bills_fan Posted September 17, 2008 Share Posted September 17, 2008 Face it, as taxpayers we are all screwed. The difference is not so much WHAT they take, it's WHERE they spend it. If I am going to be bled dry on taxes, I would rather have it to buy lunches for hungry school children as opposed to bailouts for bloated corporations and their golden-parachuted executives. Far from it, the original Resolution Trust, created to solve the S&L crisis in the 80s, actually made money for the government while it orderly disposed of the assets. Taxpayers will actually make money if they use an RTC II. Link to comment Share on other sites More sharing options...
finknottle Posted September 17, 2008 Share Posted September 17, 2008 How long ago were Freddie and Fannie given implicit guarantees? Did the crisis start 50 years ago?Seems to me something much more recent triggered this crisis... I think DC_Tom is right here. Yes, they were given guarantees a long time ago, but it takes time to get to where houses are being bought in volume by those who cannot afford them. It takes time for pressure on the lenders to translate into the kind of lending practices we have been seeing the past few years. It is more accurate to say that lending standards have eroded over time rather than been abruptly abandoned.. Each successive administration/congress enters office with home ownership at a certain level, and puts pressure on lenders to increase it. This means incremental pressure to relax lending requirements, and to implement programs to increase ownership rates among minorities and the poor. That also means the next administration/congress has to raise it to an even higher level if they want to claim credit for advancing the 'american dream' - more relaxation and more risky lending. Eventually we get to a situation where the loans being made can only be paid back if the housing values keep increasing... when they stop, you have massive defaults. Link to comment Share on other sites More sharing options...
DC Tom Posted September 17, 2008 Share Posted September 17, 2008 How long ago were Freddie and Fannie given implicit guarantees? Did the crisis start 50 years ago?Seems to me something much more recent triggered this crisis... Probably more like 30. When Wall Street discovered they could package mortgages into bonds and generate cash flow for S&Ls to write more mortgages, and got federal backing to promote the suitability of the investment vehicles and build the market, that's when the seeds of the current mess was planted. The true PROXIMATE cause wasn't that, it was the ready availability of money to invest in mortgages coupled with a relative dearth of suitable borrowers, ultimately leading to more and more exotic vehicles - mortgages and mortgage-backed securities - being available to people that didn't and couldn't understand the risks. Oh, and let's not forget Congress continually increasing the scope of Fannie and Freddie's guarantees...again, to support "home ownership". Lost in all the discussion of the Fannie and Freddie bailout is the legislation in February of this year to again increase the limits and weaken the standards by which Freddie and Fannie backed mortgages (which I believe I said at the time - unfortunately lost in the board crash - would lead to increased exposure of Fannie and Freddie to failure and make a government takeover more likely). That continual weakening of standards has been going on for a while - 20 years, at least - and is directly responsible for the current mess. Link to comment Share on other sites More sharing options...
/dev/null Posted September 17, 2008 Share Posted September 17, 2008 The tire on my pick up truck parked in my yard is flat and its her fault How is it her fault? Remember what her T-Shirt said? She may be broke she's not flat busted Link to comment Share on other sites More sharing options...
John Adams Posted September 17, 2008 Share Posted September 17, 2008 Oh, and let's not forget Congress continually increasing the scope of Fannie and Freddie's guarantees...again, to support "home ownership". Lost in all the discussion of the Fannie and Freddie bailout is the legislation in February of this year to again increase the limits and weaken the standards by which Freddie and Fannie backed mortgages (which I believe I said at the time - unfortunately lost in the board crash - would lead to increased exposure of Fannie and Freddie to failure and make a government takeover more likely). That continual weakening of standards has been going on for a while - 20 years, at least - and is directly responsible for the current mess. I predicted Kirk Chambers and Ashton Youboty would play like studs at that time too. Link to comment Share on other sites More sharing options...
