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JoeFin
02-01-2009, 03:56 PM
Disgorge, Wall Street Fat Cats

The president’s disgust at Wall Street looters was good. But we need more. We need disgorgement.

Disgorgement is when courts force wrongdoers to repay ill-gotten gains. And I’m ill at the gains gotten by scummy executives acting all Gordon Gekko while they’re getting bailed out by us.

With the equally laconic Tim Geithner beside him, Mr. Obama called it “shameful” and “the height of irresponsibility” for Wall Street bankers to give themselves $18.4 billion worth of bonuses for last year.

They should know better, he coolly chided. But big shots — even Mr. Obama’s — seem impervious to knowing better. (Following fast on Geithner’s tax lacunae, Tom Daschle’s nomination hit a pothole when he had to pay $140,000 in back taxes he owed mostly for three years’ use of a car and a driver provided by a private equity firm.)

http://www.nytimes.com/2009/02/01/opinion/01dowd.html?_r=2&em

Ran their companies into bankruptcy, the world into financial ruin, and then voted to give theirself a Multi-$Million Dollar Bonus

Ya - I would call that Ill-gotten Gain

I know hearing about it makes me kinda sick

dp
02-01-2009, 04:16 PM
You cannot be penalized by the court for creating moral outrage. Find a law they've violated and encourage prosecution.

barts
02-01-2009, 04:25 PM
You cannot be penalized by the court for creating moral outrage. Find a law they've violated and encourage prosecution.

Actually, as officers of these companies they have a fiduciary duty to the shareholders (this is what they claim when the same companies are castigated for abusing the public trust - "we make more money this way, and our job is to maximize shareholder value.."). Paying themselves handsome bonuses while the company is losing money isn't exactly cricket...

My guess is that you're going to see some interesting proxy fights this year.

- Baart

JoeFin
02-01-2009, 04:28 PM
Actually, as officers of these companies they have a fiduciary duty to the shareholders (this is what they claim when the same companies are castigated for abusing the public trust - "we make more money this way, and our job is to maximize shareholder value.."). Paying themselves handsome bonuses while the company is losing money isn't exactly cricket...

My guess is that you're going to see some interesting proxy fights this year.

- Baart

Yep Bart said it all

They ultimately ran their companies into bankruptcy and gave theirself a Multi-$million dollar bonus for doing it

Bart -

Before the proxy fights, I think we'll see a few lawsuits for defrauding the shareholders

daryl bane
02-01-2009, 04:43 PM
Actually, I would like to get into the Guillotine business. If this crap keeps up, we might to start use them.

JoeFin
02-01-2009, 04:50 PM
Actually, I would like to get into the Guillotine business. If this crap keeps up, we might to start use them.

I'm sure a lot of folks unemployed right now feel the same way

winchman
02-01-2009, 05:28 PM
Those guys are so well insulated from the realities regular people face everyday that they have no appreciation of the harm they've done to our country.

However, I doubt the majority of those who are reasonably well off really spend much time thinking about the plight of the poor and homeless, either.

The mega-salaries plus ultra-mega-bonuses of CEOs is the what happens when capitalism runs amok. Nobody's time and effort can be worth that much. It didn't help that they were able to set up compensation rules that encouraged such insane risk-taking with other people's money.

The rank and file shareholders have little chance of changing this situation, since so much of the stock is owned by people or held in institutions run by people who aspire to be like the CEOs they'd be condemning.

Roger

oldtiffie
02-01-2009, 05:39 PM
It may not have happened if the Regulations, Regulators, Law-makers and over-seers had done their jobs. And by extension the voters etc. who were supposed to be over-seeing the over-seers etc.

I suspect that if the regulators and legislators had stepped in they'd have been killed in the rush by all those who just wanted to get their nose in the trough.

Having said that, I wonder what will be done to regulate and enforce the regulations.

People have short memories.

speedy
02-01-2009, 05:45 PM
You may as well be pissing into the wind. The arseholes who run the show are part and parcel of our problem.

Carld
02-01-2009, 06:08 PM
the ONLY thing the politicians are mad about is that the banks didn't give them some of the money. Had the banks gave the politicians some money you would not hear a word from them.

Obama is now in control of a country that is in a depression and about to disintragrate and fall into total riot. If you think the citizens of today will tollerate the depression the way they did in 1929 you have your head in the sand.

You had better have guns and bullets and be ready to kill if you want to live.

JoeFin
02-01-2009, 06:14 PM
the ONLY thing the politicians are mad about is that the banks didn't give them some of the money. Had the banks gave the politicians some money you would not hear a word from them.

Obama is now in control of a country that is in a depression and about to disintragrate and fall into total riot. If you think the citizens of today will tollerate the depression the way they did in 1929 you have your head in the sand.

You had better have guns and bullets and be ready to kill if you want to live.

and the Unemployment Rate is not due to Peak until Aug. 09

Were at 9% now by official count - but if they counted Unemployment the same way they did in 1929, we would be at 15%

Carld
02-01-2009, 06:24 PM
That's true and it may even be worse because many don't even sign up. I think the **** will hit the fan this year or maybe next year. It can't go on like this very long.

I really don't think Obama knew the real story and I really wonder if he does now. I am glad the Dems are in control now because if the USA survives this depression the Dems are doomed for a long time.

BillH
02-01-2009, 06:41 PM
There is always money to be made, down markets, I love ETF's

JoeFin
02-01-2009, 07:16 PM
I really don't think Obama knew the real story and I really wonder if he does now. I am glad the Dems are in control now because if the USA survives this depression the Dems are doomed for a long time.

I think wanting a little pay-back against the Greedy Fat Cats on Wall St. crosses all political lines.

With the exception of what few Rush LimpBalls Faithful are left, I don’t know anyone ignorant enough not to understand the Global Economic Depression we are currently experiencing is any thing but the result of 28 years of Regeanomic - Trickle Down Theories heralded by the Republican Party as the Economic Future (post manufacturing / Anti-Labor) of this country.

Nor do I believe the Greeny Weinies (Green Party Liberals) have a clue thinking this country can invigorate it’s economy on “Green Technology” alone. If they applied Tax Cuts towards projects instituted by corporations seeking cleaner processes for existing factories and technologies (such as Steel Production) they might have a clue.

But what I will never be able to forgive is the current bunch of Dems currently in the House of Legislature who have turned the Stimulus Bill into a “Catch All – Pork Barrel Funding Program”. It gives credence to the phrase “Nancy has got to go”

BTW: Here are some interesting Fun-Facts about ":Supply Side Economics" also known as Regeanomics/Trickle down Theory


Both Reagan and Bush passed significant supply-side tax cuts. Supply-side tax cuts are designed to spur the investment side of the economy under the theory that future growth will be stronger with more investment and the best way of doing this is to cut tax rates on the owners of capital. Funny thing is that Gross Private Domestic Investment grew by the following rates:

Bush: 0.8% per year
Reagan: 4.7% per year
vs.
Clinton: 8.8% per year
LBJ: 6.3% per year
and even Nixon: 4.5% per year

saltmine
02-01-2009, 07:20 PM
Winchman said it best...These "fat cats" have no idea what's going on in the "real world"...To give you an idea of how clueless they are, just look at the CEO's of the "Big Three" auto makers. They went crying to the Federal government for a "bailout" to keep themselves afloat...only a couple billion.
Aaaannnndddd, they each flew to DC on private corporate jets, and rode to the Capitol in limos....clueless.

Unfortunately, these guys will never know how the "other people" live. They will never know what it feels like to be hungry, sleep on a park bench, or wear rags..
They won't ever be sick, and not be able to afford medicine. They will never know the sick feeling of coming home from work, and finding a foreclosure notice stapled to their door....The will never know the empty feeling of being penniless....and unemployed....
Ah, I could go on and on.....
I can only hope things change. I'd love it if somehow, somebody would pull the world right out from under these clowns....

Yes, Carld..."The excrement is about to strike the rotating air circulation device"

lazlo
02-01-2009, 08:56 PM
Obama is now in control of a country that is in a depression and about to disintragrate and fall into total riot.

Oh come on Carl -- the fundamentals of our economy are sound. Anyone who thinks otherwise is just a whiner. :D

On the up-side, at Intel's quarterly report last week (where they announced profits were down 90%) Andy Bryant projected that Q1 was going to be worse than Q4 '08, and that Q2 was still going to be bleak, but that he expected the 2nd half '09 to level-out.

That's obviously a semiconductor-specific prediction, but they make predictions based on IT acquisition and upgrade cycles, which is a bellwether of overall corporate health.

Carld
02-01-2009, 08:58 PM
Yep, trickle down is a pipe dream and can't work, there's to much greed at the top. Upper management are not in the real world just as saltmine said. As long as everyone is trying to get their hands on the taxpayers money the government is in serious trouble.

Roosevelt did not get the US out of the depression with the CCC, WPA, NRA, etc., it just kept us afloat untill WWII brought the economy back with manufacturing jobs. The government making jobs with infrastructure did not in 1929 and will not in 2009 build the economy. Nor will giving money to banks and private industries. On top of that, as I understand it, the new payout is mostly PORK.

Obama does not have a solvent government as Roosevelt did to keep us afloat untill WWIII or some such event.

It's kind of scarry as to what will happen in the next few years. It sure won't be pretty.

Teenage_Machinist
02-01-2009, 09:04 PM
I suspect that what is most likely is a slow slide down that does not cause starvation to most people, then a period of depression, and then either an end will come to Obama and also to all liberals who do not lie in the Land West of Sea, or by miracle hope and an awakening will save us and bring us out ahead of time, or the Reds will come marching out of the history books and save us or harm us greatly.

What is unlikely to me is a civil war, being used as an excuse to have tons of guns. Perhaps however, the US will start to lose it's empire.

Rather than guns, we may save ourselves with... Lathes. Knowing how to use a machine and being able to fix stuff when the throwaway economy ends could be useful, and in any case you can make money with these skills while all the desk jobs are no more.

I frankly doubt that there is really going to be terror or war. The US could burn as bright as day and yet have no material harm to home and so we did in both world wars. There would be unrest and perhaps some violence, unlikely any sort of civil war.

The last and most feared possiblity is that India and Pakistan, or others, will engage us in a third and final flaring of Humanity's Bane.
\


Also, I would say that things were improving a lot before wwII, it would have taken longer, maybe.

wierdscience
02-01-2009, 09:15 PM
What everyone here is ignoring is entitlement spending,currently running %42 of the budget,soon to be %52 in the coming year.

By 2035 we were going to be bankrupted due to entitlements,that number has now been revised to 2015 or even 2012.At that point federal debt held by the public will be %110 of the GDP compared to %109 in WWII.If projected out to 2050 it rises to %550 of the GDP,of course it will never get there however.

No one mentions the fact that Rossevelt didn't have 40% of the population recieving a check from the government every month in 29'

No,you can argue supply side-vs-tax and spend all you want,but it still boils down to the same simple fact-

IT'S SPENDING STUPID!

lazlo
02-01-2009, 09:16 PM
Roosevelt did not get the US out of the depression with the CCC, WPA, NRA, etc., it just kept us afloat untill WWII brought the economy back with manufacturing jobs.

40% of Obama's Stimulus Plan is for infrastructure development. Because banks aren't lending right now, almost all local, state and Federal building projects have shut down. So the hope is to add 2 million infrastructure jobs. A lot of it is construction work, but Obama's bill also spends a great deal of money/jobs to upgrade/modernize the national power grid (which desperately needs it) as well as substantial enhancements to the US Internet backbone. The latter programs should support a great deal of white collar jobs as well.

But the stated goal is to stop the hemorrhaging of lost jobs. I don't think even the most optimistic economist believes $800 Billion is enough to fix a deeply debt-laden economy teetering on the edge of Depression.

Teenage_Machinist
02-01-2009, 09:32 PM
Don't forget its a depression, not a debt. Actually it is a debt, and that among other things contributes to a recession, but spending can help us, as can taxes to help pay for it, and most importantly tariffs to shift all manufacturing back to the USA. We dont need to KILL Sieg or all chinese, just need to prevent them from completely undercutting US manufacturing. We must also obliterate anything ending in -AFTA. I think that the people of the Land Across the Sea have not crippled themselves by tariffophobia.

Mad Scientist
02-01-2009, 09:33 PM
Some stimulating numbers from the stimulus bill.

345 million for new Agriculture Dept. computers.
15 billion for college scholarships.
1 billion to deal with census problems.
88 million to help move the Public Health Service into a new building.
870 million to combat the flu.
400 million to slow the spread of HIV.
40 million to change the way health statistics are collected.
And seeing as how the $300 tax credit last year did not have much effect now we will try a $500 credit.

Now while some of these my have some value in and of themselves just what are they going to do in terms of actual stimulation the economy?
We are being lead by a ship of fools or at least they think we are bunch of fools.:mad:

lazlo
02-01-2009, 09:33 PM
What everyone here is ignoring is entitlement spending,currently running %42 of the budget,soon to be %52 in the coming year.

Darrin, I share your concern, but let's be clear that the entitlements you're talking about are Social Security, Medicare, and Medicaid. Considering that a large portion, probably a majority, of the readers here are retired or near retirement, I don't think you're going to garner a lot of support there :)

I've read the same numbers: 42% of the 2009 Budget is going toward SS (21%), Medicare (13.3%) and Medicaid (7.3%). We could dramatically cut Medicare and Medicaid costs, without any reduction in coverage to the recipients, by cutting off the choke-hold that the Pharmaceutical and Health Care corporations have on the US Government. Killing Bush's "Medicare Reform Act", for which the only purpose was to make it illegal for Medicare to negotiate drug prices like the VA, and Private Health Care companies do, would be a big start...

That leaves Social Security. I don't think there's any tenable solution there: up to the Baby Boom generation, people relied on Social Security, so you can't just pull that rug out from under them. My generation (I'm 42) and beyond (the GenX and GenY's, ...) don't have any illusions that we'll get anything out of Social Security, so if we can just handle the wave of retirements past the Baby Boomers...

By the way, for anyone interested in the details of the 2008 Budget:

http://upload.wikimedia.org/wikipedia/en/thumb/e/ef/Fy2008spendingbycategory.png/800px-Fy2008spendingbycategory.png

Teenage_Machinist
02-01-2009, 09:37 PM
Argh. That graph is hard to read. I cannot tell how much is for war but it is TOO FREAKIN MUCH for a country our size.

Buy teh way, Carld, What do you think this weird catastrophe involving killing of other humans is? And why would not modern people tolerate what those alive in the Depression went through?

lazlo
02-01-2009, 09:49 PM
Argh. That graph is hard to read. I cannot tell how much is for war but it is TOO FREAKIN MUCH for a country our size.

The legend on the right goes in clockwise order, which is also size. So the largest expense was Social Security (Blue), the next largest was Department of Defense (16.6%), ...

However, the Bush Administration separates out the "War on Terror" and "Department of Homeland Security" as separate line items. "War on Terror" is the spending on the Iraq War (cool accounting trick! :) ), so US military spending was 16.6% (DoD) + War on Terror (5%) plus a lot of Homeland Security Budget:

The Department of Homeland Security is now the Mega Organization that used to be the National Guard, FEMA, the Coast Guard, Customs and Border Protection, Immigration, Secret Service, and the Transportation Security Administration.

2007 US Military Spending:

http://upload.wikimedia.org/wikipedia/commons/thumb/f/f1/2007_top_10_countries_by_military_expenditure_MER. svg/478px-2007_top_10_countries_by_military_expenditure_MER. svg.png

wierdscience
02-01-2009, 10:11 PM
Darrin, I share your concern, but let's be clear that the entitlements you're talking about are Social Security, Medicare, and Medicaid. Considering that a large portion, probably a majority, of the readers here are retired or near retirement, I don't think you're going to garner a lot of support there :)]

I flatly don't give a dam,it's the single biggest expense and the programs should be fazed out over time.Once the boomers are gone,that won't be the end of the problem.


I've read the same numbers: 42% of the 2009 Budget is going toward SS (21%), Medicare (13.3%) and Medicaid (7.3%). We could dramatically cut Medicare and Medicaid costs, without any reduction in coverage to the recipients, by cutting off the choke-hold that the Pharmaceutical and Health Care corporations have on the US Government. Killing Bush's "Medicare Reform Act", for which the only purpose was to make it illegal for Medicare to negotiate drug prices like the VA, and Private Health Care companies do, would be a big start...

I would remind you that any concessions made by any drug company to medicade/care will be made up by those of us not covered by the programs or our own insurance.

I would also remind you that the only objection by Dems to Bush's medicade/care plans is that he didn't spend enough.



That leaves Social Security. I don't think there's any tenable solution there: up to the Baby Boom generation, people relied on Social Security, so you can't just pull that rug out from under them. My generation (I'm 42) and beyond (the GenX and GenY's, ...) don't have any illusions that we'll get anything out of Social Security, so if we can just handle the wave of retirements past the Baby Boomers...

By the way, for anyone interested in the details of the 2008 Budget:


That's just it,we can't handle the wave.Even if we let the rest of the budget pie slide by eliminating ALL other spending we still would not be extending SS solvency much beyond 2040.

Make no mistake,SS will end,the only question is how soon and how hard.I fully expect to be supporting my parents fairly soon,all the while STILL paying payroll taxes.I'm lucky,I have two older brothers who chip in when needed.

There are many ways the system can be modified and modernized,but none will work unless they are inacted.The system needs to be fazed out and our children need to be taught that the government IS NOT responsible for their retirement.

SS cannot work forever,what we have seen in the last 70 years is completely artificial.We will be returning to the social contract parents and children have had since we lived in caves.

JoeFin
02-01-2009, 10:20 PM
Roosevelt did not get the US out of the depression with the CCC, WPA, NRA, etc., it just kept us afloat untill WWII brought the economy back with manufacturing jobs.

The US emerged from WWII as an Economic Super Power not so much because of our increased manufacturing capabilities - but because they were the only manufacturing capabilities left intact in the world. The rest of the manufacuring centers in the world were blown to smitherines.

What exactly WWII did for our economy was recuit 90% of the population to pay taxes. In 1929 roughly 10% paid income tax. By 1942, with all the able bodied men in the service of the country and many women taking factory jobs (at a reduced rate) and now paying taxes, it gave the Federal Government the latitutde to institute programs that sling shot the US Economy into High Gear

wierdscience
02-01-2009, 10:20 PM
The Department of Homeland Security is now the Mega Organization that used to be the National Guard, FEMA, the Coast Guard, Customs and Border Protection, Immigration, Secret Service, and the Transportation Security Administration.

2007 US Military Spending:

http://upload.wikimedia.org/wikipedia/commons/thumb/f/f1/2007_top_10_countries_by_military_expenditure_MER. svg/478px-2007_top_10_countries_by_military_expenditure_MER. svg.png

And if DHS didn't exist we would still be spending that much and probably more.The original idea was to combine those agencies into one agency with shared intel,assets and personel.However inter agency rivalry coupled with civil service union presssure brought that idea to a grinding halt and now we have this situation.

I also contend it's not that we are spending too much on our military,it's that others aren't spending enough on theirs.

JoeFin
02-01-2009, 10:27 PM
I've read the same numbers: 42% of the 2009 Budget is going toward SS (21%), Medicare (13.3%) and Medicaid (7.3%). We could dramatically cut Medicare and Medicaid costs, without any reduction in coverage to the recipients, by cutting off the choke-hold that the Pharmaceutical and Health Care corporations have on the US Government. Killing Bush's "Medicare Reform Act", for which the only purpose was to make it illegal for Medicare to negotiate drug prices like the VA, and Private Health Care companies do, would be a big start...

16% Admin Cost plus 20 - 30% profit margin = The American people are being Raped without so much as a kiss

America pays 2 - 3 times per capita what other countries pay for universal healthcare. You can not convince me this is any thing more then manipulation just as we saw with the price of crude oil




That leaves Social Security.

Lift the Cap on Social Security Tax and there is no problem

dp
02-01-2009, 10:31 PM
SS cannot work forever,what we have seen in the last 70 years is completely artificial.We will be returning to the social contract parents and children have had since we lived in caves.

There is an interesting quirk about SS that galls me. My first wife and I divorced in 1976 after 12 a year marriage. We both remarried. I did pretty well in life but she did not - married a loser who just died from a failed liver. She divorced him with just time to spare so she could sign up for SS coverage under my SSN, not his. It turns that that Exes can shop around their Ex's accounts and find the one that provides the best return. So she retired on my SS before I did - I'm 63, retired in 2008 and still not claiming SS. And I can't remain retired, so I won't be getting much of that SS investment I've paid into. And my current wife can apply for SS coverage under my SSN, too. Is it any wonder SS is going TU?

JoeFin
02-01-2009, 10:34 PM
Some stimulating numbers from the stimulus bill.

345 million for new Agriculture Dept. computers.
15 billion for college scholarships.
1 billion to deal with census problems.
88 million to help move the Public Health Service into a new building.
870 million to combat the flu.
400 million to slow the spread of HIV.
40 million to change the way health statistics are collected.
And seeing as how the $300 tax credit last year did not have much effect now we will try a $500 credit.

Now while some of these my have some value in and of themselves just what are they going to do in terms of actual stimulation the economy?
We are being lead by a ship of fools or at least they think we are bunch of fools.:mad:

Not 1 of those "Pet Projects equals what we paid Haliburton in 1 year for Security Contractors in Iraq.

Tell me again why we pay a "Washed Out Navy Seal 175K per year to stand next to a US Marine doing the exact same job for 15K per year

That is some stinky pork there my friend

wierdscience
02-01-2009, 11:02 PM
There is an interesting quirk about SS that galls me. My first wife and I divorced in 1976 after 12 a year marriage. We both remarried. I did pretty well in life but she did not - married a loser who just died from a failed liver. She divorced him with just time to spare so she could sign up for SS coverage under my SSN, not his. It turns that that Exes can shop around their Ex's accounts and find the one that provides the best return. So she retired on my SS before I did - I'm 63, retired in 2008 and still not claiming SS. And I can't remain retired, so I won't be getting much of that SS investment I've paid into. And my current wife can apply for SS coverage under my SSN, too. Is it any wonder SS is going TU?

Yup,and if a person is single,never married,pays into the system and dies before they collect they get buried in Potter's field unless their family has the cash for a funeral.

If your self employed like I am you get to pay the full 14.38% of your gross in payroll taxes.If your also single with no dependants forget any refund.If I got hurt and couldn't work,it would be 3-6 years and $10-18,000 in legal fees before I could get dis-ability SSI.Real fair this system huh?

Mad Scientist
02-02-2009, 12:12 AM
When SS was first started the people were promised that they would receive a small check from the government when they reached 65 to supplement their income. Of course when the government looked at the actuary tables back then you were expected to die at 62 thus all the money you paid in would never have to be paid out!

Thus SS was just a new way to tax the public without them realizing that they were being taxed. Of course now it has grown into this giant ponzi scam something that Madoff could be proud of and just like Madoff’s “investment company” it too will eventually implode.

Naturally the government will call on the tax payers to help bail it out.

oldtiffie
02-02-2009, 12:13 AM
Still lots of bitching and how its everybody else's fault coz they caused it and ipso facto they should fix it 'coz it's not your fault.

Yeah - too easy.

And just exactly what are YOU going to do about it that is both positive and constructive?

Oh.

Not your job coz its not your fault so you don't have to do anything except bitch?

Yeah - right.

Like I said - too easy.

dp
02-02-2009, 12:30 AM
Not your job coz its not your fault so you don't have to do anything except bitch?

Yeah - right.

Like I said - too easy.

Mighty broad brush, Tiffie. I'm going out of retirement to recover my losses. I earned it once, and while time is short at my age, I'll earn it again. But I'll tell you this - it's definitely not my fault what has happened.

lazlo
02-02-2009, 12:40 AM
I'm going out of retirement to recover my losses. I earned it once, and while time is short at my age, I'll earn it again.

Man, that sucks Dennis -- I'm really sorry to hear that. I'm sure there're other guys here that are in a similar situation.

winchman
02-02-2009, 01:01 AM
"And just exactly what are YOU going to do about it that is both positive and constructive?"

What exactly CAN I do that's positive and constructive?

I have always and will continue to live within my means. I worked hard, paid my bills, paid my taxes, saved and invested when I could, took care of myself, and treated others fairly. I even quit working when I had enough to sustain me, so someone else could keep their job.

Should I go on a spending spree to stimulate the economy? Looks like Uncle Sam's doing that for me.

Should I give my money away to those who got us into this mess? Uncle Sam's taking care of that, too. Big Time.

The only thing I can think of that I can do is to forego taking Social Security, because I don't really need the money. Don't hold you breath on that one. I can spend it just as stimulatively as someone else can.

Any other suggestions?

Roger

oldtiffie
02-02-2009, 01:08 AM
Originally Posted by oldtiffie
Not your job coz its not your fault so you don't have to do anything except bitch?

Yeah - right.

Like I said - too easy.


Mighty broad brush, Tiffie. I'm going out of retirement to recover my losses. I earned it once, and while time is short at my age, I'll earn it again. But I'll tell you this - it's definitely not my fault what has happened.

I know exactly how you feel Dennis. But I will give you credit as being about the only one so far that has bit the bullet and doing something about it.

I, like many of my age, have not only been burned before but learned our lesson and prepared for the worst knowing about the cyclic nature of these things. We did the "squirrel trick" and put as much as we could away in the "good times" and started ~40 years ago. It has worked out pretty well. Credit and debt are non-issues here as we eliminated both a long time ago. Our income is well diversified and very recession-proof. We can get by for about two to three years at current expenditure rates with no income at all if needs be although the probability of that happening is pretty remote.

We paid what some would see as very high prices for excellent financial advice. I never saw it as a "cost" but as (a good or bad) "investment" over time. It has been a great investment as we re-couped the "cost" many times over.

My aim was about the whinge-ing and bitching about "fat cats" etc.

So far as I can see there's a lot of puffing and blowing but little positive action to implement a "Plan B" (if there IS a "Plan B").

I can not see any retrospective legislation being enacted at all let alone any time soon. There are far too many that have power and personal and vested interests in seeing that no in-depth enquiries are made or people pursued or legislative action taken confident that it will all blow over in the fullness of time - which will happen.

dp
02-02-2009, 01:15 AM
Man, that sucks Dennis -- I'm really sorry to hear that. I'm sure there're other guys here that are in a similar situation.

Yep - I watched as nearly 1/4 million dollars vaporized in a matter of weeks. Can't imagine what this has done to Bill Gates.

dp
02-02-2009, 01:18 AM
I, like many of my age, have not only been burned before but learned our lesson and prepared for the worst knowing about the cyclic nature of these things. We did the "squirrel trick" and put as much as we could away in the "good times" and started ~40 years ago. It has worked out pretty well. Credit and debt are non-issues here as we eliminated both a long time ago. Our income is well diversified and very recession-proof.

