B-Large Posted March 12, 2012 Share Posted March 12, 2012 Until you understand the difference between "companies" and "markets", you can't even discuss it intelligently. Believe what you want, I would still have liked to hear your answer to my question.... perhaps you feel Government Bailouts are just fine.... The trite answer is that the public benefited for two decades from the financial party, and TARP was a temporary loan to prevent a panic. The real answer is that without a global "TARP" you would have been screwed far worse. How many people can live without their next paycheck for two weeks and what would happen during those two weeks when there was no money to be had? That is fine if we want to subsidize/ encourage bad behavior..... but if we want to be true capitlists, where bad business results in plummeting stock prices and failing firms are part of the consequence, then perhaps that is just the medicine we need? So Government is good when Finance/Auto needs a bailout, but bad in all other cases... What happened to the brand of conservtism that stuck to the principles of free markets, free enterprise and did not selective choose when Big Uncle Sam was the perfect medicine to ease the ill of the circle of cronies.... Link to comment Share on other sites More sharing options...
DC Tom Posted March 12, 2012 Share Posted March 12, 2012 Believe what you want, I would still have liked to hear your answer to my question.... perhaps you feel Government Bailouts are just fine.... Your question is loaded and idiotic. Now you're asking if bailouts in general are okay, generalized from bailouts being okay to make up for bad decision making, generalized from TARP being okay. and I already gave you the answer to the last: you don't know what you're talking about, you're asking a question from a context that isn't based in reality. And the real problem here is that until you can make the distinction between "companies" and "markets," you couldn't even understand my answer. Link to comment Share on other sites More sharing options...
GG Posted March 12, 2012 Share Posted March 12, 2012 That is fine if we want to subsidize/ encourage bad behavior..... but if we want to be true capitlists, where bad business results in plummeting stock prices and failing firms are part of the consequence, then perhaps that is just the medicine we need? In case you were asleep, that experiment was floated when US & UK allowed Lehman to fail, thinking that in the months following Bear Stearns' collapse, the financial markets could absorb a failed investment bank. They guessed wrong. You can't unwind twenty years' worth of financial systems overnight as the regulators quickly learned. Four years later they're still trying to find a formula to reduce the risk of an entire system collapsing. No such luck yet. And if you think that you would have been fine if the financial collapse ran its course, then you are clueless. Link to comment Share on other sites More sharing options...
B-Large Posted March 12, 2012 Share Posted March 12, 2012 (edited) In case you were asleep, that experiment was floated when US & UK allowed Lehman to fail, thinking that in the months following Bear Stearns' collapse, the financial markets could absorb a failed investment bank. They guessed wrong. You can't unwind twenty years' worth of financial systems overnight as the regulators quickly learned. Four years later they're still trying to find a formula to reduce the risk of an entire system collapsing. No such luck yet. And if you think that you would have been fine if the financial collapse ran its course, then you are clueless. I guess is took over 2,000 pages in Dodd Frank? We have a way to reduce risk, its called bankruptcy and liquidation... Isn't that what people fear most? Isn't that the natural order and consequence of bad business? Isn't not being able to petition Washington to get a loan reason enough? If there was no help from Uncle Sam, would firms still make outlandish loans and investments, or bundles them into derivities if THEY have to pay the piper in monetary losses and reputation losses when they bust? Would they keep enough cash or reserves around to cover the riskier pieces of their portfolio? Heck, I certainly am afriad to get overexteneded, to take on too much... unless I could go for handout from my parents, then I would figure who cares, I am safe I can do whatever I want... to me that mentality is what will continue to get our country in trouble, the blief that consequence is managable, and very much so IF your dollars and contrubitions are in the right place. Your question is loaded and idiotic. Now you're asking if bailouts in general are okay, generalized from bailouts being okay to make up for bad decision making, generalized from TARP being okay. and I already gave you the answer to the last: you don't know what you're talking about, you're asking a question from a context that isn't based in reality. And the real problem here is that until you can make the distinction between "companies" and "markets," you couldn't even understand my answer. I understand the difference. I don't understand why some compaines, or perhaps whole markets in which those companies particpiant/sells products/ do business get special consideration? All I keep hearing is "you don't understand, it would have been so awful".... would it? How would we know? Is it because we always come to the rescue of the Financial Industry when they do what they want? Isn't that as Entitled as it gets? Until you understand the difference between "companies" and "markets", you can't even discuss it intelligently. you keep saying that, I assume you just rather not answer, which is fine. Or perhaps you can unravel the great mystery of the differences? Edited March 12, 2012 by B-Large Link to comment Share on other sites More sharing options...
