Charlie Gasparino: Another Crash 'Has to Happen Again' 103 comments
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Dan Holland has just interviewed Wall Street chronicler Charlie Gasparino. The first few paragraphs of the interview that appeared on RealClearMarkets are published below.
There’s good reason to believe that Gasparino’s latest book, The Sellout, will become the definitive book on the current financial crisis and the events that led up to “The Great Recession.” Spanning three decades, The Sellout pulls no punches in chronicling the rise and fall of excessive Wall Street leverage and risk taking, as well as the cast of colorful characters that ultimately brought the U.S. financial system to its knees. It will hit bookshelves Tuesday.
RealClearMarkets: You sat down recently with Wall Street legend Teddy Forstmann to discuss your new book and the genesis of the mess we now find ourselves in. Forstmann said it all began as a “cold” back in the 1970s and 1980s, and that since no one ever learned much about that cold, or did anything to treat it, it developed into the “cancer” that rocked the market and economy last year. As you pointed out during your conversation, these guys have been bailed out several times before, and that the risk-taking grew-exponentially-each time as a result. So where does that leave us today? Have we at last cured what ails us, or are we going to be reading another Gasparino book about a future Wall Street disaster that we could have prevented?
Charlie Gasparino: I don’t know when it’s going to happen, but if history is any guide, it has to happen again–the “it” being another financial crash. Of course, it won’t happen tomorrow or next week, or maybe not even two years from now. But when the memory of 2008 wears off, and mark my words it will wear off, excessive risk taking will be back in a form that evades all these alleged regulatory controls that have been established. Regulation can never cure the disease of excessive risk.
The only thing that can cure it is tough love–allowing firms to fail. That doesn’t mean I wanted the Fed and the Treasury to walk away last year. That would have meant Armageddon. But they should have walked away before that, when the systemic risk was smaller and the damage would have been limited. 1998 would have been a great place to start. Let Long Term Capital Management fail; let Lehman, and as I show in my book, possibly Merrill to fail, because the trades were the most vulnerable to LTCM’s bad bond market bets.
Instead, by arranging a bailout, and by using free money to juice up the markets, policy makers emboldened Wall Street to take even more risk. That’s what they did then, and that’s what I fear is happening all over again.
RCM: As you are well aware, Goldman Sachs (GS) now has a serious PR headache on its hands with reports of $16 billion in bonuses in the pipeline. There’s widespread anger that Goldman has been milking the system and profiting from a sort of incestuous, government-subsidized, “heads I win, tails you lose” paradigm-that the firm has profited off the taxpayer’s dime after being rescued by Uncle Sam. Do you think the public outrage toward Goldman is justified?
Gasparino: Absolutely. Now I’m not in the Goldman is the center of all evil camp. But I know a lot of really smart people who believe that Goldman’s bankers and traders virtually control the federal government in order to advance their own notorious agenda.
In fact, as I show in The Sellout, there were far worse players whose risk taking led to last year’s meltdown, starting with Merrill Lynch and Citigroup (C). They were equally powerful from a policy making standpoint.
Remember, after Robert Rubin fought to end Glass-Steagall’s separation of investment and commercial banking, he didn’t go back to his old firm, Goldman Sachs, he went to work for the firm that benefited the most from the law’s demise, Citigroup.
But Goldman in many ways crystallizes all that is wrong with the financial bailout, started by the Bush Administration, but carried on and expanded by Obama’s. Goldman has been declared a bank, not much different than the old Bailey Building and Loan, and yet they don’t take deposits or offer checking accounts. So what do they do? They trade, and they are trading as a federally protected bank, meaning they get to borrow at cheaper rates and they are Too Big To Fail.
How anyone considering themselves to be a capitalist can support this arrangement is beyond me.
RCM: Hedge-fund manager David Einhorn delivered a heck of a speech at the recent Value Investing Congress. He didn’t pull any punches. Of particular note, he said the “failure of Lehman meant that, barring extraordinary measures, Merrill Lynch, Morgan Stanley (MS), and Goldman Sachs would have failed as the credit market realized that if the government were willing to permit failures, then the cost of financing such institutions needed to be re-priced so as to invalidate their business models.” Do you agree with Einhorn? But for the bailouts, would those firms have failed?Gasparino: Yes I do. What’s interesting about what Einhorn said is that even though he predicted Lehman’s demise, he never thought the feds would let the firm fail. There’s a section in the book that discusses this very point.
So think of it this way: if a notorious skeptic like Einhorn thinks the government is going to bailout a firm like Lehman, why wouldn’t the irrational exuberants at Morgan (JPM), Goldman, and Merrill think that they can take enormous leverage and carry enormous amounts of high-yielding but high risk debt on their books? They all thought when things got tough Uncle Sam would be there with a paycheck ready to bail them out.