DC Tom Posted September 17, 2008 Share Posted September 17, 2008 I predicted Kirk Chambers Ashton Youboty would play like studs at that time too. Yeah, I know...I bitched far and wide about it at work here, and people remember. Fat lot of good that does me, since none of them post here... ...though some of them still ask me every so often, "Has that 3.5 guy said anything else stupid recently?" Link to comment Share on other sites More sharing options...
TPS Posted September 17, 2008 Share Posted September 17, 2008 Probably more like 30. When Wall Street discovered they could package mortgages into bonds and generate cash flow for S&Ls to write more mortgages, and got federal backing to promote the suitability of the investment vehicles and build the market, that's when the seeds of the current mess was planted. The true PROXIMATE cause wasn't that, it was the ready availability of money to invest in mortgages coupled with a relative dearth of suitable borrowers, ultimately leading to more and more exotic vehicles - mortgages and mortgage-backed securities - being available to people that didn't and couldn't understand the risks. Oh, and let's not forget Congress continually increasing the scope of Fannie and Freddie's guarantees...again, to support "home ownership". Lost in all the discussion of the Fannie and Freddie bailout is the legislation in February of this year to again increase the limits and weaken the standards by which Freddie and Fannie backed mortgages (which I believe I said at the time - unfortunately lost in the board crash - would lead to increased exposure of Fannie and Freddie to failure and make a government takeover more likely). That continual weakening of standards has been going on for a while - 20 years, at least - and is directly responsible for the current mess. First, I agree with much of this. However, if one does blame the guarantee, then that gets to the argument made by austrian folks here, that without government intervention of any kind there would be no crisis; or at best, they'd be less severe. Intervention of any kind is not the cause; crises arise from the nature of financial capitalism--leveraged and profit driven (note to those who always try to put words in my mouth--this is not a value judgment either about the system). Financial innovations arise from seeking profits or to circumvent regulations which restrain profit making. We agree that financial speculation and bubbles have always happened, always will. While older factors play a role, it's a consequence of behavior that began in 1999 with the end of Glass-Steagall--In fact, one might argue that this deregulation was more imortant in causing the crisis than government's guarante of the GSEs. So the walls come down; the enron debacle has investors looking for returns elsewhere (and of course they're flush with cash from Bush's supply-side tax cuts... ); 911 has the Fed lowering interest rates; China ensures they stay low; the bubble begins; everyone believes tulips will continue to rise in value; everyone is making money hand over fist; everyone who isn't yet, wants to; build more houses, offer interest-only loans so more people can qualify, generate more fees; risk has been lowered by securitizing; another lucrative market emerges with insuring the CMOs, CDOs, etc, which are split into so many different pieces some fund managers don't even know what they're holding--but they are insured); the insurance vehicle itself becomes an asset to trade; and on and on... Why should it stop when everyone is making so much money? The very nature of a bubble causes people to under-estimate the risk. I don't think it's a devious plot by the heads of companies saying, "well the government will bail us out." I don't think there are many CEOs willing to risk losing control of their firms by doing so. I'll say it again, it's just the nature of the beast. The financial industry said they'd self-regulate. That didn't work too well. Regulation won't prevent future crises, but it can reduce their severity. "We live in interesting times..." Link to comment Share on other sites More sharing options...