GG Posted March 12, 2012 Share Posted March 12, 2012 It would greatly help the discussion if your understanding of the topic was more than a misreading Matt Taibbi's ignorance. Link to comment Share on other sites More sharing options...
B-Large Posted March 12, 2012 Share Posted March 12, 2012 (edited) It would greatly help the discussion if your understanding of the topic was more than a misreading Matt Taibbi's ignorance. So you guys are just not going to repond, that is fine... I am sure it is so complex that you hold all the secrets and we should just trust you... I mean, what do us silly MBA's, Hospital Adminstrators and Investment Property owners know anyway... I am sure your explantion would be way over my head so thank you for being wise enough to save me from being embarassed.... Jesus, you guys sound like a couples of Nancy Pelosi's... and I know how you feel about her.... like Nancy would say, "you are too dumb to engage in this, I know better so just listen to me" Edited March 12, 2012 by B-Large Link to comment Share on other sites More sharing options...
DC Tom Posted March 12, 2012 Share Posted March 12, 2012 In case you were asleep, that experiment was floated when US & UK allowed Lehman to fail, thinking that in the months following Bear Stearns' collapse, the financial markets could absorb a failed investment bank. They guessed wrong. You can't unwind twenty years' worth of financial systems overnight as the regulators quickly learned. Four years later they're still trying to find a formula to reduce the risk of an entire system collapsing. No such luck yet. And if you think that you would have been fine if the financial collapse ran its course, then you are clueless. And oh-by-the-way...the liquidation of Lehman's assets was a direct contributor to the liquidity issues in the capital markets over the following three weeks. So you guys are just not going to repond, that is fine... I am sure it is so complex that you hold all the secrets and we should just trust you... I mean, what do us silly MBA's, Hospital Adminstrators and Investment Property owners know anyway... I am sure your explantion would be way over my head so thank you for being wise enough to save me from being embarassed.... I already did explain it, and it already did go over your head. Link to comment Share on other sites More sharing options...
B-Large Posted March 12, 2012 Share Posted March 12, 2012 And oh-by-the-way...the liquidation of Lehman's assets was a direct contributor to the liquidity issues in the capital markets over the following three weeks. I already did explain it, and it already did go over your head. this is going in circles, if you every decide to actually engage, I will look out for your repsonse. Link to comment Share on other sites More sharing options...
DC Tom Posted March 12, 2012 Share Posted March 12, 2012 this is going in circles, if you every decide to actually engage, I will look out for your repsonse. I agree with emergency government action to maintain liquidity in the financial markets. But disagree with bailing out companies. Told you that you wouldn't understand. Link to comment Share on other sites More sharing options...
B-Large Posted March 12, 2012 Share Posted March 12, 2012 (edited) I agree with emergency government action to maintain liquidity in the financial markets. But disagree with bailing out companies. Told you that you wouldn't understand. I understand perfectly.... why do financial markets, ie commercial paper have issues? is it magic? Or is it because companies who participant in those markets screwed them up with poor business practices, shaking the very trust in those supposedly efficient markets? Financial markets don't just "go bad", and you know that... so a bailout, aka emergency liquidity in the financial markets is nothing more that a bailout to people who made bad bets in various places, and you know darn well it will happen again... Without emergency liquidity many big time financial instiution would have failed.... that is the consequence, and it maight have brought on some real changes, both in financial sector and in the US Government.... but now, instead we have that highyl suspect relationship between money, lobbying, representative Government and private industry... yuck What is the worst that would habe happened with out Emergency Liquidity? Maybe the end of the world... my guess, short time hardship, bankruptcies and firm with cash and resources coming in to pick up bargain in the trash heap... Edited March 12, 2012 by B-Large Link to comment Share on other sites More sharing options...
