Unless Google continues to have the best search engine, in which case again, the consumer wins with Google being available and pervasive.
As far as Enron, you're making my point. No regulation and deregulation are not the same thing.
So you're saying that in an industry where there is no competition, we are going to regulate it into a monopoly?
Maybe there is no competition because the cost is below the price to develop an alternative? In which case, the market price (however high it may be perceived) is not higher than it should be.
Maybe no one can compete with your electric company, because there is not enough profit in it to compete! Duplicating infrastructure may not be profitable because only a portion of the existing market will be served with 100% of the capital costs. These are just economic realities, not monopolistic agendas.
Can you imagine having multiple phone companies? Multiple cable companies? Oh wait, Cell Phones and Satellite TV.
The market will provide if there is demand. Just because it is a hassle to duplicate infrastructure today, doesn't mean that the free market won't create new infrastructure or find a new technique around it.
But in order to have the profit incentive to do so, the market has to have zero artificial barriers to entry. If it's too costly to get in, then it becomes even harder to develop alternatives.
It's like the so-called energy crisis. You can't drill anywhere. You can't build nuclear. There are probably a million other things you can't do. So the costs are enormous to practice any R&D and establish a new company.
So the government's solution is, spend more money. Instead, they should just cut regulatory red tape. Let people drill. Let people build nuclear. Let the market work.
You see this all day, every day. Right now, the banks are in trouble. The system is starved for genuine, real capital.
So the government will impose more regulations, force capital to flee to other markets and out of the currency. They will run up more debt, causing inflation, which will make it even harder for people to keep the homes they haven't bought yet.
When really, they should cut red tape, raise interest rates and cut spending/taxes simultaneously. That would allow the market to respond to the crisis, higher interest rates would be an incentive for people to save (savings are capital) and by cutting taxes would have the same effect. People would be more inclined to work, save and invest. The spending cuts have to come, because more debt is inflationary, so you can't cut taxes unless you cut spending, otherwise you're spinning your wheels.
Watch what the government does over the next year or two. They will do everything assbackwards, and then blame the market, price gougers, greedy capitalists etc. All while they continue to spend spend spend, and help out their buddies on Wall Street.
I really can't believe the mess that the Bush administration has got this country in. Hopefully this bailout will fix things. But again, I wish I could say that I was optimistic.
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