I sure thought I was well diversified, too, but this was a broad collapse that sucked it all down.


So far as I can see there's a lot of puffing and blowing but little positive action to implement a "Plan B" (if there IS a "Plan B").

Plan B for many young people who haven't been through a down economy, and for people who have not prepared for the winter of their life is for Plan A to succeed. That's not happening any more.

chief
02-02-2009, 04:44 AM
Obama is socialist buffoon and an econmomic illiterate. He hired the same people who caused much of this mess. He allowed the government to hand out the money without pre-conditions. Don't blame Wall Street for spending it the way they saw it. He has not produced a stimulus bill. What he has doing is attempting to pay off his crimminal friends and grab more government control of the US. His buddies are tax cheats but he expects the little guy to pay on. He isn't giving the taxpayer anything except debt.
The only feast obama will provide is the bitter fruit from his anus.
You can't spend your way out of debt.

JoeFin
02-02-2009, 06:36 AM
An interesting spin on Free Trade and Globalization

People everywhere are done with it. They realize it does nothing for anyone except the corporatists.

This is by no means a comprehensive list, just the most recent protests, from a quick search. I know there are more, but you get the picture...

Russia 1/31
http://www.youtube.com/watch?v=JFZgUp-VXBM

France 1/30
http://www.youtube.com/watch?v=TLTOrgHvO7Q

http://www.youtube.com/watch?v=Yi3Q5e7-eh8

Latvia 2/1
http://www.youtube.com/watch?v=XKeWBO3_uCc

Lithuania 1/16
http://www.youtube.com/watch?v=uWMxj03mOV4

Iceland 1/26
http://www.youtube.com/watch?v=MK0d0Nno4zw

Bulgaria 1/14
http://www.youtube.com/watch?v=SMR1zu2G5hw

Colombia
http://www.youtube.com/watch?v=qxfKNIHa48M

Mexico 1/31
http://www.youtube.com/watch?v=dRbaq5PcJ48

Switzerland 1/31
http://www.youtube.com/watch?v=lZHHXPRrAAo

China 1/2
http://www.youtube.com/watch?v=DEfrjNrs3oc

Greece, of course - as we already know

UK 1/31
http://www.youtube.com/watch?v=-EabWX3_mdA

http://www.youtube.com/watch?v=vaD7GlBegG0


It isn't working anywhere. And everybody knows it. In fact it's making people poorer everywhere, they know that too. Everybody is fed up with their jobs being taken by cheap labor, or their wages reduced, which is happening all over.

Your Old Dog
02-02-2009, 08:04 AM
It isn't working anywhere. And everybody knows it. In fact it's making people poorer everywhere, they know that too. Everybody is fed up with their jobs being taken by cheap labor, or their wages reduced, which is happening all over.

All it was ever able to do was spread the wealth in the little guys pocket around the globe and leaving lots of wealth for those who owned companies. Flooding our shores with cheap foreign products and expecting people to ignore the cheaper product in favor of the more expensive one doesn't fit with human nature. It just meant that the Walmarts of the world would be able to buy cheaper product and ignore better made product.



........... I cannot tell how much is for war but it is TOO FREAKIN MUCH for a country our size.

Buy teh way, Carld, What do you think this weird catastrophe involving killing of other humans is? And why would not modern people tolerate what those alive in the Depression went through?

I don't have a problem with war even though I know it's expensive. I understand it's how some problems have to get solved. I asked the bully in school not to pound me in the nose but he didn't care to listen. That was only "my" nose, but now that I got a family to look after I'm not up to asking the bully for anything, I'm in dictating mode. And I'll dictate it right up his arse though I wish I didn't have to use million dollar missiles on one raghead to do it. You can't always solve someone elses greed, ego or desire for power with an olive branch. Sometimes you need an Oak.

Seastar
02-02-2009, 09:32 AM
There is somthing we can do right now-----------------
Contact all the Democrat and Republican Senators and demand that they STOP this insane giveaway bill that was passed by the house.
We need some government action but this crap bill is not anywhere close.

Get on the phones and make your voices heard ----------------

Carld
02-02-2009, 01:16 PM
I have been off line because of power outage.

http://i82.photobucket.com/albums/j276/yeathatshim/Homeandshop.jpg

So, if 40% is for infrastructure then just drop the remaining 60% of the bill.

Teenage machinist, Catastrophe, that remains to be seen. The people of 1929 were more willing to accept their condition and work with others. the ME society of today won't tollerate their condition as well and that is where violence will begin. I don't have a clue what will pull us out of this mess but I know it's not just printing more money that is not backed by anything but a promise by the government. That is a reality, the USA does not back their money with anything but a promise. Our money is a promisary note and nothing more. Do you really think the world market will tollerate that long. Look at the inflation rate of countries in Africa that print worthless money.

The world market is what destroyed the American industry. When we opened our market to inport/export and had to compete with the cheap labor/overhead of other countries it was the beginning of our doom. The industry quickly moved to those countries with cheap labor/overhead. It's finally bitting them and us in the ass. I firmly believe it was driven by the profitiers of industry as no sane person would give up our industry and jobs. The profitiers are the problem and they will not go away easily. Greed is at the heart of all the money decisions.

Obama is being led down the primrose path to failure. I don't know anyone that has spent themselves out of debt and governments are the same. It only leads to failure and deeper debt.

As a speculation, could it be that the Democrates knew of the doom and decided to put a black man in office to lay the blame on him. The ones in command know of the dire straights we are in. They are not dumb and don't want to take blame. Have they found a scape goat?? I hope that is not the way this will play out. Obama is in serious trouble and I hope he knows it.

lazlo
02-02-2009, 01:49 PM
Obama is socialist buffoon and an econmomic illiterate. He hired the same people who caused much of this mess. He allowed the government to hand out the money without pre-conditions. Don't blame Wall Street for spending it the way they saw it.

Uh, Obama hasn't handed out a dime (yet). Wall Street has been abusing the $750 Billion TARP Bill, which was Bush's hand-out, not Obama's.

lazlo
02-02-2009, 01:55 PM
could it be that the Democrates knew of the doom and decided to put a black man in office to lay the blame on him.

Oh, Dear God. How are you guys coming up with this crap?!


The Republican National Convention just chose Michael Steele, an African American, as their chairman. Is that some kind of racist plot to put a black man in office to lay the blame on him??

derekm
02-02-2009, 01:57 PM
Capitalism is a wealth amplifier

However, if anyone here has built an amplifier you will know that if you have high gain and too little negative feedback you get out of control oscillations...

we need to increase the negative feedback and reduce the gain.

change the limited liability laws - 5 years rolling liability

speedy
02-03-2009, 03:54 PM
An Email from my son .
=============================




This is how it work's!!!


MONKEY BUSINESS

Once upon a time a man appeared in a village and announced to the villagers that he would buy monkeys for $10 each.

The villagers, knowing there were many monkeys, went to the forest and started catching them. The man bought thousands at $10 and, as supply started to diminish, the villagers stop ped their effort.
He then announced that he would buy monkeys at $20 each. This renewed the villagers efforts and they started catching monkeys again.
Soon the supply diminished and people started going back to their farms. The offer increased to $25 each and the supply of monkeys became so scarce it was an effort to even find a monkey, let alone catch it!

The man now announced that he would buy monkeys at $50 each! However, since he had to go to the city on some business, his assistant would buy on his behalf.
The assistant told the villagers, "Look at all these monkeys in the big cage that my boss has already collected. I will sell them to you at $35 and when my boss returns, you can sell them to him for $50."
The villagers rounded up all their savings and bought all the monkeys for 700 billion dollars.
They never saw the man or his assistant again, only lot s and lots of monkeys!

Now you have a better understanding of how the
WALL STREET BAILOUT PLAN WORKS !!!
It doesn't get much clearer than this........




--------------------------------------------------------------------------------

lazlo
02-03-2009, 04:08 PM
Now you have a better understanding of how the WALL STREET BAILOUT PLAN WORKS !!!

LOL! That's classic Ken! :)

I posted this on a previous thread: from Sunday's Austin Statesman:

http://i164.photobucket.com/albums/u15/rtgeorge_album/BenSargent.gif

oldtiffie
02-03-2009, 05:42 PM
Seems to me that its all about helping yourself - in the worst possible way.

Sure the Wall Street "fat cats" et al were bad enough but nobody seemed to want the music to stop because they had or wanted to get their noses in the trough to get money they hadn't earned and only "deserved" because "everybody else" was doing it and it was therefore their "right" (and "bounden duty"??) to get into the swill with the other pigs as well.

Hmmm - "morals" and "ethics" seemed to have taken an enforced "holiday" - as did "caution" and common sense - as is still the case as all the self-justification and self-righteousness seems to indicate. Fair bit of self-deception as well.

Nobody made people take out those sub-prime loans etc. I suspect that many would have torn the banks down if they couldn't get in for their licks.

Spending other people's money and using it to finance "hidden or non-working equity" as well as margin loans was no worse than what the banks etc. did and without the participation of the "consumer" the banks and "Wall Street Fat Cats" may not have had the chance to do as they did.

That being the case the "consumer" (aka "Joe Public") collectively is in a collective problem largely if not pretty well of their own making.

I don't recall any of the wise-ar$es begging the Government to step it and save those other (always "others" - never "me") from themselves at the time.

There are sins of omission as well as sins of commission - in other words, its often just as bad to have done nothing you should have as it is to have done something when you should not have.

If the same smart-ar$es had "seen it coming", and if they did not or would not do anything to stop it, what then did they do so save themselves - or did they just sit on their ar$es and cry for someone else to do it for them - again?

Speedie made his point very well with his "Parable".

I suspect that his Villagers were both in Melanesia, Polynesia - and Main Street as Wall Street had shown them what was available and convinced them that it was their right and theirs for the taking:
http://en.wikipedia.org/wiki/Cargo_Cult

lazlo
02-03-2009, 06:59 PM
Nobody made people take out those sub-prime loans etc.

There's been a total of $500 Million in Sub-prime defaults. The World's economy didn't just collapse because Countrywide had loan officers driving around in mini-vans offering half million dollar mortgages to homeless people...

Rustybolt
02-03-2009, 07:00 PM
Teenage machinist. Congress and the president are constitutionally obligated to defend the country. You may argue what "defend" means, but they are obligated none the less. One of the very worse things to do in the midst of a recession is to raise taxes. The other is to engage in pork.Which is what the so-called 'stimulous package' is. You want to jump start the economy? Lower the corporate income tax to 5%. The idea is to promote the creation of wealth, not discourage it.
As far as shutting down all the aftas and raising tarrifs, that's what FDR did and lengthened the depression till lend-lease. Sorry. That horse is never going back in the barn.

Rustybolt
02-03-2009, 07:04 PM
Nobody made people take out those sub-prime loans etc.


Uh. Actually congress pressured banks into making low interest loans through the "community redevelopement act" .This one rests soley in the lap of congress.

lazlo
02-03-2009, 07:04 PM
One of the very worse things to do in the midst of a recession is to raise taxes. The other is to engage in pork.Which is what the so-called 'stimulous package' is.

Obama's stimulus package has WAY less pork than Bush's TARP stimulus. There was $250 Billion out of $750 Billion in Pork in Bush's bill.

lazlo
02-03-2009, 07:09 PM
Actually congress pressured banks into making low interest loans through the "community redevelopement act" .This one rests soley in the lap of congress.

That's B.S. Congress required that banks lend 5% of their total mortgage portfolio to low-income customers. Countrywide started issuing NINJA loans (no income, no job -- way outside the Federal mandate) in 2000, and by 2002, over 45% of Countrywide's mortgage portfolio was NINJA loans.

http://en.wikipedia.org/wiki/Community_Reinvestment_Act
The Community Reinvestment Act does not require institutions to make high-risk loans that may bring losses to the institution; instead it emphasizes that an institution's CRA activities should be undertaken in a safe and sound manner.[2][10] There are no specific penalties for non-compliance with the CRA

They were floating trash loans because they would immediately package them up as Mortgage Backed Securities, and float them on Wall Street as AAA-rated investment bonds. So it was zero risk to Countrywide and the other mortgage brokers.

http://i164.photobucket.com/albums/u15/rtgeorge_album/rsg1a.gif
http://i164.photobucket.com/albums/u15/rtgeorge_album/rsg2a.gif
http://i164.photobucket.com/albums/u15/rtgeorge_album/rsg3a.gif
http://i164.photobucket.com/albums/u15/rtgeorge_album/rsg4a.gif

wierdscience
02-03-2009, 08:31 PM
We would be closer to having a balanced budget this year,if Obama's appointee wish list would pay their taxes:D

Where are the IRS auditors when we need them?

lazlo
02-03-2009, 08:37 PM
We would be closer to having a balanced budget this year,if Obama's appointee wish list would pay their taxes:D

Agreed Darrin -- that was hilarious and bizarre. You'd think that the Senate majority leader would want to be squeaky clean. What was he thinking??

On a side note, I notice that Obama's stimulus package is up to $900 Billion now. Let the pork barrel begin... :rolleyes:

wierdscience
02-03-2009, 09:03 PM
Agreed Darrin -- that was hilarious and bizarre. You'd think that the Senate majority leader would want to be squeaky clean. What was he thinking??

On a side note, I notice that Obama's stimulus package is up to $900 Billion now. Let the pork barrel begin... :rolleyes:

It's quickly going down in flames in the polls too...bet it still passes though.

It's funny as hell,the dems have been selling themselves as squeeky clean halo's over head for the last eight years and now we have Rangle,Geithner,Daschle and the list goes on.Obama had better stick to his promises and clean up his own house first,otherwise people will get buyer's remorse fairly quick.Personally I think he should call for an IRS audit on all members of the Congress and Senate.

It also galls me that these clowns who "forgot" to pay their taxes look like they won't get tapped for penalties and intrest like YOU AND I would if we "forgot" to pay.:mad:

Was it $260m for contraceptives in the first run? I'd be willing to bet we could load up a flight of B-52s and carpet bomb our major cities with rubbers and pills for less:D

BTW,did you get a reply PM from me???

Teenage_Machinist
02-03-2009, 09:08 PM
Roosevelt pretty much had us on the way to a better economy. It would not have happened as fast without the war. But the entire New Deal did a lot of help. THis is a myth that has been pushed throuhg the :mad: :rolleyes: "liberal media" for a long time.

dhammer
02-03-2009, 09:33 PM
There's been a total of $500 Million in Sub-prime defaults. The World's economy didn't just collapse because Countrywide had loan officers driving around in mini-vans offering half million dollar mortgages to homeless people...

It is amazing that people still buy into the BS that making loans to poor people somehow caused the collapse of the world's entire financial system.

From what I have read the foreclosure rate on homes varied inversely with income..that is-the higher your income the more likely you were to default.

The lending institutions that were responsible for most of the defaults were the very institutions that were NOT regulated under the CRA.

google CRA and default and see for yourself..see Business Weeks commentary

wierdscience
02-03-2009, 10:07 PM
It is amazing that people still buy into the BS that making loans to poor people somehow caused the collapse of the world's entire financial system.

From what I have read the foreclosure rate on homes varied inversely with income..that is-the higher your income the more likely you were to default.

The lending institutions that were responsible for most of the defaults were the very institutions that were NOT regulated under the CRA.

google CRA and default and see for yourself..see Business Weeks commentary

It wasn't just making loans to poor people,it was making loans to anybody poor or otherwise without any collateral.

Here the banks would loan out up to $500,000 to build a house with only the house as collateral,nothing down,not even a credit check.

Enter the "now" generation.They didn't pay their dues coming up,everything was handed to them by their parents.They got out of college,making good money off the bat and had to have the $500,000 house,the two $40,000+ cars,the $30,000 boat and another $30,000 in credit card debt.

The banks lent the money knowing if/when things went south the taxpayers would back them up which we are now.

Fannie and Freddie wern't responsible for the entire fiasco,but they were the flagship of the design.CEO's being paid a comission for all the bad apaper they could write.

In the end we can blame congress,the prez and the banks,but an equal share goes to the general public who at the end of the day is every bit as greedy and foolish.

oldtiffie
02-03-2009, 10:15 PM
Originally Posted by oldtiffie
Nobody made people take out those sub-prime loans etc.


There's been a total of $500 Million in Sub-prime defaults. The World's economy didn't just collapse because Countrywide had loan officers driving around in mini-vans offering half million dollar mortgages to homeless people...

First of all, that is selective quoting of what I said in that it is out of context. If you don't realise it, than go back and read all of what I said.

If you don't know - well, that's another matter.

The mortgagees in those sub-prime loans, perhaps not unreasonably, wanted "something better" with the least perceived risk to themselves. As was their right. But people should be accountable for their actions. That they were "conned" is not a defence as a contract presumes that both/all parties to it made informed decisions and are bound by it to honour their obligations under that contract.

While the "Sub-Prime" component of the economy did not of itself cause the collapse, it was the unwinding of it that caused the economy to get frayed at the edges and unravel and the panic to start with the results as they were, as they are and as they are yet to be. They were the snow-ball that became the avalanche that it did and carried all sundry with it.

Too many thought that irrespective of what happened the asset that they were mortgagee for would just keep on appreciating and that all the costs would be in the "profit" they made when they sold it to the next "sucker" who wanted to get on the gravy train. And so on it went until it inevitably collapsed - as it had to.

"Play money" is just that. If you must play, you are taking your chances and have to accept the outcome - or get more from the "Casino" - until you are "wrung out and hung out to dry".

People should never gamble with anything (money, assets etc.) they you cannot afford to lose. "Betting" on "dead-certainties" is potentially the worst of all.

The "sub-prime", while not the entire problem, is indicative of the underlying problem over-all.

As said in a quote I saw, it seems that there was a lot of spending money that people didn't have, to buy stuff they didn't need to impress people they might not like.

"Having" something is not necessarily owning it.

Having a credit or loss is only a "paper" assessment until it is liquidated or realised to net cash.

Something is only worth the net result after someone else has bought it at price that is acceptable to them and after all associated costs and debts are paid.

And there are some huge debts to be paid and paid they must be unless a "borrower" defaults - just as those "sub-Prime" mortgagees - and Russia - did.

I can't see that talking about it here is doing anything about it here - or any place else.

barts
02-03-2009, 11:32 PM
Did you ever notice that Republicans are only in favor of fiscal discipline if their party isn't deciding the spending priorities? If we're buying bombs, invading other countries, or given tax cuts to the wealthy, they're all for it, running up the deficit ruinously in the process. As soon as we're trying to spend money to shore the economy, keep people in their houses, etc, it's back to fiscal discipline - because they and their fat-cat base aren't swilling at the trough.

- Bart

J Tiers
02-04-2009, 12:07 AM
The banks made the silly loans because there was more money LOOKING for loans to buy than there were loans.

Just like oil, the price went up as the supply went down (whether the supply issue was real in either case is another issue).

Even trash paper. which EVERYONE IN THE PIPELINE KNEW was trash paper. was worth enough wrapped-up in pretty paper that the mortgage brokers got their marching orders to get out there and write more of it, any way they can, no question asked.

Then, the CDS deal started, and ended up in a situation where people who were not involved at all were "owed" staggering amounts of cash when relatively minor banks failed. All because they paid an "insurance" fee against that institution failing, perhaps as little as $40 million against an insured amount of nearly a billion.... if the place went broke, the "insurer" owed the billion, after taking in only the $40 million.

They in turn were owed that hypothetical billion by someone else, who didn't have the money either, they had been paid only $30 million, not even 40.

A billion here a billion there, before you know it you're talking real money, "backed" by a mere hundred million or so of "actual money".

It is EXACTLY the same situation as a bank which has insufficient reserves..... a "run" on the bank" can wipe it out, and did. One failed institution or defaulted loan theoretically could have triggered several times more total payout than the loss that was actually incurred in the original default. It is an "automatic run on the bank".

Naturally, that can cause a number of other banks to fail, each triggering many times the payout of insurance vs actual losses.

It is perfectly possible that there is not ONE bank presently actually solvent. They may EVERY ONE OF THEM be as broke as a homeless drunk. But you will not be told that until in 30 years, a book comes out of the "untold story of how the banks all went broke and nobody knew it.

Anyway...the bozos in charge "didn't think it was loaded", "didn't think that could happen", etc, etc, etc.

If the oh-so d##n smug tiffster wants to blame that on the ordinary folks around the nation, who hadn't a clue it was going on, well, so be it. He'll get a "TIFF" all right, and I don't mean "tax increment financing".

And, it is of interest that the means to STOP much of that activity in its tracks WAS IN PLACE AS OF THE MIDDLE 1990s...... BUT ALAN GREENSPAN WOULD NOT USE THAT AUTHORITY, WHICH CONGRESS HAD GRANTED.

As for "Boomers"...... the majority of them are just like you...... Better get used to the image in the mirror. They worked like you do, saved as much or as little as you have, and generally expected the same as you expect. If you were born between 1944 and 1962 or so, you IS one.....

There are about as many in debt or millionaires as there are among the 30-40 year olds, proportionately. There probably are more boomers with significant invested savings than in prior generations, probably more than among younger folks as well..... The drag on the social security system may not be quite as large as the pundits predict..... and boomers already work a bit longer than prior gens before getting into the SS trough.

There are a lot OF them, but that's about it..... I wouldn't advise blaming it all on the "boomers", as if they were an alien species.

And, when the economy is booming, cash is floating around, and a few extra hands out are never noticed. In a downturn, it becomes much more obvious. China is finding that out right now...........

Speaking of china.... that's a classic bait-and-switch... but we'll have to take that another time.

lazlo
02-04-2009, 12:22 AM
The "sub-prime", while not the entire problem, is indicative of the underlying problem over-all.

As said in a quote I saw, it seems that there was a lot of spending money that people didn't have, to buy stuff they didn't need to impress people they might not like.

So you're saying Americans defaulting on $500 million worth of sub-prime mortgages is what caused the $100 Trillion collapse of the entire world's economy?

J Tiers
02-04-2009, 12:28 AM
So you're saying Americans defaulting on $500 million worth of sub-prime mortgages is what caused the $100 Trillion collapse of the entire world's economy?

Apparently he is....

I vote he's wrong on that one.........

It may have triggered the start of a chain of CDS failures...... THAT I can agree with. But it's hardly the same thing.

lazlo
02-04-2009, 12:28 AM
It may have triggered the start of a chain of CDS failures...... THAT I can agree with. But it's hardly the same thing.

Yep, agree on both Jerry. The sub-prime mortgages triggered the world-wide Ponzi scheme where the international investment banks were selling each other the same junk bonds (CDO's and CMO's) "backed" by unregulated Credit Default Swaps with insufficient funds...

The investment banks built a house of cards...

oldtiffie
02-04-2009, 12:34 AM
I've posted the following on another current thread but its as relevant here as there:



Look,
I can sort of understand the griping, but it was YOUR politicians and Legislators/Lawmakers who were voted in by YOU to look after YOUR interests that both let this situation develop and apparently did little or nothing to correct the situation and the Law and/or the enforcement of any law/s.

If the "fat cats" did nothing that was illegal or that they could be held accountable or liable for under the laws as they are or stood, then they are guilty of nothing and will and perhaps should retain what they acquired and as many object to.

"Moral" and "Ethical" issues are for the moralisers, Philosophers, Ethicists and Clerics, all of whom have been conspicuous by their absence and lack of advice, initiative and leadership on these moral and ethical and now social issues.

Its going to be a long hard road back - if we ever get back to where we were.

But do we need to or really want to?

Its no use blaming Allan Greenspan or anyone else. I can't see him or his peers being held accountable. He was responsible to the Government and they - on your behalf - did not and seemingly will not - for what-ever reasons - take any "action" so griping is a waste of time.

I thought it was dangerous getting between a politician and a bag of - quite legal - "Government" money that they can "allocate" - but getting between a "good deal" and a "sucker" seems to be more of a risk.

But if those "investors" ("suckers"??) were looking for expecting those that were elected or appointed to look after their (electors) best interests and who (supposedly?) had the skill-sets to see these things in advance and warn the constituents and/or take necessary proactive or punitive legal actions did not then surely there was at least incompetence or lack of due care there.

And do you really think that they will look after your best interests now when/if they perceived that doing so may imperil their best interests?

Come on.

This topic seemed to be avoided like the Plague during and since the recent election campaign - during which this problem just bubbled away and got almost no attention at all.

barts
02-04-2009, 12:57 AM
Since we're talking about Fat Cats (http://www.nytimes.com/2009/02/04/business/04pay.html?_r=1&hp):

WASHINGTON — The Obama administration is expected to impose a cap of $500,000 for top executives at companies that receive large amounts of bailout money, according to people familiar with the plan.

- Bart

oldtiffie
02-04-2009, 01:14 AM
Thanks Bart.

I read that item as I get the NYT on the net.

Lots of ifs and buts and good intent, but let's see how it eventuates - let's see what really eventually happens.

If any of those "Fat Cat" candidates for future limits on pay etc. "walks", the cure may well be worse than the disease, or to continue the analogy: "The operation was a success, but the patient went into terminal decline" (para-phrased).

By any measure, the track record of/and survival skills of those "Fat Cats" and their cohorts is very impressive indeed.

It will be interesting to see how (and if) they are "nailed" (down). It may well be like pinning jello to the wall or herding cats - or both.

chief
02-04-2009, 03:51 AM
Lazlo, get your facts straight. Sorry, but voting for it is the same as handing it out. The governemt didn't tell them how to spend it so they were free to do whatever they wanted to with the mioney. Obama is the the paragon of economic illiteracy. You still haven't enlightened us with how spending your way out of debt works.



http://www.usatoday.com/news/washington/legislative/senate/2008-10-01-roll-call_N.htm?loc=interstitialskip

gmatov
02-04-2009, 04:35 AM
Chief,

That is the funniest posyt I have ever read.

"Obama is socialist buffoon and an economic illiterate. He hired the same people who caused much of this mess. He allowed the government to hand out the money without pre-conditions."

Do you pay ANY attention to politics? The man has been President of these United States for exactly 2 weeks. His Admin has not spent ANY monies, yet.
You remember, the BUSH Admin gave Paulsen 700 BILLION bucks with no questions asked, and finally the DEM Congress defied Bush and Paulsen and said they would only release HALF of the money, show us some progress and then come back to get the rest released.

Under the Democratic Congress, Paulsen did NOT get the rest of the money, nor under Obama, and the still Democratic controlled Congress, has the second 350 BILLION bucks been given away.

