That's the thing about that act - if it wasn't for that act, then the big banks would have never been able to buy Morgan Stanley or the other "investment bank".
And i completely agree that poorly thought out regulation is in fact, one of the biggest problems we face.
Too little or too much regulation are both bad things.
Do you also care about the billions being wasted on programs that don't work? How about the billions spent on earmarks?
Or the $147 billion tacked onto an already expensive $700 billion bailout package?
The government spends too much. And while i do think the rich should pay a little more in taxes, i also believe the federal government has ALOT of fat it needs to cut.
OK I got ya.
I think it's excellent for people to start their own business. But they better know their market. For example, it might be hard to start a lawn mowing business right now considering people are cutting back on expenses.
So the thing to do is this:
1. think about what people need during an economic downturn.
2. think about how you can supply that to them
3. start slow. you don't want to quit your job unless you're 100% sure the side business is bringing in the dollars.
Some ideas that might work are...
- computer repair (people would rather fix the old computer then buy a new one)
- car repair (more people are repairing their cars instead of buying new ones)
- selling information products online ( it just takes awhile to build the list, etc... but a good idea is anything GREEN related)
- become a drug dealer: as people lose their jobs, they buy more drugs! ok this is a joke > : )
I'd love to see where your facts come from, because every medical journal i've ever read (including the British government) have said that pot is LESS HARMFUL than alcohol.
Just do a google search and you'll find plenty of proof to show that.
It's also obvious you've never smoked pot. I know plenty of potheads, and none of them "stopped caring about their lives and only wanted to get high".
You are obviously confusing pot or crack or heroin.
"Drama Queen? EVERY Democrat has played the same lying horseshit."
Because republicans don't lie, right? Every politician lies. It doesn't matter if you're conservative or liberal.
"Trickle down economics DOES work. You just use the wrong yardstick just like all liberals."
And which yard-stick should we use? the one created by conservatives?
Trickle-down does work - but only to an extent. It's obvious that it didn't work too well over the last 8 years, though. The average household earnings have stayed flat that entire time.
I don't believe in a cure for poverty, because there is no cure for human nature. But i believe that we can take more care of middle-class Americans then we currently do. we just went through an administration that helped the rich a great deal. Whats the problem with helping the middle-class go to college for free? or having a little more money left-over in their paychecks?
I agree - thinking that Obama will do everything he's promised is foolish, especially considering what has happened over the last two to three months.
But I bet Obama will do more for the middle-class in this country then any president has in a long time. That's because democrats are expected to gain a 60 member majority in the senate... and a huge one in the house too.
Think about - who is hurting most right now: the rich or the middle class? The answer should be obvious.
So you don't think, not even for a second, that it was the financial industry that lobbied the hell out of our politicians for relaxed rules?
You don't think that leveraging by 30 times... would eventually lead to chaos? You don't think that banks and the financial institutions did absolutely nothing wrong? That it was all a cause of legislation?
Last time I checked, legislation typically comes about because the industry lobbies politicians for new rules and regulations. And let's not forget that our entire Federal Reserve system is bought and owned by the biggest bankers in the nation.
It seems to me, that Wall Street has a little too much power on capital hill. And that greed, more than anything else, drove their decisions and got them into the mess they are in today.
If the industry didn't agree with what congress was saying, wouldn't they have lobbied against that? And somehow, i bet they didn't lobby against it at all. In fact, they got in deeper and deeper even recognizing the serious risks of it.
Anyone who paid attention to the financial markets saw this coming years ago. So why weren't the big banks and institutions prepared for it? Greed and stupidity.
As far as Mark to Market rules, I don't think they are bad at all. The only time they are bad is when big banks put too much of their worth into one group of assets that all go bad at the same time (like right now).
Lesson? Maybe some diversification would have done the trick, don't ya think?
Also, these rules had been around long before Sarbanes Oxley. One thing Sarbanes did was eliminate mark to model or mark to fantasy accounting (you know, what Enron did).
Either way, it looks like the SEC temporarily haulted Mark to Market accounting. Mainly because real estate assets are worth dick and banks would have been trully exposed for the frauds they perpetrated.
