Does Anyone feel like Bailing

[Griff]

Choice #1 - lawmakers decide how the money borrowed/stolen from our future will be spent.
Choice #2 - clutch of bankers decide how the money borrowed/stolen from our future will be spent.

Two groups whose incompetence has already been exposed will be picking the winners and losers and paying the winners with money they haven't earned. Go us.

[smoothmoniker]

Originally Posted by Griff

Choice #1 - lawmakers decide how the money borrowed/stolen from our future will be spent.
Choice #2 - clutch of bankers decide how the money borrowed/stolen from our future will be spent.

There is a one glaring difference.

Under option 2, we are only at risk if we, individually, decide to put money at risk. Nobody is coming into your FDIC insured savings account and taking away money because the market is down, are they? Nobody is showing up on your doorstep and saying, "Sorry, because of the troubled credit market, we need you to pay 20% more for your mortgage" unless you agreed to let them. Prudence and foresight were sufficient to avoid any direct fallout from this mess.

Option 1 affects everyone, all of us, regardless of our individual responsibility. It obligates the prudent and the fool alike to repay money that only some put at risk.

[tw]

Originally Posted by smoothmoniker

There is a one glaring difference.

Under option 2, we are only at risk if we, individually, decide to put money at risk. Nobody is coming into your FDIC insured savings account and taking away money because the market is down, are they?

Yes, they are. Where do you think that $700billion is coming from? Economics has many methods of punishing you (all), for example, for not calling the President a liar when he said that "Mission Accomplished" would pay for itself. You money will now be diminished. You are being punished.

That money in your FDIC account has diminishing value as your dollar becomes worth less and as inflation increases massively. And then takes even more money when economics revenge also causes gasoline prices to skyrocket again. Economics also raids that FDIC account by taking away jobs. Don't fool yourself for one minute. Those massive tax cuts to the rich are now being paid for by you. That routine lying on spread sheets made so acceptable especially during this past eight years - you must now pay for that deregulation and welfare to the rich.

And those roads that will be repaved? Those bridges that get rebuilt? That electric system that remains reliable? More ways you must pay. Meanwhile, the only alternative is massive tax increases. But again, more ways that your FDIC account get raided such as when you could not pay your bills. Or you must take a severe reduction in your standard of living.

Having said this, was your stockbroker or finance adviser warning you to get out of equities back in August when that was obviously prudent? If so, then you get to pay less for our economic fiasco.

The time to worry about this was many years ago when Cheney said, "Reagan proved that deficits don't matter." He was right because nobody wanted to think in economic terms - in 4 to 10 year cycles. Those Cheney debts are only just starting to become due. So those debts did not matter to Cheney. Now everyone must pay for the party by a few.

So who is calling for the problems to be fixed. You still don't hear mass media commentators calling for fixing GM's #1 problem - Rick Wagoner. Instead, they want to throw more of your money - another part of $25billion into $5billion GM - as if throwing money like a grenade will solve problems.

[TheMercenary]

Originally Posted by smoothmoniker

There is a one glaring difference.

Option 1 affects everyone, all of us, regardless of our individual responsibility. It obligates the prudent and the fool alike to repay money that only some put at risk.

Not according to the Obama plan.

[Griff]

Originally Posted by TheMercenary

Not according to the Obama plan.

or the Bush plan. They both use confiscated dollars. There is no individual choice.

[Griff]

Originally Posted by smoothmoniker

Under option 2, we are only at risk if we, individually, decide to put money at risk. Nobody is coming into your FDIC insured savings account and taking away money because the market is down, are they? Nobody is showing up on your doorstep and saying, "Sorry, because of the troubled credit market, we need you to pay 20% more for your mortgage" unless you agreed to let them. Prudence and foresight were sufficient to avoid any direct fallout from this mess.

I consider the plan to confiscate $700 Billion, to be distributed willy nilly, to be direct fallout. There will be costs to the rest of the economy to pay for this free ride. I made the poor choice of paying my own way for housing now I get to pay for "yours" as well. Go me.

[TheMercenary]

Originally Posted by Griff

or the Bush plan. They both use confiscated dollars. There is no individual choice.

From what I can tell there never was a Bush plan. The rescue plans were designed and passed by the Democratic controlled Congress. Bush just rubberstamped them in as a Lame Duck President.

[Undertoad]

Originally Posted by tw

you must now pay for that deregulation

Can you point to which particular deregulation?

[Griff]

Originally Posted by TheMercenary

From what I can tell there never was a Bush plan. The rescue plans were designed and passed by the Democratic controlled Congress. Bush just rubberstamped them in as a Lame Duck President.

Wrong, that is a complete rewrite of history. The Bush plan was to demand the money with no strings attached during a panic. Originally he got his way, but now the once compliant congress is winding string having found an opportunity to turn Republican pork into Democratic pork.