Sen. Claire McCaskill of Missouri and Bernie Sanders had been trying to get a rule that Banks and possibly investment houses turned Bank limit their top execs pay to 400, and now, maybe, 500 thou per year. If they take handouts, that is all that the officers can be paid, in any fashion.

I really don't know about you, maybe you are so rich that you don't like this idea. I do. I know, were I still working, and I was offered a 1/2 mill per year to run a top 10 company, I'd probably jump at it. And I wouldn't need a 40 million buck "signing bonus" to hire on.

DP,

You probably should have gotten out instead of watching for 2 weeks. Not to blame you. I could have saved a few bucks my own self, had I traded my fund mix to Money Market from equities. I didn't, so I am down a bunch, on paper. Fortunately, I am not dependent on income from those funds.

SS, I would like to be here 50 years from now to ask some of you younkers, like the 42 year old who doesn't think he will ever get any benefit. I would bet you, if I could ever be able to settle up, that you WILL get SS benefits. They may, in the long run, be the greatest part OF your retirement.

Case in point. My own mother, a coal miner's widow. Very small survivor pension, Black Lung Pension, SS. Over the 15 or so years of her remaining life, both pensions stayed the same, SS had COLA, and when she died, she had almost enough to live on. I helped, but were it not for SS, I could not have afforded to fund her and my own family.

You will NOT see the US going back to a 100 years ago where the prior generation supports the retired generation, PERSONALLY, as in the old folks move in with the kids, and the kids support them. We put people in "homes" to pretend we are " taking care" of them. All their income goes to the home, and then some. You go see them once a week, or so.

Mad,

When SS was enacted, you might THINK it was a SMALL check, but, do you know, a SMALL check, back then, might be 35 bucks, and 35 bucks was pretty damned big, as far as living expense. That was 1937, when the first check was paid out. My own father retired as a coal miner in 1949, at 100 per month, soon reduced to 50 per month. His SS was 28 bucks a month, but 28 bucks bought you some food, energy, whatever.

SS was never calculated to begin when people started to die. The full retirement age was to match the age that Chancellor Otto von Bismark, of Germany, determined that all Germans should be able to stop working if they wanted to. It took us 60 more years to come to the conclusion that people should not have to work till they died. That really pissed off a lot of businesses.

Contrary to opinion, here, people have always, or at least for the last 1,000 years or so, lived to a ripe old age, as individuals. Mortality rates make the average age come way down. Revolutionary War probably drooped the age 5 years, because of the number that died in prime years. Civil War, even more. Influenza outbreak, ditto, WWI, WWII, Korea, Viet Nam, of course.

CaldD,
"As a speculation, could it be that the Democrates knew of the doom and decided to put a black man in office to lay the blame on him. The ones in command know of the dire straights we are in. They are not dumb and don't want to take blame. Have they found a scape goat?? I hope that is not the way this will play out. Obama is in serious trouble and I hope he knows it."

That is asinine. They pushed a half black to the Presidency to...what? Show that even a Black can't solve our problems?

Did you hear the man admit on TV that "I screwed up." with the Daschle nomination? Did you hear ANY mention from GW over 8 years that he made even ONE mistake in those 8 years? I think I have seen him say "I can't think of a single mistake I may have made."

Rove, from what I have seen on TV, who said, yesterday, he still has protection from "Executive Privilege", though his patron is no longer the Executive, seems to have had a visit from the DOJ today who seem to have convinced him that he does NOT have residual "executive privilege".

This might open a very big can of worms. We may have a very interesting few weeks or months ahead of us.

Lazlo,

I should have gone a post or two farther. You nuked the black thing, with the new rep Chair, and that Obama hasn't spent a cent.

Rustybolt,

You are as full of it as Newt Gingrich or Ronnie Regan.

Creating wealth is not our problem. We have plenty of wealth. Our problem is that it is concentrated in too few hands. Forbes 400 holds 89% or whatever of the wealth of a country of 300 million, yes, I would say it is too concentrated.

You could lower the corporate income tax to zero. In fact, see GE, many companies have NEGATIVE income tax, ie, they GET refunds, in the billions, FROM you and me. They, and possibly YOU, pay NO income tax, and STILL get a check from the USG.

You MAY, but you sure as hell argue the point as though you are one of them who get more FROM the Gov than you give.

Posts here seem like they should be on the "Professional Machinists" site, you know, Don's site. This is Home/Shop, not for profit. You ain't making money, so you ain't jacking up your taxes, so why in the hell the bitching?

Why can't you raise taxes? You make 50 thou, OK, might be a bad idea to raise your taxes. Execs make 27 million, why would it be so bad to raise their tax rate? We once upon a time had a 90% marginal tax rate, and those few who paid that rate STILL made more money and paid whatever of that tax rate they could not squeak out of.

History from at least the Reagan era has not proven true that lowering tax rates has not raised the tax income of the country except for any year that had a tax forgiveness for repatriated overseas earnings. After that, tax income fell, else Reagan, Bush, BushII would have had lots of money to spend without borrowing to keep up their rate of spending.

I would prefer a budget that adjusted the tax rates to pay for this year's expenses, than such as a drunken National Guardsman's idea of spending, which was borrow and spend. Reagan was Borrow and Spend. Bush I was Borrow and Spend. Bush II was Borrow and Spend. That is 20 of the last 28 years.
Clinton, that dirty bastard, insisted that we TAX and spend. If we can't afford it, we shouldn't spend it. The Debt, so far as I can see, fell a bit. The deficit was eliminated. Your GOD came in with a surplus, which he immediately wiped out.

YOU guys bitch that we got a deficit that you still want. You LIKED the money that went to you and your clients.

Now that credit is tight, and you have to pay it back, at 0 to 1/4% interest, oh, sorry, YOU might have to pay 10 to 30% on your credit lines, I forgot, we give the banks 350 BILLION bucks, and the interest is STILL 25 to 30%.

Jaysus, I haven't even read all the posts in this thread. I got so pissed at the points I mentioned. Surely will have more to say tomorrow.

Cheers,

George

gmatov
02-04-2009, 04:49 AM
Oldtiffie,

"Its no use blaming Allan Greenspan or anyone else. I can't see him or his peers being held accountable. He was responsible to the Government and they - on your behalf - did not and seemingly will not - for what-ever reasons - take any "action" so griping is a waste of time."

Absolutely NOT.The Chairman of the Fed is not subordinate to the USG. I do not know if it is possible for the USG to remove him. The Pres nominates him, the Congress approves, he is totally free of Government control. I do not know if even the Presidents of the other Banks in the system can oust him. I would assume they CAN, but I would not hold my breath on them doing so.

Our Federal Reserve Bank has gone from about 700 BILLION before the big bailout, to something like 3 TRILLION in assets since the troubles started. HOW did they get so much bigger?

How did 12 PRIVATE banks grow so much when the US is in economic turmoil?

All the other banks seem to be hurting. The FED GROWS? The FED has, so far as I can tell, guaranteed 7.4 TRILLION bucks in "Rescue moneys". They don't have that kind of money, nor does the USG.

I have said, and I will repeat, we are in for a world of hurtin'.

Cheers,

George

dhammer
02-04-2009, 06:24 AM
The banks made the silly loans because there was more money LOOKING for loans to buy than there were loans.

The above sentence made me pause and think..I've never heard anyone say that before or if I did it went right over my head. So, if that was the case where did all the money go and where did all this money looking to be put work come from in the first place?

Dawai
02-04-2009, 08:32 AM
We would be closer to having a balanced budget this year,if Obama's appointee wish list would pay their taxes:D

Try to find a HONEST politician in Washington DC to give a job to.. HA...

As good as the "stimulus bill is" they should just take boxes of money and bomb the impoverished parts of America with it, it'd be spent, circulating again, making a boost to the economy. Hit my house with a cargo container of money please.

More crooks lined up to steal that money than there is money in the world..

Obama is trying, black white, blue I don't care.. he is trying. We did get a giggle thou, a teleprompter in his ear, meaning you could not see the PUPPET strings that his advisors were pulling offscreen.. Perhaps he needs a make up man to airbrush that dingle to match his skin.. I AM AVAILABLE FOR THAT JOB Mr Obama.. can I keep wearing my 357 thou? I's be scared to be around you sir, too many lunies that care about skin color.

Recently, they passed a bill stopping all local govt employees from wearing guns on the job.. Mostly Road Paving operators who have to pave bad sections of town. Amazing how much assault-robbery is stopped by a visible sign of force.

J Tiers
02-04-2009, 08:49 AM
The banks made the silly loans because there was more money LOOKING for loans to buy than there were loans.

The above sentence made me pause and think..I've never heard anyone say that before or if I did it went right over my head. So, if that was the case where did all the money go and where did all this money looking to be put work come from in the first place?

From Oil Sheiks, chinese capitalists, and others who have been collecting their billions for a while now.............. basically from those who have been profiting from your troubles, ALONG WITH ordinary banks in other countries which were looking for good investments.



Its no use blaming Allan Greenspan or anyone else. I can't see him or his peers being held accountable. He was responsible to the Government and they - on your behalf - did not and seemingly will not - for what-ever reasons - take any "action" so griping is a waste of time...................

Well Tiffster...... YOU ARE TO BLAME FOR THE COLLAPSE!

It's no use you trying to squirm or weasel out......

Banks and investors ALL OVER THE WORLD were looking for places to put money. US mortgages were hot, Credit default swaps were hot, a number of "new instruments" were hot. Even if they were not directly invested in such things, and plenty were, just about every bank was indirectly invested.

If you had ANY money in ANY bank over the last 10 years, YOUR OWN MONEY very likely was at least indirectly invested in the very things that you are now pontificating "should have been regulated". And YOU were collecting the profits just as much as anyone here. Banking is so interconnected these days......................

So maybe you had better divest yourself of perhaps 12% of your investment income earned over the past 5 to 9 years. Just give it away, it is "tainted", "polluted" earnings.

Then perhaps we will be happy to listen to your lecturing.

of course, if your gains were purely due to the increase of herds and good crops on your land, with no filthy lucre, banking, moneylending, or usury involved, then we will regard you as "clean", and not just as another part of the problem.:p

winchman
02-04-2009, 11:46 AM
I just heard this on CNBC:

"Next up: More on executive compensation limits."

I sounds more appropriate if you say it quickly. :D

Roger

rowbare
02-04-2009, 01:00 PM
Actually, I would like to get into the Guillotine business. If this crap keeps up, we might to start use them.

So what kind of steel would you use? Would you use a cnc grinder for the edge? And what about heat treatment...

Now this is worth debating!

:D

wierdscience
02-04-2009, 08:30 PM
So you're saying Americans defaulting on $500 million worth of sub-prime mortgages is what caused the $100 Trillion collapse of the entire world's economy?

Your memory is faulty-

"The immediate reaction to the U.S. government's commitment of up to $200 billion to support the two giant mortgage lenders, which together back about half the country's $12 trillion in mortgages, was positive."

http://www.reuters.com/article/topNews/idUSN0527106320080909

How much foreign money was backing that $12trillion?

tony ennis
02-04-2009, 08:39 PM
I don't like the precedent of limiting wages. It's philosophically wrong to me.

However, when the 'bailout execs' ran their companies into the ground, why weren't they fired? Clearly, they are incompetent. So grossly incompetent that the shareholders have reason to bring suit IMO.

My stipulation for receiving bailout funds would have been that the top people in the company must resign and not work in the industry for 7 years. Else, no bailout money.

But executive pay is a smokescreen. A straw man. Their pay, however remarkable, is a mere fraction of a fraction of the mess. The discussion is meant to distract us from the real issue which is that the US government allowed, even encouraged, the situation to occur. Both sides of the aisle are culpable. Are we addressing the issues that allowed the abuses to occur?

daryl bane
02-04-2009, 08:47 PM
Originally Posted by daryl bane
Actually, I would like to get into the Guillotine business. If this crap keeps up, we might to start use them.

I bet there are some people on this board that could really design a nice one. S/S steel, linear bearings. Literally take off a few CEO/politician heads very quickly.

lazlo
02-04-2009, 08:59 PM
I bet there are some people on this board that could really design a nice one. S/S steel, linear bearings. Literally take off a few CEO/politician heads very quickly.

Rusty, dull, serrated blade would be nice ;)

wierdscience
02-04-2009, 09:06 PM
First you must prove they did something illegal,accounting fraud etc.If you can't prove that they walk.

If you impose limits on salary,bonuses etc in order to recieve bailout money there is a good chance they will simply reject the money and walk away with whatever was in their packages leaving the corporation to colapse.

"It may not be moral,it may not be ethical,but it will be legal"-Edwin Edwards (D) former Louisiana governor now sitting in jail for acceppting bribes.

oldtiffie
02-04-2009, 09:10 PM
Oldtiffie,

"Its no use blaming Allan Greenspan or anyone else. I can't see him or his peers being held accountable. He was responsible to the Government and they - on your behalf - did not and seemingly will not - for what-ever reasons - take any "action" so griping is a waste of time."

Absolutely NOT.The Chairman of the Fed is not subordinate to the USG. I do not know if it is possible for the USG to remove him. The Pres nominates him, the Congress approves, he is totally free of Government control. I do not know if even the Presidents of the other Banks in the system can oust him. I would assume they CAN, but I would not hold my breath on them doing so.

Our Federal Reserve Bank has gone from about 700 BILLION before the big bailout, to something like 3 TRILLION in assets since the troubles started. HOW did they get so much bigger?

How did 12 PRIVATE banks grow so much when the US is in economic turmoil?

All the other banks seem to be hurting. The FED GROWS? The FED has, so far as I can tell, guaranteed 7.4 TRILLION bucks in "Rescue moneys". They don't have that kind of money, nor does the USG.

I have said, and I will repeat, we are in for a world of hurtin'.

Cheers,

George

Thanks George.

I was aware that the Chairman of the Central bank was appointed by Government to be independent of Government influence and that he was responsible to Government. Which at first blush is the way to go - providing that he does the job right. Its a big gamble but the best of all options I suppose.

The Chairman of the Reserve Bank of Australia is similarly appointed.

But both are subject to what should be some pretty rigorous questioning by Government - Congress/Senate in the US? - on a fairly regular basis. Now, I don't think that there are no sharp political and financial minds in Government - and many or most have a flock of "advisers" as well as "lobbyists" in the back-ground to advise/influence them. I am aware that they have super-sensitive antenna sniffing the wind for political scoring (and defending) as well. This makes me wonder how many of them were not aware of the financial wall that we were all heading for - and why they didn't know. On the other hand, there must have been some that did know and for what-ever reason said or did nothing. The Chairman was in the "hot seat" to be questioned. Why did those that "knew" not question him and why did those that did not know not know or question him closer?

If this in fact was the case then it seems that the Chairman was free to run his own race and effectively by-passed the Government which in turn did not seem too concerned.

The questioning should have focused on what he had done in the past and why as well as what he intended to do in the future - and why? - and to pursue the issues until a satisfactory result or answer was given.

I find it hard to believe that some in the Administration knew or anticipated the outcome too - but nothing much was done.

It seems that "Business" - particularly the "Financial" business - was well aware of it and took full advantage of the situation and left the Central Bank, the Government and the Administration in their dust.

It seemed to me that any practical over-sighting or regulation was, to put it in its kindest light - "not encouraged".

Somewhere along the line the Government is going to have to really ramp up revenue and lower costs so as to re-pay all the money it has borrowed as well as the interest on it. There seems to be no obligation (at least) for the bond-holders to "roll the bonds over" at their maturity date/s nor to not increase the interest and terms attached to them. It will be quite a problem if those bond-holder (lenders to the US) decide to repatriate their funds home as the US and other countries banks are currently doing.

I can't see things getting any easier anytime soon - and won't our kids be pleased with us!!!

Teenage_Machinist
02-04-2009, 09:17 PM
People who bought subprime loans helped.
Execs helped. Subprime sellers helped. But the execs are really screwing things up.

oldtiffie
02-04-2009, 10:01 PM
First you must prove they did something illegal,accounting fraud etc.If you can't prove that they walk.

If you impose limits on salary,bonuses etc in order to recieve bailout money there is a good chance they will simply reject the money and walk away with whatever was in their packages leaving the corporation to colapse.

"It may not be moral,it may not be ethical,but it will be legal"-Edwin Edwards (D) former Louisiana governor now sitting in jail for acceppting bribes.

Thanks ws.

I had to smile at the quote:
"It may not be moral,it may not be ethical,but it will be legal".

I had it explained to me by Lawyers and Accountants that the average "Joe" thinks that if it isn't legislated as OK it mustn't be legal, where-as a good Lawyer, Accountant or businessman will regard anything and everything that is not prescribed as illegal to either be legal or not illegal.

They also said that a Court does not find you innocent (if you "win") but "not guilty". In other words they do not say that you did not do anything wrong, but just that the prosecution case was not sufficient to find you guilty.

Think about it - they are dead right.

Likewise those "Fat Cats" and "Executives" - they have every right to their "earnings" (or what-ever you may choose to call it) unless and/or until it not only can be but is proved - usually in a court - that they acquired them illegally as the law stood at the time.

I will be very surprised if retrospective legislation is enacted to recover any of that money.

If that is the case the those who used the system for their own benefit and/or the benefit of others or who have used Government grants (or what-ever) before any new "Rules" are applied will get to keep it. The"New Rules" will only apply to instances after the Rules are enacted or Regulated.

Now that means that in the case of two identical cases, the one before the new rules will not have his income "capped" but the one after the Rules will not only have his income capped and limited but for substantially the same job.

I will be interested to see how it is implemented - and when.

I suspect that the Lawyers and Lobbyists will make a meal of this.

wierdscience
02-04-2009, 10:23 PM
Thanks ws.

I had to smile at the quote:
"It may not be moral,it may not be ethical,but it will be legal".

I had it explained to me by Lawyers and Accountants that the average "Joe" thinks that if it isn't legislated as OK it mustn't be legal, where-as a good Lawyer, Accountant or businessman will regard anything and everything that is not prescribed as illegal to either be legal or not illegal..

Funny you should mention that.For years many Democrats here have shouted down and belittled anyone proposing a flat tax system instead of the 18,000+ page nightmare we have now.

But suddenly after so many of them are found owing large amounts of back taxes they have begun admitting maybe the systems needs simplification:rolleyes:




They also said that a Court does not find you innocent (if you "win") but "not guilty". In other words they do not say that you did not do anything wrong, but just that the prosecution case was not sufficient to find you guilty.

Think about it - they are dead right.

Likewise those "Fat Cats" and "Executives" - they have every right to their "earnings" (or what-ever you may choose to call it) unless and/or until it not only can be but is proved - usually in a court - that they acquired them illegally as the law stood at the time..

Exactly,"gulity beyond reasonable doubt" is the term used.

Everyone is pointing out the excesses of the fat cats and executives,but failing to see similar if not identical behavior in their own neighbors.

How many of the sub prime loans were made to real estate speculators?There was a woman on TV awhile back who had obtained $1.6m in loans to build spec houses.She bought into the housing market which was booming at the time to build houses which cost her $90,000 out of pocket to build,which she would then re-sell for $170,000 making a tidy profit after taxes.

Only problem was booms always yeild large profits while in effect,but they also always go bust leaving some bankrupt.I believe it's a seldom used word a few years ago called-risk.

She took a big risk on the chance of making big profits and she lost.Should the taxpayers bail her out?Years ago the answer would have been a resounding hell no.


I will be very surprised if retrospective legislation is enacted to recover any of that money.

If that is the case the those who used the system for their own benefit and/or the benefit of others or who have used Government grants (or what-ever) before any new "Rules" are applied will get to keep it. The"New Rules" will only apply to instances after the Rules are enacted or Regulated.

Now that means that in the case of two identical cases, the one before the new rules will not have his income "capped" but the one after the Rules will not only have his income capped and limited but for substantially the same job..

If they make it retro-active,how far back will they go?Back to when the company and the share holders were making profit?It doesn't matter,it's against our constitution so it will take some doing to make that happen.


I will be interested to see how it is implemented - and when.

I suspect that the Lawyers and Lobbyists will make a meal of this.

Don't forget the media,they are working double overtime it seems:)

JoeFin
02-04-2009, 11:05 PM
This makes me wonder how many of them were not aware of the financial wall that we were all heading for - and why they didn't know.

The Short answer is "They Knew in 2004"

But at that time the market was in it's peak and every American who owned property was licking his chops to make a killing in the market. To say any thing to rock the boat would have been political suicide


If this in fact was the case then it seems that the Chairman was free to run his own race and effectively by-passed the Government which in turn did not seem too concerned.

He was hauled up in front of several committees - but he is not bound to them




I find it hard to believe that some in the Administration knew or anticipated the outcome too - but nothing much was done.

It was the only economy we had left - the Housing Bubble. Those Re-Fi loans fueled spending like gasoline on fire. Every thing from Hummers to Harleys. What do you think we all been living on for the past 8 years.

At the time it started to become widely known in Washington it was during the 2004 Presidential Elections. The Democrats were shouted down as attempting to be "Political Spoilers" during an election year. BTW: When was the last time Phil Gramm said it was a "Mental Recession".

The only question I have is "Do you all want to go through this every couple of years? Because nothing has been done to prevent it from happening again

wierdscience
02-04-2009, 11:13 PM
At the time it started to become widely known in Washington it was during the 2004 Presidential Elections. The Democrats were shouted down as attempting to be "Political Spoilers" during an election year. BTW: When was the last time Phil Gramm said it was a "Mental Recession".

The only question I have is "Do you all want to go through this every couple of years? Because nothing has been done to prevent it from happening again

It was also known in 2006 when Repubilcans wanted to reign in Fannie and Freddie.

Nothing was done after the Dot.com bust either.

JoeFin
02-04-2009, 11:22 PM
Nothing was done after the Dot.com bust either.

I didn't follow the details of the Dot.Com bust that well. Other then Michel Milken selling junk bonds the Dot.Com bubble looked to be a whole bunch of people looking for a good place to put money into the stock market and there being no where else to go

Which is what I see as the real under lying problem.

We don't have the Economic Model of Capitolism we had 50 - 100 years ago. There is no "Re-investment" for corporations any more - just the stock quote or dividends. Until that is fixed they are all junk bonds

J Tiers
02-04-2009, 11:27 PM
I don't like the precedent of limiting wages. It's philosophically wrong to me.

But executive pay is a smokescreen. A straw man. Their pay, however remarkable, is a mere fraction of a fraction of the mess. The discussion is meant to distract us from the real issue which is that the US government allowed, even encouraged, the situation to occur. Both sides of the aisle are culpable. Are we addressing the issues that allowed the abuses to occur?

I'm not so sure that is straight up true......

If the numbers on the news are anything close to true, the banks etc have handed out 18 billion dollars of bonuses and miscellaneous payouts to executives SINCE THE BAILOUT STARTED

If I recall correctly, that is directly comparable to the ENTIRE bailout package given to GM and Chrysler, over which there was a big stink.

It amounts to a bit over 2% even of the enormous additional bailout figure currently being debated in the congress (and which should be soundly defeated).

Now, if these greedy bastiges have awarded themselves sufficient money to SAVE a PAIR of very large corporations (at least temporarily)...... that I submit is a very significant amount indeed.

it may be "only" 2%, but that 2% is essentially being skimmed-off as a reward for royally screwing up the entire world economy. They are taking it "because they can".

It is stuff like that which causes Osama bin Laden's philosophy of money and finance to start to make sense.... And he isn't that far wrong.... about where the current crop of capitalists have taken us.

Now as far as the philosophical roots of limiting pay?

Since when? There is NO limiting of executive pay being considered.

Oh, YOU mean limiting of pay for corporations which have come to the government hat-in-hand begging for help..... And exactly WHAT could POSSIBLY be wrong with requiring that they use the money they are given for the purpose intended?

If they take the money, hand it out amongst themselves, and come back saying "that wasn't NEARLY enough", would YOU give them any more?

Heck no. You'd look at what they did, turn them upside down and beat them until the money fell back out of their pockets. Any sensible person would.

The limits are merely a pre-emptive strike against having to do what it looks very likely, from recent history, WOULD otherwise need to be done.

wierdscience
02-05-2009, 12:07 AM
I didn't follow the details of the Dot.Com bust that well. Other then Michel Milken selling junk bonds the Dot.Com bubble looked to be a whole bunch of people looking for a good place to put money into the stock market and there being no where else to go

Which is what I see as the real under lying problem.

We don't have the Economic Model of Capitolism we had 50 - 100 years ago. There is no "Re-investment" for corporations any more - just the stock quote or dividends. Until that is fixed they are all junk bonds

Part of the problem is many people don't realize just how many recessions we have had as a nation in our history.It's cyclical as the phases of the Moon.Problem is the cycle is just long enough that it eclipses the memory of man.

The Dot.com bubble was a good example.Stock was being sold in internet upstart companies many of which were nothing more than an office and server space-no bricks and mortar.People were making money and lots of it,so everybody wanted a piece of the action.The result was waaaayyyy over valued stock that people invested in.Once rumblings started that maybe those companies were overvalued people cashed in and many lost.

At the same time we had Enron,Worldcom,Tyco and several others who had legitimate business,but accounting fraud both internally and externally.Laws were actually broken and people did actually go to jail.This new debacle hasn't produced any major illegal activity,with the exception of Madoff.

If laws were broken,then go after them.If not just accept it and move on.If what usually happens happens again the government will sped more going after them than they would recover if they proved anything.They,the politicians need/want a show trial.

Get rich quick is human nature,it was also what drove the great depression.Millions bought stock on margin,problem is at some point there is a margin call and then the ballon pops.

J Tiers
02-05-2009, 12:39 AM
Part of the problem is many people don't realize just how many recessions we have had as a nation in our history.It's cyclical as the phases of the Moon.Problem is the cycle is just long enough that it eclipses the memory of man.

Yep..............



Get rich quick is human nature,it was also what drove the great depression.Millions bought stock on margin,problem is at some point there is a margin call and then the ballon pops.

This last time, there were lots of "multipliers". People who borrowed against stocks had to maintain a certain ratio of value to borrowed cash. If value goes down, it triggers an automatic sale to restore the ratio. But a lot of that going on will drive down value, forcing another round, and another, and another, chasing the correct minimum ratio, which keeps sliding out of reach as forced sales degrade stock value.

Similar effects have occurred in some mutual funds, due to withdrawals by people getting out of the market, who then destroy value for those who stay in. The fund managers really want to buy the cheap stocks to make money, but they have to sell so much to pay off exiting investors, that they haven't anything to buy with..... forcing them to PASS on good opportunities, and further reducing the value of the stocks they must sell.

"last one out is a rotten egg"........ and FIRST one out is a rotten egg too. Everybody loses.

oldtiffie
02-05-2009, 01:21 AM
OK.

Now a couple of questions.