A classic case of insiders helping insiders, no doubt.
I just don't know why you don't understand that. Or why you give off the impression that in an unregulated market, worse frauds than happen today would be the norm.
I agree with everything except your last statement.
Did you know that Barack Obama signed a bill that prevented reform of Fannie and Freddie back in 2005? Had that bill passed, Fannie and Freddie would have been fixed then, and not bailed out (Causing the mess it did) now.
From a recent response...
"A bill passed the Senate Banking Committee that would create a regulator that would cause Fannie and Freddie to rid their investments in high risk paper as well as additional oversight. Too bad the bill didn't pass, because things would be a lot different today. The bill never made it to the Senate floor because the democrats blocked it.
It was Senate Bill #190 and was, incidentally, co-sponsored by Senator John McCain, blocked by Senator Chris Dodd (who received over $125,000 in campaign contributions from Fannie and Freddie), Senator Barack Obama (who received over $165,000 from Fannie and Freddie), Senator Hillary Clinton (who received over $75,000 from Fannie and Freddie). You can throw Barney Franks in there too."
I don't trust Barack because I don't trust any politician. They are all opportunists who are bought out by the elite.
Congress is the problem?
I don't think that's the case at all. I think who bears responsibility are the banks who ignored risk and started lending in this manner. I also blame the last 20 years of financial deregulation which led us right into the mess we're in today.
I agree, we have a problem of confidence. I also think FDIC reserves should be boosted (wait, isn't that Congress who does that?!?).
And Lastly, i think the president, fed chairman, and treasury secretary should go in front of the nation everyday and remind people that there is plenty of cash in the system and that nobody is going to lose their accounts.
With that said, as long as banks are holding on to bad assets and hoarding cash to anticipate future losses, then the credit markets will not function normally.
Have you seen what's happening in the commercial paper and credit default markets? It's crazy. Margin calls of well over $150 billion were made last week alone.
What happened today, was nothing more than politics. It's an election season and certain republicans want to keep their "Free market" credentials before re-election.
I can nearly guarantee that if this crisis had occurred after the elections, the bill would have made it through congress just fine.
By the time all is said and done, the taxpayer won't lose a dime.
The government will buy these assets for dirt cheap. In two to three years, when the market is better, these assets should be worth more than the government bought them for.
And if they aren't, then the bill has a clause that says "any losses will be assesed to the banks" so that taxpayers don't lose any money.
We need a big bailout to get credit moving. If it doesn't happen, we may see another great depression.
Like I said before, this bill is not finalized. Right now you are simply speculating that there would be no accountability, etc...
Hot off the press...
"The bill gave the Secretary (Paulson) much too much authority," Mr. Frank said. "We restored the notion of judicial review and accountability; we have created in our legislation...a very tough oversight board independently funded to check" the program's operation.
Now, neither you nor I know specifics. But it looks like congress is working to make sure there are some checks and balances in this bill.
The purpose of this bailout isn't to help CEO's. In fact, CEO's may take a pay cut and never be eligible for exit bonuses.
And another thing which may be in there would be for judges to have the power to adjust mortgages downwards to help people avoid foreclosure.
You believe confidence IS the entire problem?
You have to be kidding me. The problem of "confidence" stems from another problem. And that problem was the credit-orgy perpetrated by the government during the late 90's and for the past eight years.
The problem is in the bad loans made by stupid banks to people who couldn't afford the loan to begin with. The problem is not just one of the banks, but of the consumers who forgot that they should save money.
To try and minimize this entire thing into a "crisis of confidence" is just wrong.
It doesn't matter how confident you are, a bad investment is a bad investment.
Renewed confidence doesn't take away from the fact that banks are holding trillions in junk assets. And thus, it would be in the best interest of an opposing bank to not lend to the bank who has the bad assets.
How do you take away that fear? By minimizing the bad assets on various banks balance sheets, that's how.
Oh - as far as trying things over and over again - this type of bailout has never been done. The bailout in 89 was different in many ways from this one. And the problem was very, very different from the one we have today.
The bailout in the great depression was also very different, as was the cause of the great depression.