RCM: Who’s at the top of your list of people who should be held accountable for the unraveling of the global financial system?
Gasparino: The politically correct answer would list a long line of risk-taking CEOs starting with Stan O’Neal at Merrill, Sandy Weill and Chuck Prince at Citi, Jimmy Cayne at Bear, and of course former Lehman CEO Dick Fuld, as well as various senior traders at these firms. They’re all in my book with their contributions to the demise of the financial system.
But what you will also find in my book, which I guarantee is absent from most of the others, is the root cause of the risk taking, which I believe begins and ends with the policy makers. The various heads of HUD, like Henry Cisneros, Andrew Cuomo and those in the Bush Administration who believed owning a home was a right, rather than something that should be earned, led to the disaster at Fannie Mae (FNM) and Freddie Mac (FRE), which spread its guarantees to subprime loans, a place it traditionally stayed away from.
You also can’t excuse Alan Greenspan for handing out free money to Wall Street every time the big firms screwed up over the past thirty years. It gave them incentive to double down on their risky bets until of course they double-downed so much the system blew up.
Click here for the full interview.
Source: Dan Holland, Real Clear Markets, November 2, 2009.
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This article has 103 comments:
That day will engender a new economy and a new approach to public service entirely supported by the population, for they will then clearly see the few crumbs thrown them were no more than stale crusts.
Charlie is right.
GS making the rounds of English churches to spread their notion that they haven't violated Biblical morality. One said that since it commanded to love thy neighbor as thyself, it's okay to be unstinting in self-love. I guess that includes cloaking oneself with unlimited wealth by any means necessary, no matter at whose expense.
Wall St. and Washington have already reached the greatest levels of looting in history, by plumbing some of the lowest levels of self-serving doublethink possible. It is only made possible by the insentience of Americans, who, as Vuke comments, must understand that they will always be pikers at this game. Handing Washington the keys to our future generation's future, hands it to the biggest liars and swindlers of all time, leaving behind only virtual crumbs now.
They actually should have let them fail.
Rather than "save" them with interest free money from the taxpayer; the government should have not backstopped them.
Then the trillions in liquidity could have been given to the banks and firms still standing.
Punishing bad behavior and rewarding conservative management and prudence.
Instead - we have rewarded bad behavior, Charlie is spot on.
Those animal spirits like being rewarded.
The "Ouroboros" end to a lack of adult behavior will be a collapse.
I thought that the loss's eventually exposed in European and U.S. funds etc., including large U.S. and international banks, due to the purchase of those over rated 'bonds' consisting of weak mortgages rolled into a 'bond package' , are what began the deadly financial snowball rolling. That in turn cause the blinds to be opened and the weakness in Leh, MS, C, et.al, became public. But I still have cow manure under my soles, so what do I know?!!
On Nov 06 04:19 AM JamesPond wrote:
> In reading this and other similar commentary, the lack of mention
> of the role the security rating agencies played in this crash of
> '09, is deafening !!
> I thought that the loss's eventually exposed in European and U.S.
> funds etc., including large U.S. and international banks, due to
> the purchase of those over rated 'bonds' consisting of weak mortgages
> rolled into a 'bond package' , are what began the deadly financial
> snowball rolling. That in turn cause the blinds to be opened and
> the weakness in Leh, MS, C, et.al, became public. But I still have
> cow manure under my soles, so what do I know?!!
In fact, I think there is a large degree of danger in the markets right now, in the form of underlying weakness. For those interested, I have just written a series of blog posts titled "Danger In The Markets?" that can be found at my blog here:
www.economicgreenfield.../
I agree the financial industry is destroyed. But like poker players they are trying to outbluff the world and win the pot with a pair of deuces, backed up by trillions issued by the privately owned Fed and backed up by I guess the public....but that is not clear when it comes to fiat money.
But dang-it, do you have to name the article "Another crash has to happen"?? There is so much angst and nervousness in the market right now and you guys keep pumping up the panic. Why don't you take a chill pill for awhile and let investors start to feel comfortable.
Oh well, at least people are reading your articles. I guess that is what is important to you.
...James E Gambrell
After the fall.
On Nov 05 02:33 PM Vuke wrote:
> Some day there must come a shock sufficient to flush out the rot
> from Wall St. and the massive piles of waste within every level of
> government. So much self interest has become engendered in the entire
> system that it cannot go on without collapsing of its own accord.
>
>
> That day will engender a new economy and a new approach to public
> service entirely supported by the population, for they will then
> clearly see the few crumbs thrown them were no more than stale crusts.