If both the Legislature/Congress/Lawmakers etc. as well as many in the general population knew the risks and the probable outcome and did nothing about it for personal/political/business reasons going back as far as said previously, why wasn't something definitive, enforceable legislated and enforced then?

If nothing was done then, it would seem that the rot and precedent for "getting in for your licks while the going was good" and perhaps deliberately doing nothing to right what are now said or seen to be "wrongs", then it seems that if any retroactive Legislation is to be enacted and enforced, that common justice requires that goes back to the root cause/s and source/s and susequently - right up to enactment of the required re-troactive legislation.

Now how far back do you go and who and what do you exempt and why?

If Executives etc. are "making a meal of it" (still) and if its not illegal, then at least part of the fault is with the Legislators and Administrators of those funds. I wonder if and what - and when - anything of substance will be done to remedy the situation and recover at least part of the funds.

I am still appalled at how all the extra "pork" got loaded onto the last "package/s" to get it through Congress and to get members elected or re-elected in the up-coming election. It seemed to me that it was all about getting re-elected and using that "pork" to "persuade" the electorate to vote them (back) in. If this did persuade some parts of the electorate, then then they effectively sold their votes for their own advantage.

It seems that there are a lot of people who are less than squeaky clean - going back a long time - and who would rather not see a good open inquiry under-taken.

Don't just look at the "fat cats", but look at the legislature, the administration, your neighbours and perhaps yourselves.

Either way, despite all the moralising and righteousness and all the hand/wrist-wringing etc., the money borrowed (bonds etc.) from other countries is going to have to be paid back - with interest - and the Government is going to have to raise revenue and reduce expenditure quickly to do it. And then it will have to address all those things that should have been done over time.

It will not be pretty.

It will not be easy.

It will not be over "soon".

The retirees who invested their nest-eggs in good faith following the advice given are devastated and bordering on desperation with no real resolution in sight. Those who are/were "putting away" for retirement are not much - if any - better off than those who have retired.

It will be passed onto the kids who will have no real reason to thank us for the examples we set and the mess that we leave them.

What a legacy.

chief
02-05-2009, 04:50 AM
George,
Now that obama has capped CEO salaries, how many people in your area have been called back to work, had their salaries increased or new jobs created?
You have no problem with hiring tax cheats or lobbyists, maybe you think it's ok because you figure you'll get something from the government. Remember in the end you are only screwing your children. Your last statement about my income reveals what you are really about, class envy.

JoeFin
02-05-2009, 07:44 AM
George,
Now that obama has capped CEO salaries, how many people in your area have been called back to work, had their salaries increased or new jobs created?..

As many CEOs coming begging to Washington for OUR hard earned tax dollars they are cutting saleries and their work force. Those same folk who are laid off are still paying taxes - part of which will be going to the very same CEOs and corporations that just fired them

No kidding their saleries need to be capped



You have no problem with hiring tax cheats or lobbyists, maybe you think it's ok because you figure you'll get something from the government. Remember in the end you are only screwing your children. Your last statement about my income reveals what you are really about, class envy.

Just as you have no problem voting for the same ilk that legislated this mess into existence.

In reality it is "pick your poison". The Dems have their own faults many of which I'm sure your going to trot out and attempt to blame for the current problem. Bottom line is an over whelming majority of Americans understand the current crisis is the direct result of "De-regulation and Trickle Down Economics". Even the Champion of Supply Side Economics - Allen Greenspan has declared the policies at fault for the current crisis (where have you been)

Regardless of all their faults historically the Dems have a better track record of restoring the economy and getting the country back to work. So unless your completely "Brain Washed" by Rush LimpDick, unable to think for yourself, your more then likely "Not Hoping for the Stimulus Plan to Fail"

I find that ironic. The Party that claims to "Wave the Flag" in defense of Democracy is publicly advocating for America's Economic Demise. Maybe we should start a petition to move Rush LimpDick's show over to China. We could restore sanity in politics and stimulate the economy all in 1 shot as I'm sure Rush will have them advocating outsourcing to America as the cure all for their economic woes in no time

J Tiers
02-05-2009, 08:59 AM
If both the Legislature/Congress/Lawmakers etc. as well as many in the general population knew the risks and the probable outcome and did nothing about it for personal/political/business reasons going back as far as said previously, why wasn't something definitive, enforceable legislated and enforced then?



If Executives etc. are "making a meal of it" (still) and if its not illegal, then at least part of the fault is with the Legislators and Administrators of those funds. I wonder if and what - and when - anything of substance will be done to remedy the situation and recover at least part of the funds.


You've missed some points here.

THE LEGALITY IS NOT AN ISSUE.

The questionable money-grubbing and looting that was done, SHOULD, IN MANY CASES, STAY LEGAL.

The legality isn't the issue. Government, unless directly involved (such as by the company coming begging to congress) , SHOULD STAY OUT.

Obviously, some things, such as defrauding etc, are and should remain illegal. Ponzi schemes must be illegal, certain types of re-packaging etc should be disclosed and not hidden. That is a given.

Paying execs too much, spending a lot on the executive crapper, skimming off the top, those things are legal, and should stay that way.

These are corporations, with stockholders. THE ISSUE IS NOT "WHERE WAS THE GOVERNMENT", THE ISSUE IS WHERE WERE THE STOCKHOLDERS?

The checks and balances in a corporation mirror the government structure. If the board allows improper things to be done, they should go.

The problem is that often they are the stockholders, and can, with 500 shares over 50% iof the outstanding stock, run the joint, running over the folks who hold "only" 49.999% of the stock. They can structure the voting so that opposition can't be heard.

This is legal, and since they own the company, they are free to loot it, run it into the ground, etc.

They MAY be subject to any amount of legal retribution, in the form of suits for gross malfeasance, breach of fiduciary responsibility, etc, coming from the folks holding "only " 49.999% of teh stock.

THAT is how these things are supposed to be taken care of, NOT by more laws, and government intrusion into day-to-day operations of the company.

If you don't like that, change the Constitution, have a dictator, etc.

wierdscience
02-05-2009, 09:19 AM
As many CEOs coming begging to Washington for OUR hard earned tax dollars they are cutting saleries and their work force. Those same folk who are laid off are still paying taxes - part of which will be going to the very same CEOs and corporations that just fired them

No kidding their saleries need to be capped




Just as you have no problem voting for the same ilk that legislated this mess into existence.

In reality it is "pick your poison". The Dems have their own faults many of which I'm sure your going to trot out and attempt to blame for the current problem. Bottom line is an over whelming majority of Americans understand the current crisis is the direct result of "De-regulation and Trickle Down Economics". Even the Champion of Supply Side Economics - Allen Greenspan has declared the policies at fault for the current crisis (where have you been)

Regardless of all their faults historically the Dems have a better track record of restoring the economy and getting the country back to work. So unless your completely "Brain Washed" by Rush LimpDick, unable to think for yourself, your more then likely "Not Hoping for the Stimulus Plan to Fail"

I find that ironic. The Party that claims to "Wave the Flag" in defense of Democracy is publicly advocating for America's Economic Demise. Maybe we should start a petition to move Rush LimpDick's show over to China. We could restore sanity in politics and stimulate the economy all in 1 shot as I'm sure Rush will have them advocating outsourcing to America as the cure all for their economic woes in no time

Now just look up who it was de-regulated Fannie and Freddie,who it was exspanded free trade with China and who it was worked for Wal-mart busting down the unions.Add those to lies the Dems are telling.

BO currently has the country in limbo,so logicly some liberals will blame that on Rush to draw attention away from Nancy Pelosi who released this whopper-"500million people are losing their jobs every month" the botox has eaten her brain no doubt about that anymore.

The flames rise higher meanwhile the fiddle plays........................................

dp
02-05-2009, 12:40 PM
I don't understand the controversy - in a free market, failure is an option. In fact failure is the norm and is far more common than success. If a business has done nothing illegal on the path to failure then that's the end of it. The side effects of stock holder loss and all the gnashing of investors is irrelevant unless something illegal happened.

Any investment has risk and it is the job of the party assuming that risk to understand it and mitigate it. That requires diligence. And that right there is the real problem. Joe Sixpack and the little missus are not always diligent so when things go gunny sack they run to big government for their wailing and gnashing hoping for compensation and reward for their lack of effort.

The ill effect of cascading risk through reselling subprime risk to people who bought but didn't understand the risk is a buyer's error. When you spend billions of dollars in a market segment you really need to put somebody with great skill on the back trail to see what that risk represents. If that cannot be done then it is most prudent to avoid buying that risk.

What that all means is: Buyer Beware!

We are where we are because buyers are not.

winchman
02-05-2009, 01:33 PM
A big part of the problem with the big banks and investment houses is that they sold insurance policies (Credit Default Swaps) on debt, collected premiums for the policies they sold, but didn't put away sufficient reserves to pay off if people defaulted on the debt. They even sold insurance policies to parties that wouldn't lose anything if people defaulted on the debt. Then they set up ways to trade the CDSs like stocks.

Of course, they made big bucks on the CDS premiums and subsequent transactions, and they paid bonuses accordingly.

When the housing market tanked and people started defaulting on their mortgages, the banks faced little loss on the mortgages themselves, because most had been sold.

BUT, the CDS losses were HUGE, and they had no reserves to pay the people who actually held the bad debt, much less all those people who were just buying the insurance hoping the debt WOULD go bad.

It's fraud, pure and simple, to collect premiums for insurance without having reserves to pay off in the event of a loss. Life insurance companies are required to have sufficient reserves to pay off on a reasonable portion of the outstanding policies, but these "new" financial instruments weren't being regulated.

All of this was being carried out in ways that average investors could never see or understand. What they saw was huge revenue and huge profit, and they wanted part of it.

I have no idea how the CDS mess can be fixed, and it doesn't look like anyone else does either. I'd like to think the courts could invalidate the "naked" CDSs held by people who had nothing at risk, but that's probably wishful thinking.

Roger

lazlo
02-05-2009, 05:19 PM
I don't understand the controversy - in a free market, failure is an option. In fact failure is the norm and is far more common than success. If a business has done nothing illegal on the path to failure then that's the end of it.

The ill effect of cascading risk through reselling subprime risk to people who bought but didn't understand the risk is a buyer's error. .

The investment banks (and not just in the US) were using the sub-prime mortgages as fodder for junk bonds, just like Michael Milken and his buddies did in the 80's. The Junk Bond Ponzi scheme of the 80's caused the Savings and Loan crisis, which required multi-billion dollar bailouts from the Fed. Unfortunately, we didn't learn the lesson that investment banks and high-end financiers will steal you blind if you let them, and there was a rash of bank de-regulation bills that passed in the 90's, including the legalization of Credit Default Swaps, which had been an illegal form of betting since the 1929 crash.

So fast-forward 20 years, and the same assholes pulled the same Ponzi scheme, but this time the Junk Bonds were based on sub-prime mortgages: Bearn-Stearns, Lehman Brothers, Morgan Stanley, and the other eminent investment banks were buying huge blocks of sub-prime mortgages from their golfing buddies at CountryWide and Chase, and re-packaging them as AAA-rated mortgage-backed annuities. Since the mortgages they were re-packaging were worthless, they hid them in offshore accounts called "Special Purpose Vehicles" to keep them off of Bear-Stearns, Morgan-Stanley and Lehman Brothers balance sheets, and hide them from the shareholders.

All borderline illegal, but these guys are sharks, and they'll push the limits of moral/legal/ethical behavior if it means a higher bonus.

http://i164.photobucket.com/albums/u15/rtgeorge_album/rsg4a.gif

oldtiffie
02-05-2009, 05:27 PM
I don't understand the controversy - in a free market, failure is an option. In fact failure is the norm and is far more common than success. If a business has done nothing illegal on the path to failure then that's the end of it. The side effects of stock holder loss and all the gnashing of investors is irrelevant unless something illegal happened.

Any investment has risk and it is the job of the party assuming that risk to understand it and mitigate it. That requires diligence. And that right there is the real problem. Joe Sixpack and the little missus are not always diligent so when things go gunny sack they run to big government for their wailing and gnashing hoping for compensation and reward for their lack of effort.

The ill effect of cascading risk through reselling subprime risk to people who bought but didn't understand the risk is a buyer's error. When you spend billions of dollars in a market segment you really need to put somebody with great skill on the back trail to see what that risk represents. If that cannot be done then it is most prudent to avoid buying that risk.

What that all means is: Buyer Beware!

We are where we are because buyers are not.

Thanks for the cold shower and reality check Dennis as it was and is needed and will be needed for a while yet.

The message "out there" - as usual - seems to be to "socialise the losses and capitalise the gains". Seems to be working too in many cases, so many decide to get onto the gravy train - but the "smart money" has moved on leaving others holding the bag - no gravy and no bloody train either!!

As previously, if you can't afford to lose - don't gamble. Not knowing your market is worse than gambling (where you DO have a chance of "making it") in that they are all but throwing it away and just asking to get ripped off (as much by their own efforts as by the efforts of others).

I find it odd that if people lose money in a Casino they accept that it lost (including the stuff on "tick" - credit card!!) and move on.

But if they lose it in a financial or "market" gamble they want others and the Government to either bail them out or compensate them for their losses.

And few "losers" want to admit to themselves that they are in fact losers and that they are responsible for it and have to "wear" the consequences of it.

Mcgyver
02-05-2009, 05:45 PM
The ill effect of cascading risk through reselling subprime risk to people who bought but didn't understand the risk is a buyer's error. .

its not that simple, from financial advisors to underwriters to rating agencies; each is part of, i'll call it a financial supply chain where the next stage relies on the work/knowledge/opinion/expertise of the previous. this is typical behaviour in any supply chain; the world is just too bloody big and complicated for any one party to know it all.

The system has mostly worked well (until recently) because of a little thing called fiduciary duty that was taken seriously, you could rely on what the guy upstream was telling you. This time around the prize became so great, everyone forget how to even spell FD. I guess it seemed ok because everyone was doing it and everyone was making money. great big pyramid scheme or financial music chairs that would NOT pass any reasonable scrutiny or test of fulfilling a fiduciary duty.

There is nothing wrong with the system, there's lots of rules already. They just weren't being followed and no one did anything about it. make no mistake, there are lots of scoundrels who should be in jail. However there'll always be crooks; don't flush the capitalist/free enterprise (which is the reason the western world is wealthier than any other - decentralized economic decision making) because there's crooks. Take a look at centralized models -or countries with no rich - would you wish for that? Like i say there are plenty of regulations already, its an issue of enforcement imo so its far more painful to ignore your fiduciary duty than grab at the prize. More regs will do nothing but add bureaucracy.

PS, I disagree with bailouts completely as any supporter of free enterprise should - what an incredible, massive punishment of both taxpayers and all the business that were well run and didn't implode. I agree with you that there is no place for rewarding failure in the free enterprise system

dp
02-05-2009, 06:06 PM
its not that simple, from financial advisors to underwriters to rating agencies; each is part of, i'll call it a financial supply chain where the next stage relies on the work/knowledge/opinion/expertise of the previous. this is typical behaviour in any supply chain; the world is just too bloody big and complicated for any one party to know it all.

If you distill what I said it does not disagree at all with any of this. What it means is there are no guarantees. It is perfectly possible to lose all your investments and in a perfectly legal way. The very wise investor should know this. What the less than wise investor knows or doesn't know up's the degree of risk he assumes.

Knowing that you cannot possibly know it all should ring in your head like a bell - if you can't know it all, f'crapsake don't risk it all. I lost a lot of money but I didn't lose it all - I didn't risk it all, either.

The downside is that in a frenzied market like we've had for several years you won't realize the temporary upside (but you won't watch it all float out to sea, either).

Buying, selling, and managing risk and succeeding is hard - not even Bear Stearns could do it. There's just no way a guy like me is going to outsmart the sharks. As the WOPR said - the only way to win is to not play the game. That said, casinos are a going industry because people don't pay any attention to the WOPR.

lazlo
02-05-2009, 06:44 PM
its not that simple, from financial advisors to underwriters to rating agencies; each is part of, i'll call it a financial supply chain where the next stage relies on the work/knowledge/opinion/expertise of the previous. this is typical behaviour in any supply chain; the world is just too bloody big and complicated for any one party to know it all.If you distill what I said it does not disagree at all with any of this. What it means is there are no guarantees. It is perfectly possible to lose all your investments and in a perfectly legal way.

Dennis, you're interpreting the situation wildly different than what McGyver is saying: Bear-Stearns, Lehman Brothers, et al were intentionally misleading the investors: they would approach a local savings & loan in Norway, Northern Rock bank in England, 401K Account Managers, Tiffie's Pension Fund manager, and pitch them a high-yield, low-risk annuity. These annuities were AAA-rated, because their buddies at AIG, who actually rate the investments, were in on the scheme.

So these wise and experienced fund managers knowingly invested your 401K and pension funds in these "low-risk", high-yield junk bonds, that were insured by AIG, because they were fraudulently offered as low risk.

And Hell, why wouldn't a pension fund manager buy into the scam? This was Lehman Brothers, the oldest and most well-respected investment bank on Earth!

The reason the world's stock markets (and your 401k) lost ~$100 trillion in three months is because once the house of cards started to collapse, and Bear-Stearns and Lehmann couldn't cover the Credit Default Swaps (the non-regulated "insurance" they offered), all the fund managers were desperate to sell out of the junk bonds, and it burned the world's markets to the ground.

dp
02-05-2009, 08:00 PM
Lazlo - unless something illegal was done there's nothing to be done. We can b*tch and moan about it till the cows come home and it won't change a thing. Misleading people is what marketing is all about. There will always be people who get sucked into scams that are shady but legal. That does not negate the oldest rule in the market place and that remains buyer beware.

I've mentioned here a number of times that Google will do all it can to exploit every snippet of information they can get about any of us. I do all I can to minimize that, others don't, yet others flaunt the fact with bravado by publishing personal facts about themselves. It's the same with investments - we're not entitled to win that particular lottery, and it can be a very dangerous world for the unwary. The uncareful, or those so naieve they don't think there are schemers out there that will exploit every loop hole will suffer. What is even more astonishing is that people who should know better but are motivated to assume heightened risk because of carnal greed get caught up in it - some of these people are representing other people's money and not wisely.

Until being greedy is against the law then there is nothing the investor can do (and this applies at all levels) is do the best one can to understand the risk, and to recognize that the greater the return the greater the risk in most things. And don't assume the law is on your side - it often is not.

J Tiers
02-05-2009, 08:30 PM
I find it odd that if people lose money in a Casino they accept that it lost (including the stuff on "tick" - credit card!!) and move on.

But if they lose it in a financial or "market" gamble they want others and the Government to either bail them out or compensate them for their losses.

And few "losers" want to admit to themselves that they are in fact losers and that they are responsible for it and have to "wear" the consequences of it.

it depends.....

if you were sold a 'vehicle" that was in fact based on worthless mortgages, BUT the structure was so complex that sophisticated government investigators have trouble unraveling it, saying "yuh owtta known better" is not only meaningless, it is insulting and offensive.

THAT is what is the issue...... hiding and covering and lying to make worthless paper look valuable. THAT should be illegal, not losing money.

if you lose money in what was clearly advertised as a risky investment, fine. You knew it was hot, and you grabbed it anyhow.

But SCHOOL SYSTEMS, people KNOWN to be totally risk-averse, were in a number of cases invested heavily in worthless mortgages........ THAT should be virtual final proof that there was a LOT of heavy-duty fraud going on.

THAT is where government comes in..... to do some compensation, AND THEN TO GET THE BASTIGES TO PAY FOR IT.

WHEN the SOB'S who cheated everyone take our bailout money and buy themselves more goodies, on top of what they got with the money they cheated us out of, THEN we want blood.

I wouldn't give a shredded dollar for the chances of anybody in a Lexus or Benz in some areas now. If this doesn't clear up in a reasonable time, they'll be stopped and strung up on spec all over the country.

I wish I were just running my mouth.

You just COULD see that happen. There may have been a few cases already.

I am an even tempered type, not personally into violence as a first solution. But I've got to where I'll let anyone driving a "beater" into a line of traffic ahead of me. If you are driving a Bimmer, Benz, or Lexus, maybe even a Caddy, you'll rot before I let you in.

If I think that way, there are others with a lot worse attitude than me.

lazlo
02-05-2009, 09:03 PM
Lazlo - unless something illegal was done there's nothing to be done. We can b*tch and moan about it till the cows come home and it won't change a thing. Misleading people is what marketing is all about. There will always be people who get sucked into scams that are shady but legal. That does not negate the oldest rule in the market place and that remains buyer beware.

Agree completely Dennis, but we were all pulled into the scam by virtue of our retirement funds. No one here specifically bet on mortgage-backed securities, but our retirement fund managers did. And they weren't being irresponsible -- world-class banks were offering them (bogus) AAA-rated investment vehicles.

So now we're all looking at our 401K's and pension funds and asking -- what the Hell happened? Telling people "Bear Stearns and Lehman Brothers were exploiting loopholes in Federal Regulation, but what they did to you was technically legal, so you might as well not complain about it" doesn't help much.

The truly sad part is that I can guarantee that this will happen again: Michael Milken and his merry band of thieves made Billions in the 80's, and caused the collapse of the American Savings and Loans. 20 years later, with the same scheme, Wall Street made Billions, and caused the collapse of the world-wide economy. 10 - 20 years from now, after enough people have forgotten about this crisis, some other financial asshole will find another loophole, and billions more unsuspecting investors will again be out billions more...

dp
02-05-2009, 09:19 PM
Agree completely Dennis, but we were all pulled into the scam by virtue of our retirement funds. No one here specifically bet on mortgage-backed securities, but our retirement fund managers did. And they weren't being irresponsible -- world-class banks were offering them (bogus) AAA-rated investment vehicles.
Failure thrives on good intentions stoked with greed. It's worth repeating. Investment is risk sharing. That idea is lost behind 401K and other labels. Investment is distributed risk and people who learn how to sell outright the risk they assume can be found in every diner on Wall Street. That's not going to change. Transparency laws won't work because the entire process depends on insider knowledge. It is finally the buyer, whom ever that may be, who must show some discipline. Had I not I'd have lost a hell of a lot more, perhaps all of, my investments.


So now we're all looking at our 401K's and pension funds and asking -- what the Hell happened? Telling people "Bear Stearns and Lehman Brothers were exploiting loopholes in Federal Regulation, but what they did to you was technically legal, so you might as well not complain about it" doesn't help much.
There is no remedy in the law. Knowing that doesn't help much, either. The problem is you're looking at this problem from that back end of it. The time to look with great care is going in. And never, ever over-commit your assets. The only people who have lost to the point of suffering are those who over-committed and who did not understand every dime was always at risk.


The truly sad part is that I can guarantee that this will happen again:
Absolutely it will happen again. People forget things like earthquakes and tsunami waves and exploding silos and all manner of things - they build right up to the water's edge as soon as the mud cracks. Or in the case of New Orleans, they build in the below sea level sector like it was safe to do so. Buyer beware - caveat emptor, however you wish to express it, is true today as it was at the dawn of civilization.

gnm109
02-05-2009, 09:27 PM
Actually, I would like to get into the Guillotine business. If this crap keeps up, we might to start use them.


An excellent idea. And just think how much better and more durable a guillotine might be made using CNC processes and modern steels and alloys. I can envision one with a nice set of precision roller bearings on each side to guide the blade. There could be a servo to haul the blade up and a remote controlled digital device to release it. One might even include a self-cleaning utility to keep things clean.

Oh, and I would use no wood. It's unsanitary.

The sizes of the bonuses taken by some of the CEO's involved on Wall street is simply immoral.

barts
02-05-2009, 09:30 PM
Of course, there's a simple mechanism to fix this: stop gutting the regulations.
Consider any new financial instrument suspect and not credit-worthy until completely investigated.

If Wall Street insists on behaving in a criminal fashion with other people's money, consider their every action as an attempt to defraud until proven otherwise....

- Bart

dp
02-05-2009, 09:38 PM
Of course, there's a simple mechanism to fix this: stop gutting the regulations.
Consider any new financial instrument suspect and not credit-worthy until completely investigated.

If Wall Street insists on behaving in a criminal fashion with other people's money, consider their every action as an attempt to defraud until proven otherwise....

- Bart

The evolution of the CDS is hugely interesting and worth a quick study.

lazlo
02-05-2009, 09:48 PM
The evolution of the CDS is hugely interesting and worth a quick study.

Credit Default Swaps amplified the 1929 crash, and were outlawed for nearly 75 years, only to be legalized by Greenspan and Phil Gramm in 2000.


"Credit Default Swaps were invented in 1997 by a team working for JPMorgan Chase. They were designed to shift the risk of default to a third-party, as this shifted risk did not count against their regulatory capital requirements. In essence the swaps were created as a regulatory loophole
...
U.S. Sen. Phil Gramm (R-TX) introduced the Act on behalf of financial industry lobbyists. The Modernization Act was rushed through Congress as a companion bill to the omnibus spending bill, the last day before the Christmas holiday. It by-passed the substantive policy committees in both the House and the Senate so that there were neither hearings nor opportunities for recorded committee votes."
Warren Buffet and Greenspan had a now famous public debate about derivatives (including mortgage-backed securities) and credit default swaps:
Read this, remembering that it was in 2003, when the fundamentals of our economy were sound :)

The Great Derivatives Smackdown
http://www.forbes.com/2003/05/09/cx_aw_0509derivatives.html

"Recently Federal Reserve Board Chairman Alan Greenspan and noted investor Warren Buffett of Berkshire Hathaway have participated in a mediated back-and-forth on the value and risks of derivatives. But, as far as we know, they have yet to air their views tete-a-tete.

The party line from most major financial institutions is that they believe their risk is minimal. Still, in certain cases, firms take cash or marketable securities as collateral for derivatives contracts.

Buffett fears that there is a lynchpin out there in the derivatives market that, when pulled, will send the financial world into a spin. Essentially, the Oracle of Omaha wants nothing to do with this hot-air market. Greenspan, too, sees the high concentration of derivatives contracts at so few firms as a pitfall. His answer, however, is to educate and spread the risk around. "

J Tiers
02-05-2009, 09:56 PM
Of course, there's a simple mechanism to fix this: stop gutting the regulations.
Consider any new financial instrument suspect and not credit-worthy until completely investigated.


You have to know it's there, first, if you are a regulator.

If you are a customer, of course. There are plenty of "advisers" who will happily pile tax-free or tax-deferred investments into other tax-deferred vehicles. naturally that makes no sense. Presumably the cases I know of were done purely to prop up the commissions of the "adviser", who sold what he recommended, and got kickbacks (commission) based on volume. If the rent is due, anything goes.....................