[smoothmoniker]

I think I misunderstood. I took option 1 to be the bailout with the government taking over failing institutions, and option 2 to be no bailout, letting the economic chips fall where they fall.

[tw]

To merge a maybe $2.8billion company with a $0.5billion company, GM wanted government to add $10billion to $25billions of corporate welfare. Since that was not good enough, Rick Wagoner had meetings with Pelosi and others to beg for another $25billion in free money. All this because innovation was routinely stifled in GM and Rick Wagoner is mostly interested in a job that enriches himself. After all, Wagoner is a classic business school graduate doing what bean counters routinely do. Notice his salary and bonuses are not $1 per year like Lee Iacocca - a cary guy - did.

With deregulation this past eight years, GM did zero product innovation. None because significant GM innovation only happens when required by government regulation. Shameful. But that is what happens when finance people - ie business school graduates or communication majors - run a corporation or industry.

Numerous examples of deregulation to enrich only the richest were provided even though UT does not see them. Having promoted destruction of the American economy, now George Jr's administration might sign off on more and massive free money. Free money to those who did more to destroy America than Saddam Hussein. That last sentence clearly is not disputable.

The Economist discusses more examples of deregulation in "The Great Untangling" of 6 Nov 2008:

They are, ... a “Ponzi scheme” that no self-respecting firm should touch. Eric Dinallo, the insurance superintendent of New York state, calls them a “catastrophic enabler” of the dark forces that have swept through financial markets. Alan Greenspan, who used to be a cheerleader, has disowned them in “shocked disbelief”. ...

Until last year credit-default swaps (CDSs) were hailed as a wonder of modern finance. These derivatives allow sellers to take on new credit exposure and buyers to insure against companies or governments failing to honour their debts. ...

One reason is the broad threat of “counterparty risk” - the possibility that a seller or buyer cannot meet its obligations. Another is the rickety state of back-office plumbing, which was neglected as the market boomed. A third is that swaps can be used to hide credit risk from markets, since positions do not have to be accounted for on balance-sheets.

CDOs - how to do insurance without regulation. Deals carefully worded so that state insurance commissions cannot regulate them. Structured to fall under the domain of the SEC where deregulation was rampant and enforcement was reduced to minimal - especially by George Jr's administration.

Originally conceived as a means for banks to reduce their credit exposure to large corporate clients, CDSs quickly became instruments of speculation for pension funds, insurers, companies and (especially) hedge funds. And with no fixed supply of raw material, unlike stocks or bonds, bets could be almost limitless.

... A paper last year by economists at the Federal Reserve Bank of New York concluded that they “give banks an opaque means to sever links to their borrowers, thus reducing lender incentives to screen and monitor.”

IOW CDSs became another tool to hide losses from the spread sheets thanks to no regulation and Enron style accounting.

Concern about the damage that the failure of a big swap-seller might yet do has created pressure for the CDS market to be regulated. ... Mr Dinallo labels uncovered CDS trades as “naked”, likening them to abusive short-selling of shares. Federal regulators, who passed up several opportunities to police the market during the credit boom, are circling too.

Too little too late. But the lesson is obvious. Financial markets where so many 'expert' are nothing more than slick salesmen with the same ethics - this industry needs massive regulation.

Take for example your stock broker. Did he tell you to get out of stocks last August or earlier because he knew his job? Or was he more interested is the profits from managing your money. These people are not experts in basic economics or sufficient to evaluate equities. But they can spin deals. People who are experts in enriching themselves in commissions and management fees. How to we keep these people honest? Regulation that they well deserve.

Another way to regulate markets is a centralized exchange. The NYSE and Nasdaq add further regulations to stocks which is why most investors find greater safety there. Honest financial markets cannot operate without regulation. In a desperate effort to save derivatives such as CDOs, some are recommending the creation of centralized markets where derivatives such as CDOs would be heavily regulated and where derivative salesmen - just like stock brokers -alsp are regulated salesmen.

Some industries deserve to be heavily regulated. In thirty some years, when a new generation hypes a political agenda such as financial deregulation and promotes equity brokers as smart, then you should be smart enough to laugh in their face.

Many industries do not need massive regulation. But then those industries are regulated by the free market and by products that are limited and can be grasped. That is not true where finance people sell products that "with no fixed supply of raw material ... bets could be almost limitless."

If many jobs are lost two years from now, well look back at the money games promoted by George Jr, et al to make the economy appear productive - to promote themselves. Guess what. Deficits do matter.

Meanwhile, the worst thing we can do is destroy the auto industry by giving them free money. As long as the MBA Rick Wagoner is running GM, then innovation will continue to be stifled and all employee jobs are put at risk.