bills_fan_in_raleigh Posted September 17, 2008 Share Posted September 17, 2008 First, I agree with much of this. However, if one does blame the guarantee, then that gets to the argument made by austrian folks here, that without government intervention of any kind there would be no crisis; or at best, they'd be less severe. Intervention of any kind is not the cause; crises arise from the nature of financial capitalism--leveraged and profit driven (note to those who always try to put words in my mouth--this is not a value judgment either about the system). Financial innovations arise from seeking profits or to circumvent regulations which restrain profit making. We agree that financial speculation and bubbles have always happened, always will. While older factors play a role, it's a consequence of behavior that began in 1999 with the end of Glass-Steagall--In fact, one might argue that this deregulation was more imortant in causing the crisis than government's guarante of the GSEs. So the walls come down; the enron debacle has investors looking for returns elsewhere (and of course they're flush with cash from Bush's supply-side tax cuts... ); 911 has the Fed lowering interest rates; China ensures they stay low; the bubble begins; everyone believes tulips will continue to rise in value; everyone is making money hand over fist; everyone who isn't yet, wants to; build more houses, offer interest-only loans so more people can qualify, generate more fees; risk has been lowered by securitizing; another lucrative market emerges with insuring the CMOs, CDOs, etc, which are split into so many different pieces some fund managers don't even know what they're holding--but they are insured); the insurance vehicle itself becomes an asset to trade; and on and on... Why should it stop when everyone is making so much money? The very nature of a bubble causes people to under-estimate the risk. I don't think it's a devious plot by the heads of companies saying, "well the government will bail us out." I don't think there are many CEOs willing to risk losing control of their firms by doing so. I'll say it again, it's just the nature of the beast. The financial industry said they'd self-regulate. That didn't work too well. Regulation won't prevent future crises, but it can reduce their severity. "We live in interesting times..." What is appalling is the fact many of these CEOs that frucked up will get huge bonuses for leaving. Look at the parachute packages these guys are getting for basically making stupid decisions. If you screwed up that bad would your boss say we need to let ya go and here is 50M for your troubles? Not sure about many of you but I would jump after that one. Link to comment Share on other sites More sharing options...
DC Tom Posted September 17, 2008 Share Posted September 17, 2008 What is appalling is the fact many of these CEOs that frucked up will get huge bonuses for leaving. Look at the parachute packages these guys are getting for basically making stupid decisions. If you screwed up that bad would your boss say we need to let ya go and here is 50M for your troubles? Not sure about many of you but I would jump after that one. It's not quite like that. I've never seen a corporate officer hired who didn't have his severance negotiated as part of his employment contract. In other words, every corporate officer I've ever known (quite a few) has their golden parachute set up before they even start the job. And I have a hard time blaming the officers for that one...it takes two to negotiate a contract. (One former CEO of mine got a half-million dollar exit bonus and is still collecting $10k a month from the parent of the company he bankrupted with clear-cut, no-sh-- embezzlement - wasn't even ambiguous, he WAS stealing money. And he's been getting $10k a month from the parent company for more than six years now, because the parent is contractually obligated to pay him and too stupid not to). But fundamentally...it is a REALLY stupid way to pay coroprate officers. And you'd jump at the chance if a board of directors was dumb enough to make you that offer. I would, too...hell, I've tried to negotiate employment contracts like that. But since I'm at best middle-management, no one's dumb enough do do it. Link to comment Share on other sites More sharing options...
blzrul Posted September 17, 2008 Author Share Posted September 17, 2008 What is appalling is the fact many of these CEOs that frucked up will get huge bonuses for leaving. Look at the parachute packages these guys are getting for basically making stupid decisions. If you screwed up that bad would your boss say we need to let ya go and here is 50M for your troubles? Not sure about many of you but I would jump after that one. That's why it's so hysterial seeing Carly Fiorina stumping for McCain, who's telling everyone he's gonna fix those crummy golden-parachuters....She herself got a huge chunk of change when she got the boot from HP, after mucking it up there bigtime. Link to comment Share on other sites More sharing options...
finknottle Posted September 17, 2008 Share Posted September 17, 2008 That's why it's so hysterial seeing Carly Fiorina stumping for McCain, who's telling everyone he's gonna fix those crummy golden-parachuters....She herself got a huge chunk of change when she got the boot from HP, after mucking it up there bigtime. This is true - I wasn't particularly impressed with her controversial tenure there, and cringed at the thought that he might pick her to shore up his economic credentials (much like I cringe at Biden for foreign policy expertise). I am a big fan of experience, but experience by itself doesn't always mean expertise or even competance. You need results too. Link to comment Share on other sites More sharing options...