People didn't quite advertise the CDS.....although any financial institution had a swaps desk. And as a "private transaction" it didn't fall into the realm of the SEC, which regulates publicly traded stock, as a rule....

You can make all the crazy private deals you want, if they don't involve regulated stock sales, etc, without calling down the authorities. Naturally, Ponzi schemes and fraud are no more acceptable in private than in public.

But "private deals" have apparently got a lot more leeway. And they needn't be reported in the detail and with the promptness of transactions in stock of a public company.

dp
02-05-2009, 11:02 PM
Do a google search for Blythe Masters and you will learn the history of the reincarnation of CDS. She was quite clever.

Mcgyver
02-05-2009, 11:06 PM
unless something illegal was done there's nothing to be done. We can b*tch and moan about it till the cows come home and it won't change a thing. Misleading people is what marketing is all about. .

that's the point you're missing, there most certainly was something illegal, a massive failure to exercise a proper fiduciary duty - a concept crucial to anyone in a professional advisory capacity. FD is not a moral or intangible item, is real law with teeth and can put people out of business, banned from securities, massive fines and investigations can lead to fraud charges etc and jail. The question that should be asked is despite all the existing regulations how did this go on for so long at such a grand scale without regulators crying foul? I think there was just too much money and momentum.

Its fine to say buyer beware if people are playing to the rules, but not if they're the victims of trickery or fraud. That's not how finance or any business works, you go around as an advisor and mislead people and watch how quick you're in trouble..... and while it may seem like it a times, and unscrupulous practitioners may do so, but the point of marketing is hardly to mislead people.

if you went to a mechanic and he put used worn out parts on your car, would you say buyer beware? that it was ok for him to mislead you? No, there is a a line that is crossed where someone grossly sidestepping their professional duty so that they gain that is illegal and is not buyer beware. I'm saying that is what happened, in the financial supply chain they started bolting on used worn parts and caveat emptor is not reasonable

andy_b
02-05-2009, 11:07 PM
I'm not so sure that is straight up true......

If the numbers on the news are anything close to true, the banks etc have handed out 18 billion dollars of bonuses and miscellaneous payouts to executives SINCE THE BAILOUT STARTED



something to think about. if 40% of that $18 billion is paid back to the government in the form of income taxes, that is $7.2 billion. if those bonuses weren't given out, wouldn't the government be out $7.2 billion in revenue? this doesn't included SS, medical and local taxes.

don't get me wrong, i believe executive compensation and bonuses are much too high as it relates to the performance of these executives. i don't control 50.000001% of any companies to control how much they pay their worthless executives though.

andy b.

lazlo
02-05-2009, 11:11 PM
i don't control 50.000001% of any companies to control how much they pay their worthless executives though.

It's a quirk of American corporate law that the stockholders don't have any control over the CEO's salary: that's determined by the Board of Directors, who are typically CEO's of other companies...

Corporate bonuses are usually paid-out as stock grants, specifically so the executive pays capital gains (15%) on it, instead of income tax (35%).

Teenage_Machinist
02-05-2009, 11:13 PM
I would call it crimes against the proletariat....


I do not think that they generally violated a law. Which is a problem. WIht Reaganomics, there are not laws for them to violate so the government must judge.

lazlo
02-05-2009, 11:21 PM
I do not think that they generally violated a law. Which is a problem.

Credit Default Swaps were illegal until Phil Gramm slipped the Financial Modernization Act under the table on Christmas Eve, 2000. This was the same bill that created the "Enron Loophole"* that allowed Enron to rape California during the 2001 Energy Crisis.

The day after the Phil Gramm's bill passed, Wendy Gramm, his Wife, was named to the Board of Directors of Enron.

*The "Enron loophole" exempts most over-the-counter energy trades and trading on electronic energy commodity markets from government regulation. The "loophole" is so-called as it was drafted by Enron Corporation lobbyists working with U.S. Senator Phil Gramm (R-TX) to create a deregulated market for their experimental "Enron On-line" initiative.

dp
02-05-2009, 11:24 PM
that's the point you're missing, there most certainly was something illegal, a massive failure to exercise a proper fiduciary duty - a concept crucial to anyone in a professional advisory capacity. FD is not a moral or intangible item, is real law with teeth and can put people out of business, banned from securities, massive fines and investigations can lead to fraud charges etc and jail. The question that should be asked is despite all the existing regulations how did this go on for so long at such a grand scale without regulators crying foul? I think there was just too much money and momentum.

Certainly there were laws broken - I don't mean to suggest this was all done within the law, but it's going to surprise a lot of people when they learn what the law does and does not apply to. And establishing fiduciary associations in this mess is going to be quite an undertaking with no shortage of conflicts. The scale of it suggests it will be decades before a significant part of it is resolved. But here's the kicker - nobody has any money to pay as compensation even if there is a judgment against them.

I'm trying to be very pragmatic here, and realistic. The incautious investor does not have decades to unravel and recover. Even the cautious investor is left in the lurch. As much as I would like the value of my investments to return to at least what I invested by action of law against the offenders, that's not going to happen in my lifetime. I'm not going to use up the winter years of my life railing at the bastids that did this - elected officials excepted - I'm going to work to recover as best I can. And that is what I suggest everyone else do, too.

As for how it went on for as long as it did where the laws were applicable, it was a low priority and everyone involved was making money on paper. Our nutless politicians do not choke the golden goose and in this case the golden goose was a duped public.

When the Bush administration tried on several occasions to reel this in they were stonewalled. If we go back to earlier administrations that also tried to reel it in we will very likely find they too were stonewalled. This is why I've excepted elected officials from my ignore list. They've circled the wagons and are fully prepared to blunt any assault on them and their role in this.

dp
02-05-2009, 11:25 PM
Credit Default Swaps were illegal until Phil Gramm slipped the Financial Modernization Act under the table on Christmas Eve, 2000. This was the same bill that created the "Enron Loophole"* that allowed Enron to rape California during the 2001 Energy Crisis.

The day after the Phil Gramm's bill passed, Wendy Gramm, his Wife, was named to the Board of Directors of Enron.

*The "Enron loophole" exempts most over-the-counter energy trades and trading on electronic energy commodity markets from government regulation. The "loophole" is so-called as it was drafted by Enron Corporation lobbyists working with U.S. Senator Phil Gramm (R-TX) to create a deregulated market for their experimental "Enron On-line" initiative.

There you are - perfectly legal, perfectly immoral. Be angry, but don't bother calling a lawyer.

lazlo
02-05-2009, 11:36 PM
There you are - perfectly legal, perfectly immoral. Be angry, but don't bother calling a lawyer.

LOL! Agree on all account Dennis. But I'm less concerned about whining, and more concerned about keeping it from happening again.

We live in a pretty messed-up country when Lobbyists can (legally) pay a Senator to add a loophole to Federal Regulations with the explicit purpose of exploiting the loophole for profit.

It happened with the Junk Bond and Savings and Loan crisis, with the Enron/California Energy Crisis, and now with Credit Default Swaps.

Teenage_Machinist
02-05-2009, 11:42 PM
That is why liberalism is good. Regulation and Rockefeller's Bane are important.

Mad Scientist
02-06-2009, 12:01 AM
Ah but everything will be OK because our illustrious politicians will come out riding on their white horses to save us and tell us how they going to fix the problem by writing “new laws” to prevent this from ever happening again.

All we required to do is forget that they were the very ones that abolished the “old laws” that might have prevented this from happing.

dp
02-06-2009, 12:05 AM
That is why liberalism is good. Regulation and Rockefeller's Bane are important.

I don't suppose you have an example of successful and corruption free liberalism?

dp
02-06-2009, 12:06 AM
Ah but everything will be OK because our illustrious politicians will come out riding on their white horses to save us and tell us how they going to fix the problem by writing “new laws” to prevent this from ever happening again.

All we required to do is forget that they were the very ones that abolished the “old laws” that might have prevented this from happing.

Pay close attention to this concept: They never write laws that may be applied to themselves. Hence the problem continues.

Mcgyver
02-06-2009, 12:18 AM
Certainly there were laws broken - I don't mean to suggest this was all done within the law, but it's going to surprise a lot of people when they learn what the law does and does not apply to. And establishing fiduciary associations in this mess is going to be quite an undertaking with no shortage of conflicts. .

agreed, the troublesome part is there is not apparent fix. pop culture seems to be toward more regs, what's that going to accomplish? Nothing. there already are lots of regs to stop this that were ineffective or just not enforced

What disturbs me more executive compensation - really the unravelling comes from an individual sitting making a choice, hmmmmmm do i take $15m in bonus this year or do the right thing. I suggest not everyone in NY is a terrible person and a disturbingly high percentage of the population at large would be bolting for the hills in their new 911 carrera given this choice. Anyway, its disturbing because no ones watch the shop. The board of directors and their comp committee set the salaries, but who's on the board? Other CEO types. Joe average shareholder has no say and only the odd money manger pipes up - they either don't want to be ostracized or are too from the CEO/board member world. No one is watching the store.

I have no solution to this, as I don't want government setting wages, yet its obscene that someone (like Roth at Nortel) takes 100m off the table months before the stock marches from $800 (consolidation adjusted) dive to zero. yes, even civilized men start thinking of a blunt knife.

Its very cold comfort for those embroiled in the pain, but in the grander scheme of things its just another chapter from a future edition of "extraordinary popular delusions and the madness of crowds". The free enterprise/capitalism has done this many times; from the internet bubble, Savings and Loans, the '29 stock market crash or even the dutch tulip mania 400 hundred years ago....big crashes and lots of pain. Sort of a 2 steps forward, one back....so long as we and politicians remember that net gain of step has made the western the wealthiest in all of human history.

dp
02-06-2009, 12:23 AM
What disturbs me more executive compensation - really the unravelling comes from an individual sitting making a choice, hmmmmmm do i take $15m in bonus this year or do the right thing. I suggest not everyone in NY is a terrible person and a disturbingly high percentage of the population at large would be bolting for the hills in their new 911 carrera given this choice.

This might change your mind about NY :)

http://fundrace.huffingtonpost.com/neighbors.php?type=name&lname=Masters&fname=Blythe

Teenage_Machinist
02-06-2009, 12:25 AM
That question has fewer affirmative answers, applied to the US 1970s-present, in reciprocal form.

Judge not, that thou shalt be judged?



Also, I do not really like our dumb conservative excuses for libera;s, the Dems just dont seem to get it that they need to move the OVerton Window by tallking about really liberal things. "So evil will prevail because good is dumb" (whats that quote from?)

However, many of our democrats including Obama are not evil or malicious cruel or malicious, unlike the previous regime.

Laws applying to selves is a fact of human nature that improved very much in the 1700s and 1800s. However, there is no perfect solution. As far as general power, rights, evilness go, however, the democrats have been much more respectfull of the law than President-For-Life Yeah-im-going-to-make-an-executive-order-abolishing-habeas-corpus-even-though-it's-unconstitutional-and-I-am-not-the-Legislature W. Bush.

I suggest either communistic rule by a council of virtue (difficult to avoid corruption as Lenin's Death shows) or Athenian-style city democracy (a lost relic of the Elder Days). Neither works today.


Saying there is no example of sucsessful and corruption free liberalism shows how much harm the Neoconservative Media has done, and how liberal has become a swearword. Is like saying there is no example of sucsessful and corruption free conservativism.

Part of the problem is the way conservatives, with money and the media on their side, insert problems into stuff, then blame the liberals for not getting it right, example Medicare, possibly NCLB.

Right now the bourgeousie and the prolateriat have no voice though the People's Blogosphere may change that. Its all for the very rich.


I have hopes for and anger against Obama.

dp
02-06-2009, 12:30 AM
Saying there is no example of sucsessful and corruption free liberalism shows how much harm the Neoconservative Media has done, and how liberal has become a swearword. Is like saying there is no example of sucsessful and corruption free conservativism.

There reason I asked is because most of the world's governments are leftist ranging from liberal (France, Spain) to dictatorial (Venezuela). One would think that with such a plethora to choose from an example would be at one's fingertips.

oldtiffie
02-06-2009, 12:52 AM
If it were me, I'd take my lead from Dennis (dp) as he is more looking forward and doing something about the effects of the past instead of bitching about the past and neither neglecting nor being negative about the/his future. He is doing what he can about what he can. He has a very good positive outlook - and it shows!!

Bravo Dennis!!!

As none of us are "in charge" or able to really do anything of substance about actually solving and remedying the situation we are in and that you are not likely to influence those that are in power to do anything either, there is no point in bitching about it all.

Its time to take stock - if you haven't already - and make the best of what you have and what might be available or on offer. Its no good waffling on about what might have been and never was or might never be.

Negativity begets negativity as well as depression, despair and worse - and its one hell of a long road back in the best of times - so don't go there and don't head down the depression and despair path either.

Mad Scientist
02-06-2009, 01:13 AM
However, many of our democrats including Obama are not evil or malicious cruel or malicious, unlike the previous regime.


Oh I’m not so sure of that. To me it is more like comparing tweedledee to tweedledum and putting on my aluminum cover conspiracy hat I would say that the real people in control are using them like puppets on a string.

Meanwhile we are suppose to jump up and down, wave our red and blue flags scream hip hip hurray for our team and boo hiss for your team all the while ignoring what the puppet masters are doing to us.

gmatov
02-06-2009, 03:37 AM
Wierd,

Companies HAVE been sued and found culpable. Countrywide, now owned by BofA, were fined 150 million bucks, a pittance, for deceptive and illegal loans to people who could not possibly afford them. No Income No Job, people, or insufficient financial data.

They made the loans, sold them moments later, made a fee and had that same money, PLUS the fee, to lend again to the next sucker to walk in the door.

Obama's picks for a couple posts had some tax problems. Hokay. One had use of a Limo, which he should have paid the taxes for if it were to have been charged to him. I guess it is the value of that service, in dollars, that he would have had to declare as income, and pay tax.
Another, Geithner, I think, Pres of a Fed bank, didn't know that his paycheck did not have FICA withholding, make sure you pay it. Makes you wonder if the RICH are just too stupid to know anything about taxes, or just think, like Leona Helmsley, that "Only the little people pay taxes!"

Another is the lady who didn't pay taxes for her immigrant housekeeper. I wonder how much she paid that housekeeper, that she would have owed so much that she couldn't bear to pay that sum. Makes you think the rich are really greedy people. "I ain't paying that!"

Obama's team sure as hell should have vetted those people more thoroughly. I would think that all them make so much money that they do NOT use TurboTax to do their own taxes. Why in the hell are the Accounting companies, I would assume Top 10 companies, allowing them to cheat even on such insignificant, to them, sums.

140 thou, "OOH, I'll write you a check!" Not, oh-oh, I gotta sell some stock to be able to make that payment. Pocket money to them, but they don't want to pay it, OR, they have CPAs who think it will slide, unless they get proposed for Federal Office, where they will be under a magnifying glass.

Greenspan was the absolute ruler of the Fed for, what, 19 years? When the meltdown came, he admitted under Congressional questioning, that he got a few things wrong.

Clinton SHOULD have rebuffed his pleas for ONE MORE TERM. Interest rstes SHOULD have risen to cool things off. His successor, Bernanke, should never have been proposed. Totally ineffective. Out of his depth.
We are stuck with Bernanke, but has anyone heard him make ANY statement regarding the present situation?

Why is the FED now worth 3 TRILLION bucks, when they were, before the Recession, worth 700 BILLION bucks? Where did they get these extra assets. HOW can they guarantee 7.4 TRILLION bucks of guarantees? I don't think there are that many dollars afloat in the world.

The Stimulus Package!!!

When Obama proposed it, it was ABOUT 700 BILLION bucks. House passed it. 100% of Reps voted NO, plus 10 dems.I think it passed as 825 TRILLION bucks, 1/3 of which was tax cuts. 275 BILLION bucks to the already ultra-rich.

After lounging in the Senate, although SOME of you blame the Dems for it, it has failed every vote put up, because the Reps don't like it. It is now up to 929 BILLION bucks.

Once upon a time, the Reps threatened "The Nuclear Option", eliminate the "Fillibuster" which is what the Dems are trying to avoid. Bi-Partisanship, don't cha know?
Reagan came in and made a huge tax cut. One year later, and every year after, he raised taxes. His second year in office, he made what was, to that time, the largest tax increase in American History.

George HW Bush promised the same, "No New Taxes." Had to reverse himself. Raised taxes.

You CANNOT run a Government nor a Country without taxes. Hell, you cannot run a Village without taxes.

Of course there are them who live in the wilds of New Mexico who plow their own roads, and the like, but is not that approximately the same as taxes? You spend your own fuel money to keep the road open to your, and likely your neighbor's, 5 miles down the road, drive?

Good on you if you don't ask the neighbor to pay part of the fuel cost for clearing the road.

Weird,

BO doesn't have the country in limbo. he House, which need just a simple majority, passed the bill with ALL the Reps and 10 Dems against. Too bad. It passed.

In the Senate, it NEEDs a vote of HALF plus one, unless the Reps want a Fillibuster, and the Reps DO. All the dicking around to get them to pass it have raised the bill to 929 BILLION bucks.

Just WHAT have the Dems given the Reps to get the f**kin' thing up so much, and to which, they STILL will not vote AYE.

A week or so ago, at a meeting, Obama said "I WON!", corrected to be "WE WON!"

Democrats WON. The Presidency is Democrat! The House is overwhelmingly Democrat! The Senate is not majority Democrat, so spoilers, the Reagan Republicans, can dick around and sidetrack this "stimulus", trying to get MORE for their BASE. Bush's term, not anybody elses. "My Base."

Wierd,

Either you lie or you do not quote well.

To wit:
"so logicly some liberals will blame that on Rush to draw attention away from Nancy Pelosi who released this whopper-"500million people are losing their jobs every month" the botox has eaten her brain no doubt about that anymore."

I really doubt she said "500 million people", more than are IN the US, unless she was talking about the entire world, and I don't think, either, she would be too concerned about foreign job losses, nor would 8& of the entire population of the world either be losing their jobs nor would anybody be able to document that.

DP,
I would like you to describe what the mortgage meltdown entailed. Come. Give us some of your expertise. You must be smarter than all them Bank and Mortgage Company people.

"he ill effect of cascading risk through reselling subprime risk to people who bought but didn't understand the risk is a buyer's error. When you spend billions of dollars in a market segment you really need to put somebody with great skill on the back trail to see what that risk represents. If that cannot be done then it is most prudent to avoid buying that risk."

If you are in a 401(k) or a Pension Fund, like a State Employee's or a Teacher's Retirement Fund, or your own company's fund, what weight does your omniscience do for that Fund? YOU know it is too good to be true.(You might have your own investments that are underwater, too, so I wouldn't give your thoughts too much weight.

It is easy as hell to see the bad in something AFTER it has gone bad.

MOST of the people who bought houses with subprimes WANTED to live in those houses. They, I think, thought, because of the assurances of their mortgage brokers, that they were buying housing they could pay for.

Ahhh! McGyver brings up the "Rating Agencies".BAAAADDDD. If they didn't give AAAA to the credit apps they were handed, the mortgage brokers went to another Agency. Agencies get paid for their opinions. If they make too many thumbs downs, the lenders went to another Agency, and you still get a melt down.

Bad debt.

DP,
"t is perfectly possible to lose all your investments and in a perfectly legal way. The very wise investor should know this. What the less than wise investor knows or doesn't know up's the degree of risk he assumes."
I don't think the typical bitcher her is talking about his own, individual, I picked my own stock, investor.

I think the typical complainant is a 401 or IRA holder. Them, we pay people to manage. We should not have such losses, unless the typical manager is no brighter than we are. You might be down more, were you to have managed your own investments, you might be down less, had you. Some here say that they have not lost as much as others have.

I have a pretty good "paper loss". I have lost nothing till I decide to sell. Actually, considering the few times I have taken money out, and the amount of my total contribution, and the balance I have now, I am a bit ahead of the game, since it is higher than my contribution less my withdrawals over the years.

I WAS way HIGHER, at one time, but, what the hell you gonna do. I probably should have, since I am retired, cashed out and put it in a Money Market account, you know, them 1/2 % accounts.

And, Lazlo,

Do you ever think the USG will hire the best and the brightest, who can stay atop the scamsters who, with Congressional wink-winks, can stop the scamsters? We will always have them who can outwit anybody who is appointed to regulate them, whether because they will be hire into that firm if they turn a blind eye, or because they are just too stupid to be in charge, else they would BE in the business they are supposed to regulate.

These "financial instruments" were so complicated that the people who concocted them didn't even understand them. They were supposed to have eliminated ALL risks in the financial arena. They went nuclear, and most of the world collapsed, financially, and I would love to know how many have come out of the **** smelling like roses, and who they are.

CEOs of those entities SHOULD be grilled and possibly imprisoned, and the proverbial "clawback".

fat chance.

Barts,

never, ever, mention stopping "deregulation" on a machining site, whether HSM or Pro. They hate any type of Regulation. It will always stop them from becoming millionaires, whether they have a pot to piss in or not. If there WERE no regulation, they would all be rich.

HAD we regulation, and people who understood the risks, and NOT in the Bush-Cheney Admin, anti-regulation, we MIGHT not be in the state we are in.

I can't blame it all on the Iraq War, though I think a lot of it IS. You simply can't spend all that money on "Contractors" like KBR and Halliburton and remain solvent. 175 thou "Security Agent" embedded with a team of soldiers, who, I am surprised to learn, go int the Army at 40 thou per year, unless I have gotten bad info (I enlisted at 78 bucks a month, 40 some years ago, a private earns more than I made in industry after 40 years? Ridiculous!!!)

Bed time, now.

Cheers,

George

chief
02-06-2009, 05:31 AM
Joefinn,
You have no idea who I voted for,(save your self-righteous BS for someone else). You don't seem to understand that when taxes are increased that is in fact a cap on your salary. Let me know when you spend and borrow your way to prosperity.

Rustybolt
02-06-2009, 06:17 AM
Joefinn,
You have no idea who I voted for,(save your self-righteous BS for someone else). You don't seem to understand that when taxes are increased that is in fact a cap on your salary. Let me know when you spend and borrow your way to prosperity.




Yep. Going deeper into debt isn't going to solve this. However it IS the Chicago solution. What we have now is the same people that made Illinois what it is today, running the country. It's only going to get worse.
Enjoy!

J Tiers
02-06-2009, 09:00 AM
Saying there is no example of sucsessful and corruption free liberalism shows how much harm the Neoconservative Media has done, and how liberal has become a swearword. Is like saying there is no example of sucsessful and corruption free conservativism.



bunch of BS.

PURE BS

There is NO example of corruption-free ANYTHING. This is not "Neocons", or Liberals, or "Bushies", or the folks in power right now, the "Bammers".

Bammers are just like everyone else. They are INHERENTLY EVIL AND CORRUPT. YOU ARE TOO.

In case some of you fuzzy thinkers have missed out something in civics and history class (OOps I forgot, that got canceled as old-fashioned)......

THE ENTIRE BASIS OF THE AMERICAN MODEL OF GOVERNMENT IS TO COUNTERACT THE INHERENT, OBSERVED FACT THAT EVERYONE IS CORRUPT.

But, since everyone is corrupt in different ways, we CAN counteract each other, given a mechanism. That mechanism is in the structure of government.

The US Constitution sets a structure of government which inherently places corrupt people in opposition to each other, with the goal of finding a middle path.

What the Congress does, is counteracted by the executive branch and ultimately by the courts. The first two are elected, that last is made long-lasting and slow to change, and that is DELIBERATE. Elected folks are mob-motivated. But mobs are quick to act, and quick to disappear.

Slow change on the court ensures that hasty actions don't change everything in irrevocable ways.

Right now, mobs are yelling for change, we have bolshies here on the board crowing about the proletariat (very properly, given their advertised age, ref Winston Churchill), and hasty action is demanded.

But, the structure of US government does NOT guarantee the total absence of corruption. NO SYSTEM CAN DO THAT.

What it DOES guarantee, is that there will be a mechanism for the people to initiate change in every level of government, on a regular basis, and in whatever way the 'will of the people" demands.

If we don't like what the elected officials do, we can, and very often DO, throw the bastiges out, replacing them with others. We have an example of that in Illinois, where an evidently totally corrupt governor is now unemployed.

If you would rather trade this for a guaranteed daily bowl of gruel, and a bed in a worker's bunkhouse, you DO have the option to try to initiate that level of change.

I might point out that so far, the various worker's paradises have universally been a total flop. They have all ground down the workers, and been overturned for CORRUPTION, of all things.

The "Democracies" have also all failed, the Athenian democracy being the prototypical example. It's a darn good thing that we do NOT live in a "democracy", you'd hate it, they completely suck.

The only system of government that has endured, is the type which has its roots in the Magna Carta. We are NOT the oldest example of that, but we are ONE of them.

Our version is a "representative republic", and so far it has succeeded in surviving a large number of problems. The other derivative versions have all become representative republics also, because they just plain WORK.

They don't work perfectly in the short run, but per history, they work the best in the long run.

Thiose who are yelling now ought to study the 1929 depression, and the operations of the "robber barons" of the late 1800s. These wall street guys now wouldn't have lasted a week back in the 1800s. And in 1929, they would be those splatting sounds you heard............

wierdscience
02-06-2009, 09:14 AM
Wierd,


Wierd,

Either you lie or you do not quote well.

To wit:
"so logicly some liberals will blame that on Rush to draw attention away from Nancy Pelosi who released this whopper-"500million people are losing their jobs every month" the botox has eaten her brain no doubt about that anymore."

I really doubt she said "500 million people", more than are IN the US, unless she was talking about the entire world, and I don't think, either, she would be too concerned about foreign job losses, nor would 8& of the entire population of the world either be losing their jobs nor would anybody be able to document that.
e

Here it is George,she said it,she was also corrected on it and said it again-

http://www.youtube.com/watch?v=fVl2nqjLVeA

Here she is defending part of the stimulus bill being used for birth control,but in fairness even she admits later that the tax cuts in the bill are needed and important.

http://www.youtube.com/watch?v=JZWn1eRzvyw

Maybe she's just angry cause she didn't get the bigger plane she wanted?

BO has us in limbo because he won't step up to the plate and lead.Leadership means taking your own party to task when needed.The original bill was written by the Pelosi led house and was chock full of pork,when it got to the senate it died and rightly so.

To say that the republican add ons were"tax cuts for the rich" is pure BS-

http://www.reuters.com/article/politicsNews/idUSTRE50N04N20090124?pageNumber=1&virtualBrandChannel=10112

Pay particular attention to this paragraph-

"The House Republican proposals include cutting the lowest two income tax brackets, to 10 percent from 15 percent and to 5 percent from 10 percent, while offering small businesses a tax deduction equal to 20 percent of their income. Democrats have proposed a tax cut of $500 for individuals earning up to $75,000 and $1,000 for families earning up to $150,000. Republicans said their plan would give families an average of $1,700 in savings.