We are in a very unique circumstance, and lawmakers are looking for a unique approach to possibly fix the problem. It won't be cheap and there will be alot of political haggling, that's for sure.
The bailout package isn't final.
It won't be a final for who knows how long. So jumping to conclusions based on what the package says right now is a little premature.
The package could change significantly by the time everything is agreed upon and signed. And I wouldn't doubt that it was a different beast.
For example, a provision being argued upon is that any bank who accepts this package, must cut their executive pay. I totally agree that this should be the case.
That's just one major point of debate. There are many others - including the one you highlighted of the Treasury having no checks (Which i disagree with).
This isn't as big a deal as everyone is making it out to be.
Throughout history, this nation has crafted various "Rescue" packages to help rid banks of bad assets.
It happened during the great depression. And it also happened during the credit crunch in the 80's and early 90's.
The important thing to consider when looking at this is the alternative. As of now, a big bank goes down nearly every week. 12 banks have gone under. And let's not forget about mortgage institutions like fannie and freddie, or even countrywide.
If this isn't done, we'll continue to see more and more banks suffer the same fate. This could squeeze so muhc money out of the market, that unemployment would rocket, wages would be cut, economic activity would scale back massively, and, well, we would have another situation which could be as bad as the great depression.
I wish i was over hyping this or joking. But it's true.
I've studied finance for years now. I'm a writer and well published. And from what i've seen, if this doesn't get controlled, the repercussions are far worse than a $700 billion bailout package.
"hat do you want them to go to jail for? The games played, like mark to market tricks and related bookkeeping aren't illegal. Shorting and speculating isn't illegal. Responding to greedy people too stupid to know if it smells too good to be true it probably isn't or that there is no way to buy a house you cant afford without it biting you in the butt eventually isn't illegal. Stupidity is endemic. We cant legislate against it and can't afford to protect people from it."
MY TAKE: How about for blatant fraud? everyday they go on cnn talking about how they have "sufficient liquidity" then two days later, they go bankrupt. So, you're telling me the ceo didn't just completely lie in what he said?
So you think it was fine for banks to issue loans to people who didn't prove their income? Or how about to less than credit worthy borrowers on adjustable rate mortgages? These banks didn't think of the repercussions and consequences. And the consequence is the entire economy, on the brink of collapse. You don't think somebody should be held responsible? It's about time corporate America realized there are consequences when you have that much power.
You seem like a very responsible guy. That's great that the loan worked perfectly for you. But enough of America isn't like you, to the point where these assets are being written off.
Who's fault is it? it's the banks! they loaned the money and knew there was alot of risk. and because of their mistake, the economy is in the crapper.
Banks aren't supposed to take on risk. It was the Fed's fault for not better regulating that.
all the companies put under conservatorship saw their ceo's kicked out.
also, the ceos for freddie and fannie were even denied their "exit" package.
It's the ceos fault as much as the governments for not properly regulating. thus this is a failure of not just private industry, but the government as well.
Also, the stockholders lose their ass. it's the bondholders (you know, foreign government, pension funds across the us, etc..) that get saved.
Now imagine if every pension fund in america suddenly took a huge hit, and people weren't able to access their retirements again? what kind of mess would that cause?
Just to clarify, i think these ceo's should go to jail. that's how upset i am with them. and i am also upset that this is what has to happen. But i dont want to see a great depression. i dont want to see how it would destroy familes and lives. i dont want to see how badly the world would be screwed if it happened.
it's easy to say we shouldn't do this, but to deal with the great depression instead is far, far worse.
I don't think any of the ceos or chiefs of the company's taken over should have any benefit.
But i think the consequence of not doing some of these bailouts is far far worse than anyone can imagine.
And in fact, would be worse to the taxpayer should they opt for the route you suggest.
What would you rather see.. some greedy guys make out ok. or another great depression? Think about how a depression would impact you, and the people you love.
And then tell me what would have been better.
let me count the ways in which you are wrong...
First, the fed banks an 11% interest on that short-term AIG loan. PLus they own 79% of aig shares at a dirt cheap price. AIG will sell some assets, pay the Fed back, and then their share price will move higher.