Joe Miner Posted March 12, 2012 Share Posted March 12, 2012 this is going in circles, if you every decide to actually engage, I will look out for your repsonse. Yeah, it matters...if companies fail, it has little direct impact on the majority of people. If entire markets fail...that's a much, much bigger and qualitatively different problem. There is a world of difference between companies like WaMu, Countrywide, Bear, Lehman, and such going bankrupt, and the entire market seizing up for lack of capital, which is what TARP was meant to prevent. The problem wasn't bad decisions, it was that the capital markets were so !@#$ed up that companies (FAR more than just financials) were losing the ability to move money around. When you're looking at a possibility of Fortune 500 companies missing payroll because they can't float corporate notes, the problem is much bigger than "bad trades". The trite answer is that the public benefited for two decades from the financial party, and TARP was a temporary loan to prevent a panic. The real answer is that without a global "TARP" you would have been screwed far worse. How many people can live without their next paycheck for two weeks and what would happen during those two weeks when there was no money to be had? In case you were asleep, that experiment was floated when US & UK allowed Lehman to fail, thinking that in the months following Bear Stearns' collapse, the financial markets could absorb a failed investment bank. They guessed wrong. You can't unwind twenty years' worth of financial systems overnight as the regulators quickly learned. Four years later they're still trying to find a formula to reduce the risk of an entire system collapsing. No such luck yet. And if you think that you would have been fine if the financial collapse ran its course, then you are clueless. What are you missing from their responses? Are you seriously asking for them to tell you every bad thing that would have happened had they let the financial industry fail? Understand the gist of their responses and extrapolate some plausible outcomes. The availability of money dries up. Many companies can no longer pay bills. Some Individuals that work for those companies no longer get paid. Those people have no money to spend or pay bills. The companies that rely on those people to spend and pay bills also suffer. This causes more companies to not be able to pay bills. Grandma dies My dog gets hit by a car Skynet takes over Cats and Dogs start living together. It's a devastating cycle with a list of casualties too long to list. Link to comment Share on other sites More sharing options...
GG Posted March 12, 2012 Share Posted March 12, 2012 So you guys are just not going to repond, that is fine... I am sure it is so complex that you hold all the secrets and we should just trust you... I mean, what do us silly MBA's, Hospital Adminstrators and Investment Property owners know anyway... I am sure your explantion would be way over my head so thank you for being wise enough to save me from being embarassed.... Jesus, you guys sound like a couples of Nancy Pelosi's Do your own homework Sue. There are dozens of threads on this topic dating back to 2006. Yes, there were people concerned about real estate back then. The short answer is that the financial markets are global and do not stop at US government supervision. I noticed that you didn't notice that Iceland needed a bailout and that the first banks to topple were in Europe. So until you understand the role that credit default swap that an AIG unit signed with Goldman Sachs & French banks in 2002, had on the crisis and what its securities lending unit did wrong, if you bother to understand what securities lending is, and why you think that this was a crisis that was limited to select US companies, when the largest concentration of finance is in London, and banks with names like DEUTSCHE BANK, UNION BANK OF SWITZERLAND, CREDIT SUISSE, BARCLAYS, ROYAL BANK OF SCOTLAND, ING, etc play dominant global roles, then we can have a real discussion of why entire markets seized up. Link to comment Share on other sites More sharing options...
jjamie12 Posted March 12, 2012 Share Posted March 12, 2012 (edited) my guess, short time hardship, bankruptcies and firm with cash and resources coming in to pick up bargain in the trash heap... That's your problem right there. Every and any institution that is/was large enough to do that couldn't. Because the short-term markets were no longer pricing 'risk'. Those markets stopped existing. Good company, bad company, good bank, bad bank -- Everyone was treated the same (no short-term credit) because no one had any idea who the "next Lehman" was. Gov't came in and said "Don't worry -- no more Lehman's" and gave liquidity and capital (at a very steep price) to most of the banks in the country. And it worked. Fed made money. Banks didn't die. People got their paychecks. Investors lost billions. What's the problem? Edited March 12, 2012 by jjamie12 Link to comment Share on other sites More sharing options...
DC Tom Posted March 12, 2012 Share Posted March 12, 2012 That's your problem right there. Every and any institution that is/was large enough to do that couldn't. Because the short-term markets were no longer pricing 'risk'. Those markets stopped existing. Good company, bad company, good bank, bad bank -- Everyone was treated the same (no short-term credit) because no one had any idea who the "next Lehman" was. Gov't came in and said "Don't worry -- no more Lehman's" and gave liquidity and capital (at a very steep price) to most of the banks in the country. And it worked. Fed made money. Banks didn't die. People got their paychecks. Investors lost billions. What's the problem? Not without Pelosi and the House Republicans getting into a pissing match and throwing everyone under the bus first, though. Link to comment Share on other sites More sharing options...