[Undertoad]

But those examples are not examples of deregulation. They're shady people working their way AROUND regulation. Is it a problem, yes; could it be introduced by the administration, yes; does in involve regulation, yes; is it deregulation, NO. The Economist doesn't call it deregulation so why do you?

Now come on, be an adult; there was no deregulation, am I right?

[tw]

Originally Posted by Undertoad

But those examples are not examples of deregulation. They're shady people working their way AROUND regulation. Is it a problem, yes; could it be introduced by the administration, yes; does in involve regulation, yes; is it deregulation, NO. The Economist doesn't call it deregulation so why do you?

So many examples of deregulation from so many posts ignored. The Economist was specifically quoted saying deregulation contributed to this economic fiasco. Did you read that long ago when the example was posted specifically for you to read?

Another example of ignored deregulation - Glass-Stegall. Some parts were eliminated - deregulations. Other parts were simply not enforced - deregulation. Bottom line - none of Glass Stegall remains.

If you were honest, then you would have posted proof that deregulation did not exist. You did not because you cannot. So you are doing the only thing you can - take cheap shots. You don't prove 'no deregulation exists' because no such proof exists - just like George Jr's lies about WMDs. BTW, you did that exact same thing there. You provide zero proof that Saddam had WMDs. Your only proof was to claim I and my citations were wrong. By now, I would have expected you to learn that proof is not found in nay-saying me. Where are YOUR facts that say deregulation does not exist? Even The Economist said it exists (and what follows are more citations from tw) in "A survey of the World Economy When fortune frowned” on 9 Oct 2008 :

What will be the long-term effect of this mess on the global economy? ...
First, Western finance will be re-regulated. At a minimum, the most freewheeling areas of modern finance, such as the $55 trillion market for credit derivatives, will be brought into the regulatory orbit. Rules on capital will be overhauled to reduce leverage and enhance the system’s resilience. America’s labyrinth of overlapping regulators will be reordered.

In the same issue, "Taming the beast" said:

The market itself has already asked for dramatic changes—away from highly geared investment banks towards the safety of lower leverage and more highly regulated commercial banks. ...
The new system evolved over the past three decades and saw explosive growth in the past few years thanks to three simultaneous but distinct developments: deregulation, technological innovation and the growing international mobility of capital.

In "Changing the Rules" on 2 Oct 2008:

While free trade is linked more philosophically than directly to the deregulation that has helped to spawn the current financial crisis, ...

And then from Griff's post of 6 Oct 2008 (see also John McCain's Gramm Gamble:

With the U.S. economy now battered by a tsunami of mortgage foreclosures, the $30-billion Bear Stearns Companies bailout and spiking food and energy prices, many congressional leaders and Wall Street analysts are questioning the wisdom of the radical deregulation launched by Gramm’s legislative package. Financial wizard Warren Buffett has labeled the risky new investment instruments Gramm unleashed “financial weapons of mass destruction.” They have fed the subprime mortgage crisis like an accelerant.

We are different. I demand facts rather than turn speculation into beliefs. Need an example of why your logic does not work? UT knew that Saddam had WMDs only because he felt it must be true. Despite numerous facts and citations from tw, UT instead denied those facts. And just like with 'deregulation', UT refuses to prove 'deregulation does not exist'. He does not like the many examples of deregulation. That proves that deregulation does not exist? - just like that proved Saddam had WMDs? UT, where are your citations and proof that deregulation did not exist? In the same bin, using the same logic, that also proved Saddam had WMDs?

Why do you keep supporting that scumbag mental midget?

UT even ignored a sentence in that latest (6 Nov 2008) quote from The Economist that demonstrated another classic example of deregulation:

Federal regulators, who passed up several opportunities to police the market during the credit boom, are circling too.

Makes little difference whether one opens the gates or leaves them open. That was George Jr's deregulation to let the wolves into the hen house. George Jr got the deregulation he wanted. We get to suffer the consequences.

How many citations and example do you need UT? The above citations are in addtional to a long list cited previously. Why do you ignore them just like you ignored the numbers that said, "No proof exists for Saddam's WMDS". Why do I cite this? Because you are again making the same logic mistake you made then. You denied AND you provide no supporting facts for your belief.

You, UT, must prove that deregulation did not exist. You refuse and you can't.

[xoxoxoBruce]

Using my own basic logic and reputable sources, I think most of what tw has posted in this thread rings true. But clinging to the term deregulation, in instances where new regulation was sorely needed, but not forthcoming from the government, is stubbornness that's off putting to readers not familiar with our resident sage.

[Undertoad]

Originally Posted by tw

If you were honest, then you would have posted proof that deregulation did not exist.

http://cellar.org/showpost.php?p=499135&postcount=88

http://online.wsj.com/article/SB122403045717834693.html

While there has been significant deregulation in the U.S. economy during the last 30 years, none of it has occurred in the financial sector.

FAIL