bostonbubble.com

[john p]

The banking industry like the public sector are kind of like our intestines. They want the wealth to pass through them so they can digest some of it.

If "Assets Under Management" are up, the banks make a lot of money. If "Incomes" are up, the government gets more income tax revenue. The Democrats will tell you all about the government surpluses during Clinton but won't recognize that that wealth wasn't based on fundamentals and we were in a bubble. Looking at government surpluses during Clinton is like looking at house prices in 2005.

The biggest worry I have now, is that people aren't clear as to why we are in this trouble. I blame both the Republicans and the Democrats, but the Democrats are scapegoating George W. Bush and are using gasoline to try to put out this fire.

To all those who ask "Why don't we just give the money directly to the people?" Your answer would be to have tax cuts as it is the cleanest way to get a dollar directly in the hands of a tax payer. The answer why they won't give it to the people directly is that the government wants to be the plumbing that the wealth flows through so that they can steal from it. Knowingly grossly overcharging for something or intentionally misleading infrastructure projects into disorder and delay is stealing. Asking for something you don't need or overbuilding something because it is free money is stealing. We are now taking from future generations who aren't even around to vote on their behalf. That is stealing. I'd round up all those that gave the orders to buy the subprime notes and strip them of their licenses. If it is unreasonable to do that, then why are we in the business of bailing them out? The Democrats won't focus on the Subprime Lending, the true virus that caused this because their hands are bloody. Instead they will give us some line about deregulation and trickle down economics. If that were true, why were the Democrats, the representatives that overwhelmingly gave taxpayer guarantees to the Subprime Market? The Democrats won't tell you that we're on the hook because our Government Guaranteed these awful mortgages. The person that gave the guarantee is the person we should be calling into question, but the Press won't do their job again.

[john p]

Sorry if I'm overly political....

Anyway, what is interesting to me is how the Government will handle balancing trying to create a floor in the housing sector while protecting themselves from the Alt-A' wave of resets.

The government seemed to think they were using the Banks as a conduit to deaden the shock for the people, and the Banks used the money as a cushion for themselves and are arguing that without that shock absorber, we'd have systemic failure in the banking industry.

What is most troubling to me about this Bailout is how representatives vote based on a set of intentions, most representatives not having read the legislation, and then when we get the follow through of the legislation it is not in alignment with what we understood it to be.

The last time we did this sort of thing was voting to authorize the use of force in Iraq.

[balor123]

[balor123]

[balor123]

[Boston ITer]

[balor123]

Risk is always there and very hard to measure, whether they even realize it or not. How many star managers have been destroyed this year? Ken Heebner, Bill Gross, etc. The problem with the incentive plans is that traders aren't penalized equally when there are losses. Adding their own money to the pool doesn't solve the problem because many of them are just gambling addicts.

[GenXer]

Just wanted to clear several things up. First of all, banking is not the problem. Government which created a Federal bank is the problem. Government which forced banks to lend to those not likely to pay back created the problem, not the securitization of the debt. Yes, there are some crazy products out there, and yes, VAR models are all crap because they can't see the fat tails in their models, but lets not blame banks for this - a lot of Nobel prizes in economics were given to these models which turned out to be useless when random events on the order fo 20 sigma rocked their worlds. However, the cause for the collapse is unscrupulous lending FORCED on the banks by the government and only then the availability of cheap money (which is always good if your risks are under control).

Government is ALWAYS the problem. Just like somebody here noticed that NONE of the useless government programs ever go away. They never do! This is like a frankenstein monster - these programs live way beyond their usefullness, and ANY type of spending is almost NEVER cut. Think about this! Some day our kids will have to face the mountain of debt we racked up because of 'good intentions' - yet the intentions were never 'good' to begin with. The point of all of these programs is to keep the government FIRMLY in control by establishing a HUGE underclass. The more programs are out there, the more beneficiaries there are, and the more they are likely to keep voting themselves more programs by electing only those who EXPAND rather than contract the size of government.

US corporations and rich individuals are among the MOST charitable in the world. There is no comparison. If government was not running businesses into the ground, there would be a lot more money to spend.
People almost always know how to spend their money better. Yes, even the corporate jet executives are preferable to the inept government which wastes a lot higher percentage of what it spends.

As far as paying less taxes, its a bunk argument. Rich pay most of the taxes, period! They pay a smaller percentage of all taxes, but nobody is in your way - put away enough money to have a few mil in the bank, collect you interest (4 or 5%), and pay 20% dividend taxes. You realize this can change in a single presidency, right? Any president can crank this up to 50%, and the fun is over! As far as the 'swiss accounts and offshore firms' canard, you go TRY to make this work for you. IRS is all over this, and the fees involved are huge. Also, have you checked the interest and investment availability in those offshore and Swiss banks? Heh, they are pathetic. I wouldn't want to invest my money in a Swiss bank unless I stole 100 mil from somebody (like dictators and oligarchs), but if it is my money, I want to make it work for me. This is the difference between our system and Euro system - we invest in our country and Euros invest anywhere but their country (because they know better than to waste their money).

[Mark]

[samz]

[balor123]

I don't want to see the financial situation burn to the ground. I'd just like to see a new one put in its place. Creating a new one is perhaps risky and prone to failure but the status quo is failure. The real issue here is that votes are preventing us from making progress. Our politicians are selfish and even when not selfish not strong enough to make the hard decisions that will pull us out of this mess and eventually help the greater good.

[balor123]

I would also like to add that while government is always the problem, it is often the solution as well. The key is to get it right. We often don't and these problems are the result.

As for medicare, the solution isn't to cut off old people. The solution is to bring down the cost of healthcare. Americans pay 6x the cost of many other countries for their healthcare. It is a poorly constructed system and I think more government money for healthcare will result in new sinkholes to suck it up. Same for education and government services.

Not that I'm not advocating elimination of government support for these services, just suggesting that throwing money alone without reform often doesn't solve problems.

[GenXer]

Banks are regulated. End of story. What is NOT regulated is the models they use. Banks, insurance companies, trading floors all use discredited models which do not work as advertized. The problem is, nobody has better models, so banks use what they've got, and thats that. What I oppose is using taxpayer funds to bail them out. Let them fail. To 'regulate' banks more than they already are regulated would be to nationalize them. Will that solve the problem with the models? No.

Our government on the other hand, is NOT REGULATED. Thus, it is the government that can screw up big, and nobody will be punished. That is a bigger problem, I think, than 'unregulated' banks. So when the government MADE banks give bad loans under threats of punishment, nobody is taking Barneys and Dodds to task, and nobody is hauling them to jail for causing the very conditions, the risks of which banks underestimated.

Government is NEVER the solution to anything. The more 'solutions' the government has, the more taxes we pay and the more freedoms we have to give up. The end result of government solutions is 'from each according to their abilities, to each according to their need'. It is not a surprise that this is a slippery slope we are on, and that NOTHING can stop this now short of a radical reevaluation of our core beliefs and standards as a nation. You can help everybody, but then you'll live in communism, where everybody is equal and nobody has any rights, and everything is done for the good of the collective at the expense of the individual. There is no middle ground. Governments are like black holes - what goes in never comes out, and the longer they are around the larger they become until they collapse under their own weight.

[JCK]

[Boston ITer]