bills_fan_in_raleigh Posted September 17, 2008 Share Posted September 17, 2008 This is true - I wasn't particularly impressed with her controversial tenure there, and cringed at the thought that he might pick her to shore up his economic credentials (much like I cringe at Biden for foreign policy expertise). I am a big fan of experience, but experience by itself doesn't always mean expertise or even competance. You need results too. But don't people learn from their mistakes Link to comment Share on other sites More sharing options...
bills_fan_in_raleigh Posted September 17, 2008 Share Posted September 17, 2008 I would, too...hell, I've tried to negotiate employment contracts like that. But since I'm at best middle-management, no one's dumb enough do do it. Middle management isn't that an oxymoron? Ya get to take the employee sh-- flowing upward and the management sh-- flowing downward, I know from experience. Link to comment Share on other sites More sharing options...
DC Tom Posted September 17, 2008 Share Posted September 17, 2008 First, I agree with much of this. However, if one does blame the guarantee, then that gets to the argument made by austrian folks here, that without government intervention of any kind there would be no crisis; or at best, they'd be less severe. Intervention of any kind is not the cause I don't even know that that's worth arguing - you don't have to know anything about economics or finance to know it's a logical fallacy. Even if one were to presume that intervention caused THIS crisis (and I'm perfectly willing to - the combination of government guarantee and mandated standards for Fannie and Freddie created completely artificial expectations concerning the risks of CMOs), that does not equate to "All government intervention causes crises", or "No crises would occur if the government didn't intervene". That's nothing more than the absolutism of zealous partisans. The converse, "Intervention of any kind is not the cause," is just as bad. Of course intervention can be a cause. There's no rule that all intervention is benign any more than the is one that all intervention is damaging. Link to comment Share on other sites More sharing options...
DC Tom Posted September 17, 2008 Share Posted September 17, 2008 Middle management isn't that an oxymoron? Ya get to take the employee sh-- flowing upward and the management sh-- flowing downward, I know from experience. Were you just reading the emails I was writing? Fortunately, I'm only occasionally and temporarily middle management, when my boss is out (he's out now on paternity leave). I try to keep it that way by being as unprofessional and unlikable as possible...but somehow the people I work with keep insisting on respecting not just my abilities but my interpersonal skills as well. No, I didn't know I had any, either... Link to comment Share on other sites More sharing options...
bills_fan_in_raleigh Posted September 17, 2008 Share Posted September 17, 2008 Were you just reading the emails I was writing? Fortunately, I'm only occasionally and temporarily middle management, when my boss is out (he's out now on paternity leave). I try to keep it that way by being as unprofessional and unlikable as possible...but somehow the people I work with keep insisting on respecting not just my abilities but my interpersonal skills as well. No, I didn't know I had any, either... Ahhh I think we just figured out your problem you have interpersonal skills and probably competent as well. Lose both and your integrity and your a shoe in for executive. Link to comment Share on other sites More sharing options...
Booster4324 Posted September 17, 2008 Share Posted September 17, 2008 Ahhh I think we just figured out your problem you have interpersonal skills and probably competent as well. Lose both and your integrity and your a shoe in for executive. He can pretend he is posting for the people skills. Anyone one grade above you is automatically incompetent by default by most's perceptions. So then there is integrity. What say you Tom? Willing to sacrifice for the paycheck? Link to comment Share on other sites More sharing options...
Albany,n.y. Posted September 17, 2008 Share Posted September 17, 2008 You're forgetting to blame Sarah Palin for everything. When someone said "It's the economy, stupid." Sarah Palin said "You talkin' to me?" Link to comment Share on other sites More sharing options...
Pine Barrens Mafia Posted September 18, 2008 Share Posted September 18, 2008 Dow's UP 400+ points. Oh no!! Link to comment Share on other sites More sharing options...
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