The Republicans also proposed helping those who have lost their jobs by eliminating taxes on unemployment benefits. They also urged that the legislation bar higher taxes to pay for the anticipated increased spending."

Any package passed should include money for infrastructure and tax cuts,that's it.It's economic stimulus,not special intrests stimulus.

wierdscience
02-06-2009, 09:19 AM
bunch of BS.

PURE BS

There is NO example of corruption-free ANYTHING. This is not "Neocons", or Liberals, or "Bushies", or the folks in power right now, the "Bammers".

Bammers are just like everyone else. They are INHERENTLY EVIL AND CORRUPT. YOU ARE TOO.

In case some of you fuzzy thinkers have missed out something in civics and history class (OOps I forgot, that got canceled as old-fashioned)......

THE ENTIRE BASIS OF THE AMERICAN MODEL OF GOVERNMENT IS TO COUNTERACT THE INHERENT, OBSERVED FACT THAT EVERYONE IS CORRUPT.

But, since everyone is corrupt in different ways, we CAN counteract each other, given a mechanism. That mechanism is in the structure of government.

The US Constitution sets a structure of government which inherently places corrupt people in opposition to each other, with the goal of finding a middle path.

What the Congress does, is counteracted by the executive branch and ultimately by the courts. The first two are elected, that last is made long-lasting and slow to change, and that is DELIBERATE. Elected folks are mob-motivated. But mobs are quick to act, and quick to disappear.

Slow change on the court ensures that hasty actions don't change everything in irrevocable ways.

Right now, mobs are yelling for change, we have bolshies here on the board crowing about the proletariat (very properly, given their advertised age, ref Winston Churchill), and hasty action is demanded.

But, the structure of US government does NOT guarantee the total absence of corruption. NO SYSTEM CAN DO THAT.

What it DOES guarantee, is that there will be a mechanism for the people to initiate change in every level of government, on a regular basis, and in whatever way the 'will of the people" demands.

If we don't like what the elected officials do, we can, and very often DO, throw the bastiges out, replacing them with others. We have an example of that in Illinois, where an evidently totally corrupt governor is now unemployed.

If you would rather trade this for a guaranteed daily bowl of gruel, and a bed in a worker's bunkhouse, you DO have the option to try to initiate that level of change.

I might point out that so far, the various worker's paradises have universally been a total flop. They have all ground down the workers, and been overturned for CORRUPTION, of all things.

The "Democracies" have also all failed, the Athenian democracy being the prototypical example. It's a darn good thing that we do NOT live in a "democracy", you'd hate it, they completely suck.

The only system of government that has endured, is the type which has its roots in the Magna Carta. We are NOT the oldest example of that, but we are ONE of them.

Our version is a "representative republic", and so far it has succeeded in surviving a large number of problems. The other derivative versions have all become representative republics also, because they just plain WORK.

They don't work perfectly in the short run, but per history, they work the best in the long run.

Thiose who are yelling now ought to study the 1929 depression, and the operations of the "robber barons" of the late 1800s. These wall street guys now wouldn't have lasted a week back in the 1800s. And in 1929, they would be those splatting sounds you heard............



http://www.youtube.com/watch?v=j7M-7LkvcVw&eurl=http://crusader-rabbit.blogspot.com/

JoeFin
02-06-2009, 10:03 AM
Joefinn,
You have no idea who I voted for,(save your self-righteous BS for someone else). You don't seem to understand that when taxes are increased that is in fact a cap on your salary. Let me know when you spend and borrow your way to prosperity.

Chief

I advocate against “Trickle down Economics” – period. Sorry if I had a Cork-Soaker moment and came off harshly

Trickle down Economics never were for any thing other then the “Fat-Rat in the corner” and now that they have run out of industries in America to pillage, they are moving those industries overseas, much to the demise of the average American Citizen. Regeanomics has proved itself to be a Blithe upon this great Nation.

What I do find astonishing is the number of every day plain folk who go along with “Fat-Cat” philosophy thinking some how they are going to get rich by it. That some how these guys are going to allow them entrance to the club – pure fallacy!

Folks I know (true entrepreneurs/innovators) – that have seemingly “Beat the System” (and made millions) get out early and retire at a young age. More importantly, they didn’t get there strictly adhering to “Trickle Down Philosophy” or “Yellow Book Management”. They paid their workers very well – demanded the impossible from them, and managed by “Teach a Man to Fish” rather then manipulative, coercive tactics. And it worked

So I detest the Trickle Down advocates who are substantially at fault for the current crisis.

BTW: Here is an interesting read


Wall Street CEOs, investment bankers charged prostitutes on corporate cards, madam says
John Byrne
Published: Friday February 6, 2009

Investment bankers racked up $100,000s in prostitution charges
Visa, Mastercard or American Express? Or maybe a credit card from JP Morgan Chase?

Wall Street CEOs, lawyers, bankers and media executives chalked up thousands of dollars in prostitution charges on their corporate credit cards -- swiping their cards for $2,000 an hour prostitutes, according to a New York madam who plead guilty last year.

Kristin Davis, the madam in question, went public to ABC News this week; ABC will be broadcasting her interview Friday at 10 pm. Davis says she has a list of 9,800 clients, many of whom she says New York prosecutors deliberately avoided when taking her case, even though she offered them her annotated client list.

In what's sure to create a media firestorm parallel to that of when a Washington, DC madam announced that she was publishing her client list (which included at least one senator), Davis' comments come at a time where incredible ire is already focused on Wall Street and banking executives. The pressure for her to release the list will certainly be immense.

"Some of these guys, I was invoicing on corporate credit cards," she said. "I was writing up monthly bills for computer consulting, construction expenses, all of these things, I was invoicing them monthly so they could get it by their accountants."

More Here (http://rawstory.com/news/2008/Wall_Street_CEOs_investment_bankers_charged_0206.h tml)

Mad Scientist
02-06-2009, 10:34 AM
http://www.youtube.com/watch?v=j7M-7LkvcVw&eurl=http://crusader-rabbit.blogspot.com/

Excellent video! That is something all of our elected leaders should be required to watch. However for many of them I believe it would be above their level of comprehension. Thus they continue marching us at full speed to a new world order with the elite in total control.

Mad Scientist
02-06-2009, 10:54 AM
Greenspan was the absolute ruler of the Fed for, what, 19 years? When the meltdown came, he admitted under Congressional questioning, that he got a few things wrong.

Just a few things!!! :) :)

Clinton SHOULD have rebuffed his pleas for ONE MORE TERM. Interest rstes SHOULD have risen to cool things off. His successor, Bernanke, should never have been proposed. Totally ineffective. Out of his depth.
We are stuck with Bernanke, but has anyone heard him make ANY statement regarding the present situation?



Well yes shortly after he took on the job he stated the FRB was the cause of the great depression, which is true, BUT he "promised" not to let that happen again.

Later he said he would throw money out of a helicopter if he thought it would help. Excuse me I have to go now, I think I hear a helicopter outside.

dp
02-06-2009, 11:27 AM
DP,
I would like you to describe what the mortgage meltdown entailed. Come. Give us some of your expertise. You must be smarter than all them Bank and Mortgage Company people.

It is pretty well understood that people took on more debt than they had a reasonable ability to pay - and they knew it.


If you are in a 401(k) or a Pension Fund, like a State Employee's or a Teacher's Retirement Fund, or your own company's fund, what weight does your omniscience do for that Fund? YOU know it is too good to be true.(You might have your own investments that are underwater, too, so I wouldn't give your thoughts too much weight.

You have bought into the inevitability of the 401K. When you do that the rest is inevitable, too.


MOST of the people who bought houses with subprimes WANTED to live in those houses. They, I think, thought, because of the assurances of their mortgage brokers, that they were buying housing they could pay for.

The were uninformed. Pure and simple, they were out of their league. That is exactly what I've been talking about. Unless you also believe in the inevitability of owning a home one cannot possibly afford. These buyers do not understand risk management. I blame our schools.


DP,
I think the typical complainant is a 401 or IRA holder. Them, we pay people to manage. We should not have such losses, unless the typical manager is no brighter than we are. You might be down more, were you to have managed your own investments, you might be down less, had you. Some here say that they have not lost as much as others have.

That turns out to be a bad idea, doesn't it. I did manage mine and I did not get on the rollercoaster options. I did the long steady race and while I didn't get to keep all the rings, I still have a lot of them.



I have a pretty good "paper loss". I have lost nothing till I decide to sell. Actually, considering the few times I have taken money out, and the amount of my total contribution, and the balance I have now, I am a bit ahead of the game, since it is higher than my contribution less my withdrawals over the years.

That right there is my problem - all my losses are paper losses, but this past July I decided to retire so do need to covert, over time, my investments, starting in July. The timing for my situation could not have been worse, but the problem could have been worse had I followed another investment track.

lazlo
02-06-2009, 11:33 AM
Guys: one more time: there was a total of $500 Million in sub-prime defaults by the end of 2008. The world's stock markets lost $100 Trillion dollars between September and November. The sub-prime mortgages had very little to do with the world's financial crisis, other than being a instrument for a junk bond.

The Credit Default Swaps that we've been discussing were bets placed on whether a particular block of mortgages would default. That's where all the action was.

Large financial institutions like Bear Stearns, Lehman, Northern Rock, et al were placing Trillions of dollars in CDS bets that their own mortgage funds wouldn't default. They were spreading the bets around, so that if one mortgage fund defaulted, they could pay it with the proceeds of another CDS (i.e., they were floating checks). The problem was, that a bunch of mortgages defaulted all at once, and they didn't have enough cash to cover all the bets...


That right there is my problem - all my losses are paper losses.

These aren't just paper losses. It took about 6 years for the markets to recover from the .com bust, and most of the technology stocks, including Intel :(, never recovered to their 2000 values.

Similarly, the world's housing markets were artificially inflated due to the buying spree triggered by sub-prime mortgages (it wasn't just in the 'States, there were sub-prime mortgage sprees in Britain and Australia, for example), so the housing values have reset to their "natural" values -- they're not going back up anytime soon...

dp
02-06-2009, 12:03 PM
Guys: one more time: there was a total of $500 Million in sub-prime defaults by the end of 2008. The world's stock markets lost $100 Trillion dollars between September and November. The sub-prime mortgages had very little to do with the world's financial crisis, other than being a instrument for a junk bond.

I'm not talking about the CRA part of the subprime meltdown - the total subprime market failure was much larger including the collateral damage. http://en.wikipedia.org/wiki/Subprime_mortgage_crisis


The Credit Default Swaps that we've been discussing were bets placed on whether a particular block of mortgages would default. That's where all the action was.
Not quite that simple as that obscures cause/effect. The CDS was a tool to mitigate to the first parties any risk of radioactive loans.


Large financial institutions like Bear Stearns, Lehman, Northern Rock, et al were placing Trillions of dollars in CDS bets that their own mortgage funds wouldn't default. They were spreading the bets around, so that if one mortgage fund defaulted, they could pay it with the proceeds of another CDS (i.e., they were floating checks). The problem was, that a bunch of mortgages defaulted all at once, and they didn't have enough cash to cover all the bets...
And there were no regulatory agencies minding the store.


These aren't just paper losses. It took about 6 years for the markets to recover from the .com bust, and most of the technology stocks, including Intel :(, never recovered to their 2000 values.
Worst stock bath I ever took was on Sun Microsystems. Three things happened with perfect storm timing: I started a new business as a systems integrator, I bought a lot of SUNW, the dot com bust hit, and Sun, who put the dot in dot com, tanked. They've never recovered. Nobody in my world saw that coming :)

lazlo
02-06-2009, 12:14 PM
I'm not talking about the CRA part of the subprime meltdown - the total subprime market failure was much larger including the collateral damage. http://en.wikipedia.org/wiki/Subprime_mortgage_crisis

Looks like a great article, which I don't have time to read right now. What are they saying the indirect hit was? Are they including the "loss" in housing values? That's an artificial loss, IMHO -- the housing markets were artificially inflated because the big lenders were showering everyone (prime and sub-prim) with balloon mortgages.


Worst stock bath I ever took was on Sun Microsystems. Three things happened with perfect storm timing: I started a new business as a systems integrator, I bought a lot of SUNW, the dot com bust hit, and Sun, who put the dot in dot com, tanked. They've never recovered. Nobody in my world saw that coming :)

If it makes you feel any better, I left Intel on July 28. I timed my exit because you have 90 days to sell off your stock options, and technology stocks typically suck during the Summer. Intel always bounces in October, and my plan was to sell all my options on the second week of October.

The market crashed on the first week of October, so I "let" a sickening amount of Intel stock options expire :mad:

dp
02-06-2009, 12:23 PM
Looks like a great article, which I don't have time to read right now. What are they saying the indirect hit was? Are they including the "loss" in housing values? That's an artificial loss, IMHO -- the housing markets were artificially inflated because the big lenders were showering everyone (prime and sub-prim) with balloon mortgages.

From the article:

Financial products called mortgage-backed securities (http://en.wikipedia.org/wiki/Mortgage-backed_securities) (MBS), which derive their value from mortgage payments and housing prices, had enabled financial institutions and investors around the world to invest in the U.S. housing market. Major banks and financial institutions had borrowed and invested heavily in MBS and reported losses of approximately US$435 billion as of 17 July 2008.


The market crashed on the first week of October, so I "let" a sickening amount of Intel stock options expire :mad:

Ouch!!!

lazlo
02-06-2009, 12:40 PM
Financial products called mortgage-backed securities (MBS), which derive their value from mortgage payments and housing prices, had enabled financial institutions and investors around the world to invest in the U.S. housing market. Major banks and financial institutions had borrowed and invested heavily in MBS and reported losses of approximately US$435 billion as of 17 July 2008. !

The Mortgage Backed securities are the CDO's (Collateralized Debt Obligations) -- the junk bonds that Bear Stearns, Lehman et al were floating. So that $435 Billion loss was part of the $100 Trillion loss, and not directly related to the $500 Million in sub-prime mortgage foreclosures. Note that July 2008 was before the Bomb hit, so that loss was probably 10 times as much by the end of November, 2008.

lazlo
02-06-2009, 12:57 PM
BO currently has the country in limbo,so logicly some liberals will blame that on Rush to draw attention away from Nancy Pelosi who released this whopper-"500million people are losing their jobs every month" the botox has eaten her brain no doubt about that anymore.

She obviously meant 500,000 people are losing their jobs every month. Since you were a Bush supporter, you should be used to slips of the tongue by now ;)

http://ak.imgfarm.com/images/ap/JOBLESS.sff_GFX457_20090206105544.jpg

dp
02-06-2009, 01:05 PM
The Mortgage Backed securities are the CDO's (Collateralized Debt Obligations) -- the junk bonds that Bear Stearns, Lehman et al were floating. So that $435 Billion loss was part of the $100 Trillion loss, and not directly related to the $500 Million in sub-prime mortgage foreclosures. Note that July 2008 was before the Bomb hit, so that loss was probably 10 times as much by the end of November, 2008.

I think our differences here comes down to the size and mesh of the net we're casting around the problem. It's all related. And yep, still growing.

JoeFin
02-06-2009, 02:10 PM
The Mortgage Backed securities are the CDO's (Collateralized Debt Obligations) -- the junk bonds that Bear Stearns, Lehman et al were floating. So that $435 Billion loss was part of the $100 Trillion loss, and not directly related to the $500 Million in sub-prime mortgage foreclosures. Note that July 2008 was before the Bomb hit, so that loss was probably 10 times as much by the end of November, 2008.

Just how did this get to “Who is at Fault for Mortgage Defaults?”

YOU ARE BOTH MISSING THE WHOLE POINT

This is not about WHO is paying their mortgage or not – it’s about USA’s Currency – the God Almighty Dollar.

Our currency – the US Currency is not based on Gold, Silver, nor even Aluminum, it’s based on Trust. Trust that Americans will pay their bills. Economic Policies that proclaimed “Deficits are Good for the Economy” (debt) have a share 100 fold that of any group of folks who are defaulting on their mortgage.

The “De-Regulated Climate” led to the “theory” if we spread this astronomical dept around the world then all countries of the world will have to continue honoring the US Dollar. It was a Gamble. With our future, our children’s future, our children’s children’s future.

Not some thing anyone here on the forum would likely roll the dice on.

But there was money to be made on Wall St. by doing it, and they are so well insulated by huge executive compensation packages – they didn’t care that they made that wager for all American's future.

This at a time when China and Russia have told many small countries to divest the Dollar from their cash reserves.

So does anyone here not think regulation is needed to protect America's future from a greedy few on Wall St.

dp
02-06-2009, 02:16 PM
So does anyone here not think regulation is needed to protect America's future from a greedy few on Wall St.

To paraphrase the MOTUS (Messiah Of The United States): Everyone thinks they're an economist.

http://www.breitbart.com/article.php?id=D96675KG0&show_article=1

lazlo
02-06-2009, 02:20 PM
Just how did this get to “Who is at Fault for Mortgage Defaults?

Joe, I agree with your points, but some folks (not DP, by the way) have the overly simplistic view that Americans defaulting on sub-prime mortgages caused the World's economic collapse.

The real issue is that investment banks all around the world floated bad checks worth many times the value of the sub-prime mortgages they were based-on.

dp
02-06-2009, 02:31 PM
Joe, I agree with your points, but some folks (not DP, by the way) have the overly simplistic view that Americans defaulting on sub-prime mortgages caused the World's economic collapse.

The real issue is that investment banks all around the world floated bad checks worth many times the value of the sub-prime mortgages they were based-on.

The sub-prime was a big part of the total problem. It takes a very small subset of a bank's customers running on the bank to cause that bank to fold. It's the same with defaulted loans - when a critical number is reached the problem cascades and margins are called in in a widening circle. This ripple effect is difficult to explain and understand, but the point is the radioactive loans should never have been made in the first place, and they should never have been used as collateral for reselling the risk.

It's like using your accounts receivable as a tangible asset in seeking a loan. It does not help that there was no proper transparency nor oversight in the process.

JoeFin
02-06-2009, 03:14 PM
- when a critical number is reached the problem cascades and margins are called in in a widening circle.

There were no Margins called in

The Banks were forced to stop listing the "Mortgage Dirivitives" as assets.

Simple - when you loan money to ANYONE it is "Risk" not an asset. Just how they felt it was legal to list them as assets is another example of how "Deregulation was merely used to label High Crimes of Commerce as Business as Usual"

BUT - the reason the US government was forced to step in was because of the value of the Dollar

ckelloug
02-06-2009, 03:16 PM
I saw an article on Yahoo a month or two ago that the amount in CDS's that could go bad is on the order of 51 trillion: thats right, 5.1*10^13 dollars.

That's a lot of money and equivalent to the GDP of the entire world for a while.

dp
02-06-2009, 03:21 PM
There were no Margins called in

The Banks were forced to stop listing the "Mortgage Dirivitives" as assets.

Simple - when you loan money to ANYONE it is "Risk" not an asset. Just how they felt it was legal to list them as assets is another example of how "Deregulation was merely used to label High Crimes of Commerce as Business as Usual"

BUT - the reason the US government was forced to step in was because of the value of the Dollar

Of course there were. Institutions cannot absorb defaults indefinitely - they have bills to pay and bringing in past due loans is one tool they have to improve their cash flow. But as we now know, there was a problem. Everyone was short.

As an example: When Madoff's Ponzi unraveled it was because some of his customers tried to pull out some or all of their investments because they were short. Madoff didn't have it, of course. But not being a legal entity he could not call on his debtors to pony up - he had none. This cascade effect is the curse of lending institutions.

JoeFin
02-06-2009, 03:34 PM
Of course there were. Institutions cannot absorb defaults indefinitely - they have bills to pay and bringing in past due loans is one tool they have to improve their cash flow. But as we now know, there was a problem. Everyone was short.

I agree with you points – but given the crash of 1929 when Banks were loaning on Stocks, don’t you think it would have been a lot simpler to just to have learned our lesson and not allowed Banks to mingle speculation with assets?

We insure them with Federal Tax Dollars through FDIC and license them so John E. Citizen can trust them when he deposits his life’s savings there.

And especially after the Savings and Loan Debacle you would think we would have learned our lesson.

Just who are these folk that keep saying we need deregulation

dp
02-06-2009, 03:38 PM
And especially after the Savings and Loan Debacle you would think we would have learned our lesson.

After Katrina you'd think New Orleans would be an empty ghost town. People are not inclined to do the intelligent thing.

JoeFin
02-06-2009, 03:45 PM
After Katrina you'd think New Orleans would be an empty ghost town. People are not inclined to do the intelligent thing.

After enough Campaign Contributions a corrupt politian is inclined to go along with any group of theives that wishes to rape the tax payer for what ever amount of money the country can bare.

Given your share of taxes that will be paid to correct the current crisis - do you feel your getting your money's worth

dp
02-06-2009, 03:48 PM
After enough Campaign Contributions a corrupt politian is inclined to go along with any group of theives that wishes to rape the tax payer for what ever amount of money the country can bare.

Given your share of taxes that will be paid to correct the current crisis - do you feel your getting your money's worth

I'm old - my share won't be much. My kids, on the other hand, need to look with great care at Blythe Masters's political party of choice.

JoeFin
02-06-2009, 03:52 PM
Well - thankfully some very smart folk have decided to address the issue of the role "Deregulation has played in the current Financial Crisis"


At 3 p.m., the Senate Banking Committee hosts Paul Volcker, the former Fed chairman at the center of President Obama’s regulatory reform planning; a little later, Gene Dodaro, the acting comptroller general, addresses the committee. The hearing bears the dry title of “Modernizing the U.S. Financial Regulatory System.”

There’s nothing bland about the subject, though. Just two years ago, that title might have meant sermons on deregulation and American competitiveness; today it means nothing less than remaking Washington’s role in the financial markets, with an eye on warding off another meltdown.

http://www.businessweek.com/blogs/money_politics/archives/2009/02/obamas_regulato.html

I was watching the commette hearings on Cspan the other night and what has been revealed so far is pretty alarming. If more Americans were paying attention there would be rioting in the streets and not 1 bank would have windows

dp
02-06-2009, 03:57 PM
Deregulation does not mean unregulated, and regulations or lack of them is not the problem. The problem is the regulators do not act. The people responsible for monitoring what is regulated are incompetent. Giving them more responsibility is not going to reverse that.

Follow the Madoff Ponzi - these schemes are very simple and always require tacit cooperation of regulators to not regulate. Madoff's pyramid could easily have been exposed if any of the people responsible for compliance had done their job.

JoeFin
02-06-2009, 04:01 PM
Deregulation does not mean unregulated, and regulations or lack of them is not the problem. The problem is the regulators do not act.

Sorry Dp - on this one your wrong

The Deregulation advocates have chanted "The Free Market System Self Regulates the Markets"

and that is exactly what they did


Actual unemployment rate 13.9%: Merrill Lynch
Counting the ranks of “underemployed” as a result of cutbacks on hours, the unofficial rate hit the highest level in at least 15 years, according to economist David Rosenberg
http://www.financialweek.com/apps/pbcs.dll/article?AID=/20090206/REG/902069980/-1/FWDailyAlert01

dp
02-06-2009, 04:09 PM
Bollocks - you're trying to politicize it.

http://www.time.com/time/business/article/0,8599,1841981-2,00.html

http://www.usnews.com/articles/education/2009/01/05/manager-of-yale-endowment-funds-blames-regulators-for-financial-crisis.html

JoeFin
02-06-2009, 04:16 PM
Bollocks - you're trying to politicize it.

http://www.time.com/time/business/article/0,8599,1841981-2,00.html

http://www.usnews.com/articles/education/2009/01/05/manager-of-yale-endowment-funds-blames-regulators-for-financial-crisis.html

No..

At the onset of my breaking in to this discussion I said it was the Philosophy of Deregulation / Trickle down Economics I am advocating against.

And the article you posted reinforces my position


One positive sign in this week's mess is that both the turf battles and unyielding attachment to deregulation have been abandoned, perhaps forever. The Fed and Treasury have together seized de facto control of the regulation of all financial institutions of significance, and nobody at either agency seems willing to believe anymore that financial markets are invariably right.

Trickle Down / Supply Side Economics and Deregulation have become political suicide for generations to come......

....once again

dp
02-06-2009, 04:33 PM
To quote myself: Giving them more responsibility will not change a thing.

JoeFin
02-06-2009, 05:15 PM
To quote myself: Giving them more responsibility will not change a thing.

Excuse me … I thought you knew

Part of the Banking Deregulation was the Banks were able to define their assets, and Risk Values. This is at the core of the melt down. The Banks were allowed to use “Risk” as “Assets” in their Risk Value Model.

Prior to Banking Deregulation, the Federal Government required Banks to carry a certain amount of Cash and “Hard Securities” (real estate, muni bonds) on their books in order to remain open and in business.


Instead, Mr. Danielsson urged regulators to impose a limit on the amount of leverage banks can use by establishing a minimum amount of capital that they must maintain in relation to their assets.

While U.S. regulations currently impose such a leverage ratio as well as risk-based limits, the banking industry has argued that the leverage ratio should be discarded, so that U.S. institutions can compete more effectively with their foreign peers.
http://www.financialweek.com/apps/pbcs.dll/article?AID=/20090106/REG/901069980/1036

Currently US Banking systems carries $54 Trillion Dollars of “Unsecured Debt”

So the Federal Reserve stepping in and telling them what they must define as "Risk" and what they can define as an "Asset" is more regulation then they have had for the past 8 years

dp
02-06-2009, 05:22 PM
Excuse me … I thought you knew

Part of the Banking Deregulation was the Banks were able to define their assets, and Risk Values. This is at the core of the melt down. The Banks were allowed to use “Risk” as “Assets” in their Risk Value Model.

And these lawmakers are the people to whom you wish to assign even greater responsibility? Explain how that makes sense and why you think they have the talent needed to ever get this right - or consider this a rhetorical question.

JoeFin
02-06-2009, 05:44 PM
And these lawmakers are the people to whom you wish to assign even greater responsibility? Explain how that makes sense and why you think they have the talent needed to ever get this right - or consider this a rhetorical question.

Probably since they had it right for 50 years until some one came up with the fancy idea we needed to "De-regulate S&Ls" which of course was followed by a bunch of S&Ls failing, a whole bunch of people loosing their life's savings, and the American Tax Payer via: FDIC having to pay for it all.

Darn if that wasn't a sign of things yet to come....

Once again in 2000 we decide we need to deregulate Banking some more and "Wa La!!! .....here we are

Now who was that who posted the nice link with the video discussing a Republic such as America was a Nation of Laws. You tear down those laws (regulations) and you have ..........