B-Large Posted March 12, 2012 Share Posted March 12, 2012 What are you missing from their responses? Are you seriously asking for them to tell you every bad thing that would have happened had they let the financial industry fail? Understand the gist of their responses and extrapolate some plausible outcomes. The availability of money dries up. Many companies can no longer pay bills. Some Individuals that work for those companies no longer get paid. Those people have no money to spend or pay bills. The companies that rely on those people to spend and pay bills also suffer. This causes more companies to not be able to pay bills. Grandma dies My dog gets hit by a car Skynet takes over Cats and Dogs start living together. It's a devastating cycle with a list of casualties too long to list. But that happens everyday, to all sort of business, in many different sectors. Companies overextend, roll out bad products, etc. and they have to do the layoffs, which hurts familes, that kills grandma etc- then they enter protection and decide if they can survive, be purchased or liquidate.... I mean I suppose the are times when emergency capital is warranted, natural disaster, terrosit attack, etc... but risky behvior at the hands of people probably knew better, no. Link to comment Share on other sites More sharing options...
Joe Miner Posted March 12, 2012 Share Posted March 12, 2012 But that happens everyday, to all sort of business, in many different sectors. Companies overextend, roll out bad products, etc. and they have to do the layoffs, which hurts familes, that kills grandma etc- then they enter protection and decide if they can survive, be purchased or liquidate.... I mean I suppose the are times when emergency capital is warranted, natural disaster, terrosit attack, etc... but risky behvior at the hands of people probably knew better, no. Nevermind Link to comment Share on other sites More sharing options...
GG Posted March 12, 2012 Share Posted March 12, 2012 I understand perfectly.... why do financial markets, ie commercial paper have issues? is it magic? Or is it because companies who participant in those markets screwed them up with poor business practices, shaking the very trust in those supposedly efficient markets? Financial markets don't just "go bad", and you know that... so a bailout, aka emergency liquidity in the financial markets is nothing more that a bailout to people who made bad bets in various places, and you know darn well it will happen again... Without emergency liquidity many big time financial instiution would have failed.... that is the consequence, and it maight have brought on some real changes, both in financial sector and in the US Government.... but now, instead we have that highyl suspect relationship between money, lobbying, representative Government and private industry... yuck What is the worst that would habe happened with out Emergency Liquidity? Maybe the end of the world... my guess, short time hardship, bankruptcies and firm with cash and resources coming in to pick up bargain in the trash heap... Financial markets don't go bad? Do you not know anything about history of bubbles throughout mankind? If there's one consistency across the recorded history of financial markets is that booms always, always go bust. And they go bust for one simple reason, the prized asset is worth far less than it was worth yesterday. Couple that with the understanding that banks or other financial companies never have a perfect match of hard assets and liabilities - meaning what they own and owe TODAY - their customers get nervous in times of trouble and pull their money ASAP. Now, magnify this phenomenon across the world, and imagine a scenario of a global run on every single bank. In retrospect there were probably a bunch of things Treasury & Fed could have done to avoid the full crisis, without spending so much TARP money. But, once they decided to let Lehman go, the fate was sealed. Not without Pelosi and the House Republicans getting into a pissing match and throwing everyone under the bus first, though. Ah, remember the good times? Link to comment Share on other sites More sharing options...
DC Tom Posted March 12, 2012 Share Posted March 12, 2012 But that happens everyday, to all sort of business, in many different sectors. Companies overextend, roll out bad products, etc. and they have to do the layoffs, which hurts familes, that kills grandma etc- then they enter protection and decide if they can survive, be purchased or liquidate.... I mean I suppose the are times when emergency capital is warranted, natural disaster, terrosit attack, etc... but risky behvior at the hands of people probably knew better, no. We're not talking about "companies". We're talking about markets. Jesus... Link to comment Share on other sites More sharing options...
Jauronimo Posted March 13, 2012 Share Posted March 13, 2012 But that happens everyday, to all sort of business, in many different sectors. Companies overextend, roll out bad products, etc. and they have to do the layoffs, which hurts familes, that kills grandma etc- then they enter protection and decide if they can survive, be purchased or liquidate.... I mean I suppose the are times when emergency capital is warranted, natural disaster, terrosit attack, etc... but risky behvior at the hands of people probably knew better, no. So our capital markets and entire system of credit should have been forced into bankruptcy to either restructure or cease to exist? I like the way you think. I'm sure corporate America and by extension the global economy would have had only minor growing pains transitioning to a zero credit environment. Link to comment Share on other sites More sharing options...
B-Large Posted March 13, 2012 Share Posted March 13, 2012 So our capital markets and entire system of credit should have been forced into bankruptcy to either restructure or cease to exist? I like the way you think. I'm sure corporate America and by extension the global economy would have had only minor growing pains transitioning to a zero credit environment. Why shouldn't they have? Why do American Taxpayers have to subsidize the poor decisions of others? I guess we'll just line up the next time the financial markets crash because financial intitutions do whatever they want, essentially risk free.... Link to comment Share on other sites More sharing options...
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