The Fed sells their shares of AIG and make out huge.
This disaster you speak of, you have no idea just how bad it could be. It's easy for most people to say we need the disaster because they never went through the Great Depression. Ask anyone alive in those days if the world should ever see a time like that again and you'll get a resounding "no".
The US government will notgo bankrupt. you can count on that. And in five to ten years, when you look back you'll notice that tax payers may have even made money from these events.
"Never. You let the market correct itself. The Government should never interfere in the free-market unless it invades other people's rights and only to lower taxes/deregulate."
MY TAKE: What free market are you talking about? Because the one we're in today has never been free.
---
"We never would have these bailouts if the Federal Reserve wouldn't give these line of credits away. What's interesting to me, and people don't seem to talk about, analysts anyway, the Price Purchasing Power of the U.S. Dollars now. It amazes me that all the Stock Market Channels like CNBC or FBN never disclose how much our dollar is really worth. We can bet our bottom dollar, literally to, that our dollar will be worthless by Christmas (not that it's worth something these days)."
MY TAKE: Have you seen the dollars rally lately? All indications point to a strengthening dollar, not a weakening one. You see, the whole world is behind the US about a year (when it comes to the market) So we've been slowing for a year, but now so is europe, china, japan, etc... This is slamming the value of their currency and increasing the value of the dollar.
---
"So the Federal Reserve, this year alone, has printed half a trillion dollars to bailout companies. That bailout money is not through taxpayer money, earmarks, etc. it's through creating money out of thin air."
MT TAKE: The Fed didn't create money out of thin air. they had a huge nearly trillion dollar bank account. and they are using it to LOAN not CREATE money. In essence, they are adding no liquidity, meaning the funds are sterilized against any inflationary pressures. Just read up a little bit more about it and you'll see for yourself.
---
"If these companies fail it would be devastating at first but time would eventually pass and, again, the market would correct itself. I agree with Peter Schiff when he said that we need a hard-line recession to people get a grasp of what is going on: "People need to spend less, save more and produce more."
I agree, we do need a recession, but we don't need another Great Depression. But Peter Schiff also thinks we don't need any market regulation either. Last time i checked, we're in this mess because the Fed never regulated banks lending practices properly. And in fact, this whole mess is due to less regulation in the financial industry over the course of the past 20 years (think graham,leech act).
---
"This is just the beginning of the economic storm. Just think about our national debt now and our monthly budget. We're not even through September and look at what we have to spend: $85 Billion AIG, $225 Billion War on Terrorism, $10 Billion to Georgia, $10 Billion to Texas (I think that's correct) and we are going to have a new war going on with Pakistan (As Obama has promised and guaranteed us)."
MY TAKE: That $85 billion to AIG will be paid back.. at an 11% interest rate. It seems to me the government is making out like a bandit. And should AIG stock move higher, the government can sell their 79% stake and make even more money.
In the end i understand the need for what's happening today. I don't completely agree with the way the Fed has done it. But i think the repercussions (a worldwide depression that could start huge wars as foreign economies US debt all becomes worthless at once) if we don't do it are far worse.
I also happen to think that the government will end up profiting from most of these bailouts. They aren't just handing out free money. they are all on loans, and for the most part, the fed is buying assets at ridiculously low prices. these are assets that - although they won't do well - should mature at a higher value then what the fed paid to acquire them.
Point 1: He is certainly entitled to it, he did pay in. But, considering how much he is talking about how the system is broken, why should he contribute, even if it is a $24k a year contribution to debt? He's rich, he doesn't need the money, nor is he retired. My point is that social security lost its entire purpose years ago. McCain is proof and point.
Point 2: Of course it would. $24k a year (three to four taxpayers pay for his SS checks), $240k after ten years in deficits that have to be repaid (plus interest). Will he be responsible for the downfall of SS? of course not. But it's people like him that add considerably to the problem SS faces.
It's not a matter of whether he's entitled to it or not. It's a matter of whether it's responsible to tell your constituency one thing and do another. He talks about fiscal discpline and reforming SS.
But there he is, taking those checks willingly even though he doesn't need too.
It's just greed, really.