As for Executive Pay....

Perhaps the CEOs of American Corporations can take a lesson from the CEO of Japan Air Lines
http://www.youtube.com/watch?v=fF6lxILnRuE

Rustybolt
02-06-2009, 06:07 PM
Just one question TM. what is wealth and where does it come from?

OK that's two questions, so sue me!

Teenage_Machinist
02-06-2009, 06:46 PM
I don't suppose you have an example of successful and corruption free liberalism?

dp, your off your rocker? THink before you speak. And the conservatives who control the media are deceptive. Read the People's Blogosphere!

That is a thoroughly ridiculous question. If you allow some small tolerance on corruption free (nothings perfect a lot is pretty good, it matters if they get thrown out) then the glory of Europe is it. Norway, Finland, to lesser extent Britain, Germany, and France, The Western World likes moderate liberalism. My less moderate variety is less popular but Lenin used it to great effect after Germany and the Czar ruined Russia, (Under the New Economic Plan Russia was only half communist, more socialistic than that. THen Stalin screwed the peasants. ) though there was not democracy there. There also was corruption there, but lets note that we have plenty of corruption in the conservative side though it gets less press and bigger, fewer scandals.

Mad Scientist
02-06-2009, 06:50 PM
Probably since they had it right for 50 years until some one came up with the fancy idea we needed to "De-regulate S&Ls" which of course was followed by a bunch of S&Ls failing, a whole bunch of people loosing their life's savings, and the American Tax Payer via: FDIC having to pay for it all.

Darn if that wasn't a sign of things yet to come....

Once again in 2000 we decide we need to deregulate Banking some more and "Wa La!!! .....here we are

Those who ignore history are doomed to repeat it. :(

Now who was that who posted the nice link with the video discussing a Republic such as America was a Nation of Laws. You tear down those laws (regulations) and you have ..........


Anarchy! And who benefits from that other then the anarchists who would turn around and set up a dictatorship.

So is all of this happening by just by coincidence, or greed, or lack of oversight?
Why do I have the feeling that we are but pawns in someone’s giant chess game.


As for Executive Pay....

Perhaps the CEOs of American Corporations can take a lesson from the CEO of Japan Air Lines

With a CEO like that I think that JAL will survive this economic storm just fine, but that type of mind set appears to be beyond most of our CEO’s

dp
02-06-2009, 06:50 PM
dp, your off your rocker? THink before you speak. And the conservatives who control the media are deceptive. Read the People's Blogosphere!

That is a thoroughly ridiculous question. If you allow some small tolerance on corruption free (nothings perfect a lot is pretty good, it matters if they get thrown out) then the glory of Europe is it. Norway, Finland, to lesser extent Britain, Germany, and France, The Western World likes moderate liberalism. My less moderate variety is less popular but Lenin used it to great effect after Germany and the Czar ruined Russia, (Under the New Economic Plan Russia was only half communist, more socialistic than that. THen Stalin screwed the peasants. ) though there was not democracy there. There also was corruption there, but lets note that we have plenty of corruption in the conservative side though it gets less press and bigger, fewer scandals.

That is a long way to say no. My point which rocketed over your young head is that there is nothing magical about liberalism that makes the world better or worse than other idiologies.

Teenage_Machinist
02-06-2009, 06:55 PM
wait, what?


Liberalism is not special, its just the opposite of conservativism. However within the US conservativism is "lets let the bourgeousie do what they want and screw the proletariat so that the proletariat loves us" and they paint the liberals as " we want to destroy america".

Yes there is corruption free liberalism and as I understand North Europe is excedingly good place to live because of it, and much evener distribution of wealth. THe US is only a bit better than what we consider lower countries, just there is more total to distribute. Britain has lower GDP, slightly poorer people, but distributed better and Canada and West/North Europe have generally less grinding poverty.

JoeFin
02-06-2009, 07:16 PM
Anarchy! And who benefits from that other then the anarchists who would turn around and set up a dictatorship.

So is all of this happening by just by coincidence, or greed, or lack of oversight?
Why do I have the feeling that we are but pawns in someone’s giant chess game.

Oh Gawd !!!

Your just like my little Brother who is convinced this is all a means to bring in "Globalisation" or 1 World Government. Some thing about the founders of the 1 World Order cause know they would have to break the back of the American working class to bring about this change.

But then again there is the WTO.....

No - I think it is Greed and Corruption plain and simple and from living in a couple of countries that would other wise prosper economically... Boy can I tell you the deterrent Political Corruption has on Business, Industry, and Innovation

dp
02-06-2009, 07:16 PM
wait, what?


Liberalism is not special, its just the opposite of conservativism. However within the US conservativism is "lets let the bourgeousie do what they want and screw the proletariat so that the proletariat loves us" and they paint the liberals as " we want to destroy america".

Yes there is corruption free liberalism and as I understand North Europe is excedingly good place to live because of it, and much evener distribution of wealth. THe US is only a bit better than what we consider lower countries, just there is more total to distribute. Britain has lower GDP, slightly poorer people, but distributed better and Canada and West/North Europe have generally less grinding poverty.

You said this:


That is why liberalism is good. Regulation and Rockefeller's Bane are important.

Nothing you have said since supports the statement. It cannot be supported because it's not true. What is good is the right balance of idiologies in a free republic. That balance ebbs and flows over time but usually we get it right.

In an old Walter Matthau movie he spoke the lines in effect saying that pushed too hard from the left or the right the old house of government will collapse. Don't wish too hard for the success of your idiology.

lazlo
02-06-2009, 07:21 PM
What is good is the right balance of idiologies in a free republic. That balance ebbs and flows over time but usually we get it right.

As a fiscally conservative independent who's pro-gun and pro-choice, I agree 100% with the former statement, but disagree completely with the latter.

Seems like, since Eisenhower, all our Presidents have had major flaws, and that we're ruled by the rich, who pour money into Congress in the form of legal bribes (lobbyists).

Mad Scientist
02-06-2009, 07:28 PM
Just one question TM. what is wealth and where does it come from?

OK that's two questions, so sue me!


A very good question(s):), OK let me try to answer.
Lets assume you are a store owner and I come into your store and say a want to buy two pounds. You are going to look at me and ask two pounds of what? Two pounds of nails, birdseed, butter just what do I want. So I say ok give me some nails. You go get the nails and say that will be $5 please.

I then ask $5 of what? Because just as pounds are only unit of measure not an actual item so too is the dollar. So what are we measuring? At one time you could have said $5 worth of gold, but we are no longer on the gold standard.

What determines that a piece of paper with a 10 printed on it is more valuable then a similar piece of paper with only a one printed on it?

And what determines the precise worth of these “dollars”?

Answer that and you will begin to understand our economic problems.

dp
02-06-2009, 07:36 PM
As a fiscally conservative independent who's pro-gun and pro-choice, I agree 100% with the former statement, but disagree completely with the latter.

Seems like, since Eisenhower, all our Presidents have had major flaws, and that we're ruled by the rich, who pour money into Congress in the form of legal bribes (lobbyists).

Clinton wasn't rich until he became President. He was well off but hardly rich. And you don't really think we will ever see another national office holder who is living paycheck to paycheck?

By "getting it right" we've had only one truly egregious president in recent times and he went on to become a truly egregious former president (Carter). We've never had a despot as has Mexico, and much of Europe, and which abound in Africa even today.

Our leaders have not been out of balance with the population by much - we have had largely centrist moderates. Obama is the obvious exception. Carter's folly wasn't exposed until it was too late. We were sold a bill of goods on that one. We got Obama with our eyes wide open.

dp
02-06-2009, 07:40 PM
And what determines the precise worth of these “dollars”?

Answer that and you will begin to understand our economic problems.

According to the apostles at the Fed, our money is faith-based. It's worth what we believe it's worth. I do believe my money was worth more last year. I know my house was.

JoeFin
02-06-2009, 07:44 PM
What determines that a piece of paper with a 10 printed on it is more valuable then a similar piece of paper with only a one printed on it?

And what determines the precise worth of these “dollars”?

Answer that and you will begin to understand our economic problems.

Finally - Some one who gets it

That is what these Wall St. Fat Cats have done. They have undermind the entire monetary funding of the American Dollar. I have been screaming about this issue since 2003 and most folk have called me lunatic. Well here it is, and we are going to pay the price to restore the World's faith in the All Mighty Dollar are we are going to transend into a very very poor 3rd World Country

saltmine
02-06-2009, 07:46 PM
Even on local government levels the leaders haven't got a clue....
I was watching the news from Phoenix, AZ today, and the City of Mesa (I believe) is building a new government offices building for $53 million...
Needless to say, the citizens are outraged about it...But the politicians are saying that if they don't build it now, it'll cost more later on (BS)...
Right now the City is renting office space in office buildings that are already in place....
They interviewed the Mayor, and he claims it's "bare bones" and very "plain" for a government office building....Yeah, only one artificial waterfall, a library, and an on site museum...."plain Jane"....

lazlo
02-06-2009, 07:53 PM
Clinton wasn't rich until he became President. He was well off but hardly rich. And you don't really think we will ever see another national office holder who is living paycheck to paycheck?

Oh, agree completely. And Obama wasn't rich until he was one of the front-runners. And McCain went from a Navy pension to $33 Million dollars in 10 years.

That's my point -- our system of government if fundamentally corrupt.

Rustybolt
02-06-2009, 07:55 PM
A very good question(s):), OK let me try to answer.
Lets assume you are a store owner and I come into your store and say a want to buy two pounds. You are going to look at me and ask two pounds of what? Two pounds of nails, birdseed, butter just what do I want. So I say ok give me some nails. You go get the nails and say that will be $5 please.

I then ask $5 of what? Because just as pounds are only unit of measure not an actual item so too is the dollar. So what are we measuring? At one time you could have said $5 worth of gold, but we are no longer on the gold standard.

What determines that a piece of paper with a 10 printed on it is more valuable then a similar piece of paper with only a one printed on it?

And what determines the precise worth of these “dollars”?

Answer that and you will begin to understand our economic problems.



Wealth does not necessarily mean money, in any of it's forms. Wealth may be measured in money, but it is not money per se.

dp
02-06-2009, 07:55 PM
That's my point -- our system of government if fundamentally corrupt.

Oh. I knew that :)

wierdscience
02-06-2009, 09:52 PM
Guys: one more time: there was a total of $500 Million in sub-prime defaults by the end of 2008. The world's stock markets lost $100 Trillion dollars between September and November. The sub-prime mortgages had very little to do with the world's financial crisis, other than being a instrument for a junk bond.
...

This WSJ article I posted earlier disagrees.$200Billion was the first bailout for F&F,together they backed half of the countries $12Trillion in mortages.They clsed the year with $1.6trillion in outstanding debt.

My other point is,how many other countries have borrowed themselves up to their collective necks?We are not the only country that spends more than it takes in.I would even be willing to bet that other countries with far stricter banking regs than we are in no better shape.

J Tiers
02-06-2009, 10:20 PM
The default swaps were really a bit more than bets on mortgages, they were supposed to be insurance against defaults on bonds and other obligations.

If you held corporate paper of Bear Stearns', you could get, from someone, "insurance" against your holdings becoming value-less. You might pay a few percent of the total per year, and they, in turn, would promise to pay you if the paper was defaulted on. They bet that Stearns was golden, and you pay a bit to eliminate your risk that Stearns is nothing but dust. Not a lot, or you'd just hold the paper, because the insurance cannot cost more than the return without starting to make no sense.

That is the origin of the term...... you "swap" the risk of a "default" on a credit obligation.....

Now that is not a problem. It is a normal, ordinary, hedging of a risk, and there is NO REASON for it to be illegal. It poses NO POTENTIAL HARM to the economy.

HERE IS THE PROBLEM:

You could get that insurance at the same rate, EVEN IF YOU HELD NO STEARNS PAPER.

Your move, therefore, if you want a quick return, is to buy insurance on a chunk of Stearns paper that you DO NOT OWN. You pay 2%, say, on a billion dollars worth.

Now you turn around and SELL the same sort of insurance to a 4th party, who also may or may not actually own any Stearns paper. You charge them 3%, generating a quick 50% return.

You are totally covered. After all, since your "insurer" owes you if Stearns defaults, and you can then pay off. No risk, or minimal risk.

problem is that your "insurer" didn't just sell to you, they may have sold quite a bit of Stearns insurance, and may have bought some in the same sort of "dope deal" you are doing.

So, now, Bear Stearns DOES default............ Your customer comes to you and says "pay up!". So YOU go to YOUR insurer and say, "pay up!" also.

Your insurer has been betting heavily on Stearns, and has run out of cash, due to this 'run on the bank". So they don't pay, and are insolvent.

Since YOU don't have a billion either, YOU can't pay, and YOU are now insolvent. You have company, because your insurer ran out after paying only half their liabilities on the Stearns insurance.

Your insurer owes maybe 50 billion that they don't have. You owe a billion that YOU don't have, and your customer is out their billion from the dishonored bonds..... total so far 52 billion.

Now, any folks who bet on your insurer are out as well, because they didn't pay on their obligations..........

One single billion of defaults has so far cascaded into somewhere between 50 and 100 billion of unpaid obligations. Everyone is afraid to deal with your insurer, you, and anyone else, because they suspect you-all may have more of these CDS' hanging over you, which will mean they don't get paid back.

THAT IS HOW the "credit default swap" tears the economy.

Notice the KEY PART.......

ANYONE could get a default swap deal, EVEN without owning any paper. Those who did that were totally uninvolved spectators essentially"doing side bets".

If the bond insurer was merely insuring the bondholder, the default would cost 1 billion dollars, and that would be the end of it. No big cascade of failures threatening to trigger more defaults, and demanding more huge sums in "side bets"..... that trigger more defaults, etc, etc, etc........

Teenage_Machinist
02-07-2009, 01:51 AM
OK, well, the US has been extremely conservative to our great detriment.

It is quite conservative compared to glorious Europe, our neighbors in Canada are less. Not tryin a bandwagon but the US is freakily powerful and freakily conservative, there just isn't another like us.

We also severly lack a universal health care system which my thread showed is not hated in the countries that have them.

Yankee1
02-07-2009, 02:48 AM
J.Tiers
Thats the most understandable explanation I've heard of the root cause
of the financial crisis.
Chuck

oldtiffie
02-07-2009, 02:59 AM
Good points well made JT.

One of the problems seemed be that the "Investment" banks as well as "others", as opposed to the "Regulated" banks, had an awful lot of "off-ledger" debt (quite legally if I recall correctly) and had had for quite sometime. They were not able to be assessed in an informed manner by others and so looked a lot better than they might have been.

There is still a huge amount of unfunded liability with Government at all levels - as well as many others in "Business".

If all liability that business and government were to be exposed it would be horrific as it will be as it will be exposed and the tax-payer is in for a huge shock.

Rustybolt
02-07-2009, 08:14 AM
TM said, "there just isn't another like us."



There's a reason for that.



Are you really interested in machining or are you trying to earn your "working class" bona fides?

J Tiers
02-07-2009, 09:52 AM
That's my point -- our system of government if fundamentally corrupt.

I assume you mean "IS" fundamentally corrupt......


Let me suggest that you read what I wrote elsewhere concerning TM's comments....

The system of government isn't fundamentally corrupt. ALL systems of government are fundamentally corrupt.

The reason is that YOU are fundamentally corrupt, unless you happen not to be a person.

The beauty of this version of government that we use, is that we are having this discussion, and are not concerned.

In many of the versions you or others might consider "superior", several of us here would be government minders, reporting to bosses who would even now be demanding your address from your ISP and planning a 4 AM raid on your house.

Instead, we can bellyache and publicly call the government names and whatever, AND THERE IS A BRANCH OF GOVERNMENT ESSENTIALLY DEDICATED TO ENSURING THAT WE CAN DO THAT WITHOUT INTERFERENCE!

When the government oversteps its boundaries, we have a remedy.

There is ALWAYS some amount of low-level corruption, because people run the show. That is expected. The system of government is set up specifically to ensure that it is kept to a dull roar, and that it does not have to persist, nor come to a point that it seriously oppresses the people.

Small Southern towns were the poster child for corruption for a long time.... but they have slowly been cleaned up as they became 'too raw". Others no doubt have started. Around here, St Louis is corrupt, and I understand from otehrs that Webster Groves is extremely corrupt, although I don't know that.

But there is always someone looking to expose that, and recently there have been some very public resignations and investigations to clear it up. The feds are investigating the police right now.

Just people doing their corrupt thing. The ancient Israelites were much the same........

lazlo
02-07-2009, 10:45 AM
This WSJ article I posted earlier disagrees.$200Billion was the first bailout for F&F,together they backed half of the countries $12Trillion in mortages.They clsed the year with $1.6trillion in outstanding debt.

That's exactly my point Darrin -- we've bailed out the various mortgage companies for many times the amount of sub-prime defaults.

There was a total of $1.3 Trillion dollars in sub-prime mortgages issued by the end of 2008. And by December 31, 2008, about 35% of those sub-prime mortgages, or $455 Million dollars worth, had defaulted.

The trillions in payouts, bailouts, collapses are because Fannie Mae, Freddie Mac, and the investment banks were playing the junk bond and CDS game.

The Mortgage-backed Junk Bonds are the "Troubled Assets" in Bush's TARP bill "Troubled Assets Relief Program" -- last year's economic stimulus package. The banks were supposed to use the TARP money to dump the troubled assets (the mortgage-backed junk bonds and CDS's). Instead, they pocketed the money.

As Cameron quietly mentioned a couple of pages back, there are still $62 Trillion in remaining Credit Default Swaps that are a ticking time-bomb that no one knows what to do with.

lazlo
02-07-2009, 10:54 AM
The system of government isn't fundamentally corrupt. ALL systems of government are fundamentally corrupt.

The reason is that YOU are fundamentally corrupt, unless you happen not to be a person.

I disagree on both points. You're implying that a Democracy is driving by self interest. I would argue that there are plenty of voters who vote for what they think is best for the country, and not necessarily best for themselves. I certainly do.

But the specific corruption I'm referring to is the American Lobbyist system. There's something seriously wrong with our form of Oligarchy when Wall Street can pay Phil Gramm to add a loophole to the Federal investment regulations so that they can legalize Credit Default Swaps, which had been illegal for 75 years because they greatly amplified the 1929 crash.

As far as I know, no other country has legalized bribes as a form of government.

lazlo
02-07-2009, 10:59 AM
Now that is not a problem. It is a normal, ordinary, hedging of a risk, and there is NO REASON for it to be illegal. It poses NO POTENTIAL HARM to the economy.

Jerry, the reason Credit Default Swaps were outlawed in the 1920's is because, like you're describing, they're unregulated, so the issuer of the "insurance" isn't required to maintain enough assets to cover the bet, like regulated insurance.

But calling Credit Default Swaps "insurance" is a huge euphemism -- you're betting on whether a block of mortgages are going to default. When Credit Default Swaps were made illegal in the 20's, they were covered under the Federal gaming (gambling) laws, not financial investment regulations.

JoeFin
02-07-2009, 11:30 AM
Jerry, the reason Credit Default Swaps were outlawed in the 1920's is because, like you're describing, they're unregulated, so the issuer of the "insurance" isn't required to maintain enough assets to cover the bet, like regulated insurance.

But calling Credit Default Swaps "insurance" is a huge euphemism -- you're betting on whether a block of mortgages are going to default. When Credit Default Swaps were made illegal in the 20's, they were covered under the Federal gaming (gambling) laws, not financial investment regulations.

Once again – the real culprit here is “Deregulation / Trickle down Theory / Regeanomics”

Sure there are several factors in place that have proliferated the belief that “Deregulation” works in the Market place but that is the root cause of our current economic crisis.

Ask yourself 1 simple question: “Would America be a Free Society without Laws”

If there were no laws, no police officer standing on the corner would you feel safe to leave your home, go cash a check, drive across town. So what makes anyone think this type of philosophy works in Banking, Wall St, Crude Oil Trading, or the Energy Market.

We have plenty of examples why it does not

wierdscience
02-07-2009, 01:51 PM
So how do we find a balance between too much and too little regulation?If Reaganomics wasn't so good,Carternomics was terrible,my parents never recovered finacially from his disaster.

If we look at presidents we must ask a simple question.If in 2000 Gore had counted the votes like Bush wanted him to and he won the election-would things be any different today?Same question for Kerry in 2004.

The answer is most assuredly no.

If we step back and look at this whole mess we can see that the bulk of these monetary gynastics has resulted from peoples need to save a few more cents on the dollar from being consumed by out of control federal spending.

We need to return to a KISS financial structure,a flat tax would be a good start.

lazlo
02-07-2009, 02:17 PM
The answer is most assuredly no.

Agreed. The Savings and Loan junk bonds were some kind of derivative loophole that I don't understand. The Enron loophole is pretty straightforward, as is the loophole that legalized Credit Default Swaps (although I don't think mere mortals can hope to understand the subtleties of Collateralized Debt Obligations).

So these guys are paying for, and exploiting, subtle loopholes. I think it would be extremely difficult to regulate that away, and the SEC is highly criticized anyway as being a bunch of Wall Street insiders who don't want to pursue their buddies and/or future employers.

Speaking of which, does anyone know where Henry Paulson (Bush's Treasury Secretary) went?

Not surprisingly, he's also a Wall Street insider: he was the CEO of Goldman-Sachs, one of the investment banks that got Billions in Federal bailout money. You can be damned sure he got a sweet executive job at AIG, Bear-Stearns/JP Morgan Chase or one of the other companies that got the bulk of the bailouts...

barts
02-07-2009, 02:41 PM
We need to return to a KISS financial structure,a flat tax would be a good start.

The math needed to handle a graduated tax isn't taxing :) ...

Regardless of the rate calculation, taxes are complex because of several factors, including:

* The financial rewards for creating new and inventive ways to escape taxes are large.
* Calculating profits on investments is difficult, esp. in light of 1.
* We find it useful to reward/help certain kinds of economic activity w/ tax relief, so interest payments on
primary home mortgages, charitable contributions, medical expenses, etc are income that is not taxed (aside from AMT...)


You can go on talking about a flat tax, but you also need to tell people that they will lose all their deductions.... and in general reduce the amount of money collected via the income tax. This will shift the tax burden onto other areas, such as user fees, decreased services, etc, which is favored by those who have a lot of income.

Keep in mind that since the capital gains tax rate is so low, many wealthy individuals pay a lower % tax rate than many a working stiff.

http://www.bloomberg.com/apps/news?pid=20601103&sid=ar5uxG_wV87A&refer=us

- Bart

JoeFin
02-07-2009, 02:48 PM
If we step back and look at this whole mess we can see that the bulk of these monetary gynastics has resulted from peoples need to save a few more cents on the dollar from being consumed by out of control federal spending.

That is Very Incorrect

Of course no one wants to pay taxes but paying your fair share to live in a “Civil society is mandatory”

But contrary to the popular “Regeanomics / Trickle Down Theory belief, “Cutting Taxes does not spur the economy”

Plain and simple – look at the last 8 years of Tax cuts for the very wealthy and look at the current “Unemployment Rate”, sudden drop in GNP, and dramatic rise in our “Trade Deficit”. If Tax Cuts for the Wealthy Elite are so great how come these numbers indicate the economy is in the “Toilet”

What Wealthy Corporations and Individuals save on taxes does not get “Re-cycled” into the economy. No – quite to the contrary it can end up overseas in the form of “Foreign Currency Speculation”, 3rd World Investments, or just plain savings for when the economy gets better.

Tax Cuts for the Wealthy and Corporations WILL NOT spur the economy

barts
02-07-2009, 03:25 PM
What Wealthy Corporations and Individuals save on taxes does not get “Re-cycled” into the economy. No – quite to the contrary it can end up overseas in the form of “Foreign Currency Speculation”, 3rd World Investments, or just plain savings for when the economy gets better.

Tax Cuts for the Wealthy and Corporations WILL NOT spur the economy

In fact, here are the estimates (http://www.cbo.gov/ftpdocs/96xx/doc9619/Gregg.pdf) from the Congressional Budget Office on
the impact of various forms of government stimulus spending:

http://i564.photobucket.com/albums/ss85/KernelSander/cbo.png

As you can see, tax cuts are the least effective way of stimulating the economy - but it's the favorite methods of Republican Senators - I wonder why?

- Bart

dp
02-07-2009, 04:20 PM
dp, your off your rocker? THink before you speak. And the conservatives who control the media are deceptive. Read the People's Blogosphere!

Norway, Finland, to lesser extent Britain, Germany, and France, The Western World likes moderate liberalism.

Interesting you would mention Norway which is a constitutional monarchy that until quite recently had a centrist conservative government. It is now a trilateral coalition. France and Germany, warring friends that they have been, both have conservative leadership in Sarkozy and Merkel. Gordon Brown of Scotland came up through the labor party and is an unpopular leader at the moment. Halonen of Finland is a true unflinching socialist. I'm not seeing a broad sweep of moderate liberalism in your sample.

Rustybolt
02-07-2009, 05:38 PM
Barts. Maybe because if you don't give it to the government they can't spend it. It IS your money after all.

Which begs the question once again. Where does wealth come from?

oldtiffie
02-07-2009, 05:53 PM
If you have a lisp, (the) "Wealth" come(s) from Wales.

JoeFin
02-07-2009, 07:07 PM
Which begs the question once again. Where does wealth come from?

Back to School RustyBolt

http://www.youtube.com/watch?v=vMFWt8444nQ&feature=related

http://www.youtube.com/watch?v=TShzOZGpA7E

Looking for the "Cracks"

Rustybolt
02-07-2009, 07:41 PM
Yes Joe. Cartoons. How appropriate. Still doesn't answer the question, does it?

oldtiffie
02-07-2009, 07:52 PM
Originally Posted by Rustybolt
Which begs the question once again. Where does wealth come from?

First, define "wealth" (what it is) and then, knowing what you are looking for - go looking.

Next get a stiff drink, a lot of time and a comfortable chair and get ready for some heavy reading.

http://en.wikipedia.org/wiki/Wealth

http://en.wikipedia.org/wiki/Wealth_(economics)

http://en.wikipedia.org/wiki/Wealth_and_poverty_of_nations

http://en.wikipedia.org/wiki/Wealth_concentration

http://en.wikipedia.org/wiki/Wealth_condensation

JoeFin
02-07-2009, 07:54 PM
Yes Joe. Cartoons. How appropriate. Still doesn't answer the question, does it?

Watch them - it is a "Text Book Example" of Industrial Capitolism from 1954.

Prior to the distorted views of Trickle Down Theory Corporate Raiders who bribed their way into Deregulated markets that has cause the current crisis

dan s
02-07-2009, 07:59 PM
Prior to the distorted views of Trickle Down Theory Corporate Raiders who bribed their way into Deregulated markets that has cause the current crisis

I have one thing to say tho that.
http://www.youtube.com/watch?v=wKjxFJfcrcA

J Tiers
02-07-2009, 08:09 PM
Jerry, the reason Credit Default Swaps were outlawed in the 1920's is because, like you're describing, they're unregulated, so the issuer of the "insurance" isn't required to maintain enough assets to cover the bet, like regulated insurance.

But calling Credit Default Swaps "insurance" is a huge euphemism -- you're betting on whether a block of mortgages are going to default. When Credit Default Swaps were made illegal in the 20's, they were covered under the Federal gaming (gambling) laws, not financial investment regulations.

Lazzy:

They ARE "insurance", as they are legitimately used. Naturally, the legitimate usage requires that the insurer be able to pay.

However, the problem is twofold......

First, as you note, there is no requirement for there to be the ability to pay, which is really a joint problem between the insured and the insurer........ The one apparently has no intention of ever paying, and the other apparently has no concern about checking whether the "insurer" is any good.

But, the maximum problem resulting from this usage is 1x or at most 2x the default, since one bond issue can legitimately be be insured once and once only.

Second, ANYONE could get the insurance, without having to NEED it, i.e. without owning the paper. THIS is the "risk multiplier" that makes the CDS a doomsday device.

Obviously this way, the maximum problem in terms of dollars from one single default is totally open-ended, since any number of folks might have obtained the "insurance".

The primary limit is only the number of potential "insurers" who are willing to take on the risk for a short-term gain. The secondary limit is how many TIMES each of these folks will take on the risk with different customers.

Caviling about CDS being under "gambling" is just silly, since quite a lot of what goes on in wall street IS basically gambling, despite the big 'chaos theory" push, and all the math and physics types being hired to supposedly model the system and get some real predictions going.

Most of those physics types found out that the REAL "chaos theory" is that "when there is market chaos, you gonna get fired, my man".


Now, you called the US a "particular form of oligarchy". This is not really true.

The worst you can call it is an "oligarchy at pleasure"...... Meaning that in the sense that we CAN vote them out whenever we please.

"They" may not like it, but so far, it will still happen. Whether it will continue to happen when needed, that is another story. We may move to anarchy, pushed in part by people like you saying that the system is totally corrupt...... and anarchy is in fact (see the youtube thing) ended by strongman rule, i.e. an oligarchy. We haven't reached that yet.

Meanwhile, please do not spread such lies. I know in what sense you mean it, but that doesn't make it less obnoxious to make that false claim.

And, you ARE corrupt. Anyone who says he is NOT corrupt lies, "and the truth is not in him"......... Your price may be higher, but you can still be bought. I probably know how to buy you from what you have said here.

This is not an insult.

Some can be bought with money, power, sex, and others can be bought with the promise of work, security, "a chicken in every pot", still others with "reform", the list is endless. But you and everyone else under the sun have a price.

There are things you will overlook, things you will not. It's being human, and unless you have managed to opt-out of that, we know for a fact that you are not perfect, and are therefore corrupt.

wierdscience
02-07-2009, 08:31 PM
That is Very Incorrect

Of course no one wants to pay taxes but paying your fair share to live in a “Civil society is mandatory”

That is another arguement for a flat tax,too many people pay nothing


But contrary to the popular “Regeanomics / Trickle Down Theory belief, “Cutting Taxes does not spur the economy”

Plain and simple – look at the last 8 years of Tax cuts for the very wealthy and look at the current “Unemployment Rate”, sudden drop in GNP, and dramatic rise in our “Trade Deficit”. If Tax Cuts for the Wealthy Elite are so great how come these numbers indicate the economy is in the “Toilet”

They did and do have a positive effect,unless they are out stripped by spending.It's still spending that's the problem.


What Wealthy Corporations and Individuals save on taxes does not get “Re-cycled” into the economy. No – quite to the contrary it can end up overseas in the form of “Foreign Currency Speculation”, 3rd World Investments, or just plain savings for when the economy gets better.

Tax Cuts for the Wealthy and Corporations WILL NOT spur the economy

No poor person,or even middle class person has ever given me a job.

When you pull up to the gas pump,who is paying Exxon's corporate taxes?(That's a question for you,I know the answer)

wierdscience
02-07-2009, 08:42 PM
The math needed to handle a graduated tax isn't taxing :) ...

Why should taxes be graduated?15% is 15% as an example.Just because your a low income American why should that excuse you from paying your share?


Regardless of the rate calculation, taxes are complex because of several factors, including:

* The financial rewards for creating new and inventive ways to escape taxes are large.
* Calculating profits on investments is difficult, esp. in light of 1.
* We find it useful to reward/help certain kinds of economic activity w/ tax relief, so interest payments on
primary home mortgages, charitable contributions, medical expenses, etc are income that is not taxed (aside from AMT...)...

Tax rates are complicated by vote pandering politicians(all of them)playing one or more classes against each other is SOP.Obama is no exception.



You can go on talking about a flat tax, but you also need to tell people that they will lose all their deductions.... and in general reduce the amount of money collected via the income tax. This will shift the tax burden onto other areas, such as user fees, decreased services, etc, which is favored by those who have a lot of income....

Deductions are loop holes,holes to be exploited.Reducing deductions will not decrease collections and many wealthy individuals would be paying more as there would be less loop holes to slip through.


Keep in mind that since the capital gains tax rate is so low, many wealthy individuals pay a lower % tax rate than many a working stiff.


Keep in mind the capital gains tax is completely voluntary.It is only paid if the person or corporation sells assets and makes a profit doing so.If the capital gains rate was 75% the revenue generated would be less than it is now at 24% simply because with the lower rate more assets are likely to be sold.

The people who are hit hardest by capital gains are not the rich,but instead people who for one reason or another are forced to liquidate assets.

wierdscience
02-07-2009, 08:57 PM
So these guys are paying for, and exploiting, subtle loopholes. I think it would be extremely difficult to regulate that away, and the SEC is highly criticized anyway as being a bunch of Wall Street insiders who don't want to pursue their buddies and/or future employers.

Speaking of which, does anyone know where Henry Paulson (Bush's Treasury Secretary) went?

Not surprisingly, he's also a Wall Street insider: he was the CEO of Goldman-Sachs, one of the investment banks that got Billions in Federal bailout money. You can be damned sure he got a sweet executive job at AIG, Bear-Stearns/JP Morgan Chase or one of the other companies that got the bulk of the bailouts...

I would be more concerned where Jeffrey Immelt is heading.He ran GE into the ground and now he is tapped as an adviser.Now we know why NBC has had "tingling leg syndrome"since 2004.

oldtiffie
02-07-2009, 08:58 PM
.................................................

Caviling about CDS being under "gambling" is just silly, since quite a lot of what goes on in wall street IS basically gambling, despite the big 'chaos theory" push, and all the math and physics types being hired to supposedly model the system and get some real predictions going.

.................................................. ......................
.................................................. .......................


You've got a real talent for condensing and summarising these issues in "bight-sized" chunks JT. All good reads - thanks.

As you say, its all a gamble and there will be winners and losers.

Increased "returns" or interest or "odds" are inducements ("sucker bait"?) and are indicative of the maximum level of "bait" that the person who wants your money is prepared to pay for the use of it. He effectively sets the odds and conditions. You either take it or leave it - but the risk is yours - not his.

If you deposit your money with a regulated bank where your money is guaranteed - fine - you will - in all probability - get your money back, with or without interest (depends).

Deposit it pretty well anywhere else and the risk of losing all or part of it increases.

My first question is always why they seeking funds from the "market" - and paying a premium for it - instead of being financed by the banks.

It is almost always presumed - unless there is clear evidence to the contrary and laws or regulations have been breached - that you made an informed decision, were not co-erced, and signed up to a binding contract offered and administered by the borrower or to whom you lent/rented/"gave"? your money to and perhaps gave lein over some assets too as collateral.

Sometimes "getting out" (if you can!!) can be as expensive as losing large chunks or all of your money.

I will bet that the share/stock-holders in Beare-Sterns and others who beat the stock up to record levels as they all scrambled to get on the gravy train and band-wagon and then lost their shirts could attest to that. Odd how we never hear of, from or about them as they were probably as much directly affected as anyone else.

Make sure you know your risks and market/s - and don't "play" (gamble) with money that you can't afford to lose.

J Tiers
02-07-2009, 09:14 PM
When you pull up to the gas pump,who is paying Exxon's corporate taxes?(That's a question for you,I know the answer)


The correct answer to that question has an enormous impact on what tax policy SHOULD be, what it CAN be, and how tax policies that look good on paper operate in the real world.

It is amazing the number of people who do NOT know the correct answer..... I would say more, but I don't want to spoil the fun!

Rustybolt
02-07-2009, 10:59 PM
I'll make it easy for you joe. People create wealth. They create wealth by what they make or what they know. Governments consume wealth.

JoeFin
02-07-2009, 11:13 PM
I have one thing to say tho that.
http://www.youtube.com/watch?v=wKjxFJfcrcA

It is so sad to see folks who honestly believe if the mimic the failed idiology of those lame policies some how they'll be allowed entrance to the club and be rich themselves.

Its almost the same technique drug dealers in Los Angeles wearing all those gold chains use when they are recruiting 14 - 15 year old wanna-be Gang Bangers to deal drugs for them - Too bad they never learn the truth until they are behind bars with Bubba wanting to have the next dance

JoeFin
02-07-2009, 11:17 PM
No poor person,or even middle class person has ever given me a job.

Those Poo Folks are the consumers who keep you employed by their spending on consumer goods - to say other wise would be wishful thinking


When you pull up to the gas pump,who is paying Exxon's corporate taxes?(That's a question for you,I know the answer)

Exxon doesn't pay taxes

Nor do 85% of the Corporations in America

JoeFin
02-07-2009, 11:27 PM
I'll make it easy for you joe. People create wealth. They create wealth by what they make or what they know. Governments consume wealth.

DING DING DING.....We have a Winner Winner Winner

Combined with innovation and the risk taking required to start a business, or bring a new product to market, or even using existing ideas combined as never before to create a new product or process - They can Create Wealth the Old Fashion Way - They Earn It.

But just who is doing that in America today?

I don't consider "Financial Products" any thing other then a sophisticated shell game and other then "Bad Loans" what has America Manufactured lately.

Like I said before - "The Economic Model is Broken" just plain deregulated out of existence

barts
02-07-2009, 11:35 PM
Why should taxes be graduated?15% is 15% as an example.Just because your a low income American why should that excuse you from paying your share?


The US has experimented with various distributions of taxes on income ranges over time. Taxes are more graduated when income needs rise; the tax rates during WWI and WWII and Korea were very high for top earners. Bush cut taxes on the wealthy and went to war, which is the primary reason why we have such a budget deficit. 50% tax rate would be an intolerable burden on someone making 70K/year - but for someone making 500 million, it's not going to cramp their style in any way that makes me feel sorry for them.

Remember, most people pay state income, Medicare, social security, property and federal income tax. Some pay capital gains. If you're
going to talk about tax burden, all of these need to be evaluated
together.



Keep in mind the capital gains tax is completely voluntary.It is only paid if the person or corporation sells assets and makes a profit doing so.If the capital gains rate was 75% the revenue generated would be less than it is now at 24% simply because with the lower rate more assets are likely to be sold.

The people who are hit hardest by capital gains are not the rich,but instead people who for one reason or another are forced to liquidate assets.

Except that the capital gains tax rate is 15%. As a result, someone living off of capital gains pays a much lower tax rate... if you want to help the person who's forced to liquidate, liberalize the income averaging rules rather than cutting the overall tax rate. I see no reason why someone who makes his living investing, holding and then selling stocks should pay 15% instead of their regular income tax rate.

barts
02-07-2009, 11:40 PM
Combined with innovation and the risk taking required to start a business, or bring a new product to market, or even using existing ideas combined as never before to create a new product or process - They can Create Wealth the Old Fashion Way - They Earn It.

But just who is doing that in America today?


Microsoft, Sun, HP, IBM, General Electric, Boeing, .....

There are lots of us creating new products all the time.

- Bart

JoeFin
02-07-2009, 11:45 PM
Microsoft, Sun, HP, IBM, General Electric, Boeing, .....

There are lots of us creating new products all the time.

- Bart

By new products do you mean H1B visa workers and moving production overseas?

Because that is the what those companies are doing and the current economic model emplyed in America - which by the way is not working and killing the Golden Goose


The Bush administration labour department’s “Strategic Plan for Fiscal Years 2006-2011” explicitly stated that “H-1B workers may be hired even when a qualified US worker wants the job, and a US worker can be displaced from the job in favour of the foreign worker”.
http://www.telegraphindia.com/1090129/jsp/frontpage/story_10455379.jsp

barts
02-07-2009, 11:55 PM
By new products do you mean H1B visa workers and moving production overseas?

Because that is the what those companies are doing and the current economic model emplyed in America - which by the way is not working and killing the Golden Goose

There's some of that... but there's a lot of development going on right here in the heart of Silicon Valley.

- Bart

barts
02-07-2009, 11:58 PM
Why we need a stimulus package focused on jobs:

http://i564.photobucket.com/albums/ss85/KernelSander/jobsrecessionsjpg.jpg

- Bart

lazlo
02-08-2009, 12:01 AM
By new products do you mean H1B visa workers and moving production overseas?

In the case of the semiconductor industry (Intel, IBM, AMD/ATI, Nvidia, ...), the vast majority of the architects, designers, product engineers are in the 'States.

Intel and IBM, who represent 90% of the US chip fabrication, have almost all their high-end fabs in the 'States: Arizona and Portland for Intel, and East Fishkill (upstate New York) for IBM.

Mad Scientist
02-08-2009, 12:17 AM
Exxon doesn't pay taxes

Nor do 85% of the Corporations in America

Wrong. Business and corporation do not pay any taxes. Have never paid any in the past, are not paying any now and will never pay any in the future.

What they are forced to do is be a tax collecting arm of the government. Any tax that a company is supposedly paying is actually treated as a cost of doing business, same as paying for raw materials and labor, it is then passed on to the consumers of their product.

Thus it is the end user who gets stuck paying all these “hidden taxes”. Unfortunately many end users are unaware of this so they blame the “greedy” corporations their high prices rather then their greedy politicians who turn then promise to save them by raising the taxes on these greedy corporations.

JoeFin
02-08-2009, 12:22 AM
There's some of that... but there's a lot of development going on right here in the heart of Silicon Valley.

- Bart

Your right Bart - a good friend of mine is an engineer for Intel. All the R&D is done in America, all the production is done overseas

JoeFin
02-08-2009, 12:26 AM
Wrong. Business and corporation do not pay any taxes. Have never paid any in the past, are not paying any now and will never pay any in the future.

What they are forced to do is be a tax collecting arm of the government. Any tax that a company is supposedly paying is actually treated as a cost of doing business, same as paying for raw materials and labor, it is then passed on to the consumers of their product.

Thus it is the end user who gets stuck paying all these “hidden taxes”. Unfortunately many end users are unaware of this so they blame the “greedy” corporations their high prices rather then their greedy politicians who turn then promise to save them by raising the taxes on these greedy corporations.

Where is Bugs Bunny when you need him - That line "What a Maroon" would be perfect right now. That is one of the Rush LimpDick lies - "if you tell the same lie enough times eventually people will begin to believe it"

Corp taxation is means for the people via government to guide and direct the direction we want our corporations to be moving in.

dp
02-08-2009, 12:31 AM
Where is Bugs Bunny when you need him - That line "What a Maroon" would be perfect right now. That is one of the Rush LimpDick lies - "if you tell the same lie enough times eventually people will begin to believe it"

Who pays the corporate taxes then? Where does that money come from?

lazlo
02-08-2009, 12:39 AM
Wrong. Business and corporation do not pay any taxes. Have never paid any in the past, are not paying any now and will never pay any in the future.

What they are forced to do is be a tax collecting arm of the government.

That's a highly-flawed, and overly simplistic view of how corporations work.

Corporate taxes are just one of many operating expenses. Corporations pay a whole lot more in salaries, utilities and raw materials (in most cases) than they do in taxes. If any of those costs go up, they don't "just pass the cost on to the consumer" -- unless they're a monopoly, the consumer will just go elsewhere.

So what a corporation actually does is look at all their costs, work up a profit margin profile, and set their selling prices to optimize overall profits.

Case in point: when the Sumitomo resin factory in Japan exploded in 1993, they were the major supplier of the resin used to bond semiconductors. In a very short period of time, chip resin prices skyrocketed. But AMD and Intel didn't change their CPU prices, because whoever did it first would lose a competitive advantage over the other. So they just ate the cost for a quarter, until the resin factory was repaired, and prices went back into line.

Or more recently, computer sales have dropped dramatically, due to the recession. Intel's quarterly report two weeks ago reported a 90% profit loss. So did they just "pass it on to the consumer" with higher prices? Of course, not -- people would just buy AMD processors instead.

JoeFin
02-08-2009, 12:39 AM
Who pays the corporate taxes then? Where does that money come from?

85% of corporations do not pay taxes

barts
02-08-2009, 12:44 AM
Wrong. Business and corporation do not pay any taxes. Have never paid any in the past, are not paying any now and will never pay any in the future.


Of course they do. They pay sales taxes for products they consume, traveling taxes, etc. Corporate income(profit) taxes have always been a small part of the Federal revenue picture, but the revenues as a share of the overall total dropped by 50% or more in the last 50 years. Keep in mind that corporate dividends are taxed differently than other income as well, so some of the effects of double taxation are thus reduced. Remember, practically all of a company's expenses are offset against their revenues for the purposes of computing taxable income, so depreciation, etc, is included.

- Bart

lazlo
02-08-2009, 12:52 AM
Wrong. Business and corporation do not pay any taxes. Have never paid any in the past, are not paying any now and will never pay any in the future.
Of course they do. They pay sales taxes for products they consume, traveling taxes, etc.

Bart, he's quoting Rush Limbaugh's diatribe that corporate taxes are just passed on to the consumer.

By the way, Joe is absolutely right, due to a variety of tax loopholes, most US corporations pay no corporate tax:

Most Companies Pay No Federal Income Tax
http://www.cbsnews.com/stories/2008/08/12/national/main4342535.shtml

(AP) Two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, according to a new report from Congress.

The study by the Government Accountability Office, expected to be released Tuesday, said about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period.

Collectively, the companies reported trillions of dollars in sales, according to GAO's estimate.

"It's shameful that so many corporations make big profits and pay nothing to support our country," said Sen. Byron Dorgan, D-N.D., who asked for the GAO study with Sen. Carl Levin, D-Mich.

The GAO study did not investigate why corporations weren't paying federal income taxes or corporate taxes and it did not identify any corporations by name. It said companies may escape paying such taxes due to operating losses or because of tax credits.

More than 38,000 foreign corporations had no tax liability in 2005 and 1.2 million U.S. companies paid no income tax, the GAO said. Combined, the companies had $2.5 trillion in sales. About 25 percent of the U.S. corporations not paying corporate taxes were considered large corporations, meaning they had at least $250 million in assets or $50 million in receipts.

JoeFin
02-08-2009, 12:58 AM
Here is a piece


WASHINGTON - Since 2001, President Bush's tax cuts have shifted federal tax payments from the richest Americans to a wide swath of middle-class families, the Congressional Budget Office has found, a conclusion likely to roil the presidential election campaign.

The CBO study, due to be released today, found that the wealthiest 20 percent, whose incomes averaged $182,700 in 2001, saw their share of federal taxes drop from 64.4 percent of total tax payments in 2001 to 63.5 percent this year. The top 1 percent, earning $1.1 million, saw their share fall to 20.1 percent of the total, from 22.2 percent.

Over that same period, taxpayers with incomes from around $51,500 to around $75,600 saw their share of federal tax payments increase. Households earning around $75,600 saw their tax burden jump the most, from 18.7 percent of all taxes to 19.5 percent.
http://www.msnbc.msn.com/id/5689001/

dan s
02-08-2009, 12:58 AM
It is so sad to see folks who honestly believe if the mimic the failed idiology of those lame policies some how they'll be allowed entrance to the club and be rich themselves.

You know whats Lame Joe? You and the people like you that ran your state into the ground. I hope you enjoy your IOU. :D

lazlo
02-08-2009, 01:06 AM
You know whats Lame Joe? You and the people like you that ran your state into the ground.

This thread has gone on for 24 pages with respectful and intelligent point and counter-point.

Personal attacks are really not necessary...

dan s
02-08-2009, 01:14 AM
Personal attacks are really not necessary...

That depends on what you consider a personal attack.

Mad Scientist
02-08-2009, 01:19 AM
Business and corporation do not pay any taxes. Have never paid any in the past, are not paying any now and will never pay any in the future.


Of course they do.


While companies certainly use all the lope holes to avoid paying any more then they must.
Still those companies that do pay taxes just were do they get that money from, if it is not from you their customer?

wierdscience
02-08-2009, 01:21 AM
Of course they do. They pay sales taxes for products they consume, traveling taxes, etc. Corporate income(profit) taxes have always been a small part of the Federal revenue picture, but the revenues as a share of the overall total dropped by 50% or more in the last 50 years. Keep in mind that corporate dividends are taxed differently than other income as well, so some of the effects of double taxation are thus reduced. Remember, practically all of a company's expenses are offset against their revenues for the purposes of computing taxable income, so depreciation, etc, is included.

- Bart

You should have posted that in the pot thread,it might make sense to someone over there:)

Exxon in 2004 paid just in corporate income tax MORE than the bottom 50% of tax payers COMBINED.The total income taxes of 65,000,000 people was equaled by one corporate tax payment from just one of the 1.3 million corporations in this country.

Small part of the revenue picture my a--.

When you,or I,or anyone else in this country pulled up to one of their pumps and filled up,just who do you think really paid those taxes???????It wasn't the tax fairy or the easter bunny.

LOOK IN THE MIRROR

lazlo
02-08-2009, 01:23 AM
Still those companies that do pay taxes just were do they get that money from, if it is not from you their customer?

It's an operating expense, just like electricity or employee salaries

When they dramatically increase the CEO's salary, they don't pass the cost on to the consumer. Businesses will absorb most operating costs, including taxes, to keep competitive in the marketplace.

Using Limbaugh's logic, it's foolish to tax individuals too, because they will just pass the tax on to their employers by demanding higher pay.

lazlo
02-08-2009, 01:26 AM
Exxon in 2004 paid just in corporate income tax MORE than the bottom 50% of tax payers COMBINED.

That's because that's back when they were speculating on oil, and posted the highest profits ever recorded for a corporation. Exxon alone made more money that the Gross National Product of all but the top 10 industrialized nations.

Now that the speculation game is over, their profits are dropping like a rock. I hear violins :)

dan s
02-08-2009, 01:28 AM
Now that the speculation game is over, their profits are dropping like a rock. I hear violins :)

At least they are not on capital hill begging for money, like our worthless automakers.

lazlo
02-08-2009, 01:29 AM
At least they are not on capital hill begging for money, like our worthless automakers.

Agree with you there Dan!

Didn't help that they flew to DC in private jets, and were driven to Capital Hill in limousine's. Somehow I don't think that they get the point.

dp
02-08-2009, 01:38 AM
It's an operating expense, just like electricity or employee salaries

When they dramatically increase the CEO's salary, they don't pass the cost on to the consumer. Businesses will absorb most operating costs, including taxes, to keep competitive in the marketplace.

Using Limbaugh's logic, it's foolish to tax individuals too, because they will just pass the tax on to their employers by demanding higher pay.

This money they absorb the big salaries with - where do you suppose that comes from? Hmmm... Gotta come from somewhere - it all does, you know. I'm stumped, bud - where does it come from if not from the customers? Do they have people who are not customers lining their pockets? I'd like to get a piece of that. :cool:

(They need to get a "looking incredulous" smilely.)

wierdscience
02-08-2009, 01:49 AM
The US has experimented with various distributions of taxes on income ranges over time. Taxes are more graduated when income needs rise; the tax rates during WWI and WWII and Korea were very high for top earners. Bush cut taxes on the wealthy and went to war, which is the primary reason why we have such a budget deficit. 50% tax rate would be an intolerable burden on someone making 70K/year - but for someone making 500 million, it's not going to cramp their style in any way that makes me feel sorry for them.

Remember, most people pay state income, Medicare, social security, property and federal income tax. Some pay capital gains. If you're
going to talk about tax burden, all of these need to be evaluated
together.

No kidding,you figure out all those forms of tax need to be added together by your self?When you do that the person making $70,000/yr is paying nearly 50% already.

[QUOTE=bartsExcept that the capital gains tax rate is 15%. As a result, someone living off of capital gains pays a much lower tax rate... if you want to help the person who's forced to liquidate, liberalize the income averaging rules rather than cutting the overall tax rate. I see no reason why someone who makes his living investing, holding and then selling stocks should pay 15% instead of their regular income tax rate. [/QUOTE]

I guess you've never heard of venture capital,returns on investment and the effect capital gains taxes have on investors wanting to invest here in the US?

wierdscience
02-08-2009, 02:01 AM
That's because that's back when they were speculating on oil, and posted the highest profits ever recorded for a corporation. Exxon alone made more money that the Gross National Product of all but the top 10 industrialized nations.

Now that the speculation game is over, their profits are dropping like a rock. I hear violins :)

Speculation or not that tax was paid by the consumers.

Exxon's profit margin will remain the same regardless of market.It's how business functions.If costs rise against profit,costs will be cut.In this economy employees will be laid off.

Of course speculation being driven by supply and demand is another concept you guys have trouble with:rolleyes:

wierdscience
02-08-2009, 02:10 AM
It's an operating expense, just like electricity or employee salaries

When they dramatically increase the CEO's salary, they don't pass the cost on to the consumer. Businesses will absorb most operating costs, including taxes, to keep competitive in the marketplace.
.

Okay,my light bill at work is $900/month,I broke/wore out $350 in tooling,office supplies were another $100,but I can't charge that to my customers and remain compeditive,so I'll just "absorb it".......hahahahahaha...you kill me :D :D

He was gonna got to business school...but then he got high,he was gonna get an MBA,but he got high....he's gonna go broke and I know why.....because he got high,because he got high,because he got high....budda-dump-dump-dump:D :D

dp
02-08-2009, 02:45 AM
Okay,my light bill at work is $900/month,I broke/wore out $350 in tooling,office supplies were another $100,but I can't charge that to my customers and remain compeditive,so I'll just "absorb it".......hahahahahaha...you kill me :D :D

No, see - you pay it with your other pile of money - the stack you didn't get from your customers.