>
>
> Charlie is right.
In this country, it seems that the crooks on top get rewarded, we the American people get punished, again!
This must not have been part of the change?
the rating agencies are public enemy #1.
phil gramm is public enemy #1.
any more on the list?
> jack
1-There will be another Bubble because Congress is doing nothing to prevent it such as to reinstate Glass- Steagalles.
2-I believe to let Goldman Sacks operate as a regular bank and not have to LOAN money is a CRIME and by itself will hasten the next big bubble which may finally crush our financial system.
His appointees are for the most part, just part of his gang sort of speak. Congress, the men&women have had a good thing going for many years, and it is either play ball, or your outed. So it continues onward. The health bill is merely a Tax Bill in disguise and the citizens of America, must brace for yet another screwing in plain English. Citizens are being screwed by Banks, Wall street, and many professional CEO'S of companies, along with their management teams, friendly Research firms, analysts, high target prices, etc..
Bailouts to Banks, aren't helping the potential American buyers
trying to attain mortgages with 20-25-30% down, because they are being denied left and right. It seems as if the Bank want to hold onto their new found cash instead.
The dollar is not as easy to exchange into Euro's in Europe, because many Americans have to travel Bank to bank to find one who does exchange the dollar today. Next, I understand the new trend for oil purchases, like in Norway, is not accepting the dollar for oil. So the movement is on to replace the currency in America,
and probably will take place within 2 years. Money,greed,and power, has reached new highs in America like the Plague.
YOU CAN NOT TRUST YOUR POLITICIANS, CONGRESSMEN,CONGRESSWO... OR GOVERNMENT WITH ALL THESE CROOKS STILL LINING THEIR POCKETS AND CONTINUED BALL PLAYING
GOINGS ON. TRUST IS REPLACED BY GREED, AND GREED
IS THE BEGINNING OF THE END. WE CAN ONLY HAVE A NEW BEGINNING AFTER WE HAVE A TOTAL COLLAPSE
OF GOVERNMENT,ECONOMY,THE AMERICAN DOLLAR,
WHICH WILL COME SOONER THAN LATER.
Caveat: they will fight it with all of their pr and lobbying powers.
On Nov 06 08:26 AM tooncat wrote:
> Man I get tired of the super negative predilective headings on the
> Alpha and competitors articles. Charlie's interview and opinions
> are well thought out, alarming, and nostradamus-like predictions.
>
>
> But dang-it, do you have to name the article "Another crash has to
> happen"?? There is so much angst and nervousness in the market right
> now and you guys keep pumping up the panic. Why don't you take a
> chill pill for awhile and let investors start to feel comfortable.
>
>
> Oh well, at least people are reading your articles. I guess that
> is what is important to you.
The legacy governance system for the US capital market is in disrepair. Markets are complex systems. If there is complexity, there is uncertainty. The inability to move away from the risk-uncertainty conflation affects not only capital market governance but the environment, homeland security, education, and healthcare. To achieve real regulatory reform, policymakers have to move beyond cosmetic to substantive issues. Otherwise, the legacy, one-size-fits-all deterministic regime will be caught in a recursive loop of errors of commission (boom-bust bubble inefficiencies) and errors of omission (externality market inefficiencies). Such inefficiencies will eventually render our source of economic wealth ineffective.
If this happens, we’re all screwed.
Stephen A. Boyko
N2keco@bellsouth.net
n2kecosystems.com/
Author of “We’re All Screwed: How Toxic Regulation Will Crush the Free Market System”
w-apublishing.com/Shop...
Book Review: Brenda Jubin, Ph.D Thursday, October 8, 2009
readingthemarkets.blog...
This will never happen, of course, but it is one of my fondest wishes. What a dreamer I am, but I just can't help it.
I say that we will be in trouble again before we recover - if ever. Inflation, higher taxes, deficits, uncontrolled healthcare costs, social security deficits and a continuing sagging economy will ensure this. I give it 4 years before we are back in the same spot as we were in during Fall 2008.
I can't think of one government entity that isn't underwater - Freddie Mac, Fannie Mae, PBGC, FDIC and the list continues . . .
The current and future America is not the America of the 20th Century and especially that of Post WWII America.
On Nov 06 08:20 AM Ted Kavadas wrote:
> I agree with the statement that there will be another crash. I have
> written about this on my blog.
>
> In fact, I think there is a large degree of danger in the markets
> right now, in the form of underlying weakness. For those interested,
> I have just written a series of blog posts titled "Danger In The
> Markets?" that can be found at my blog here:
>
> www.economicgreenfield.../
This is not a political question. We need to have this conversation, I think.
We are all assuming that we will reflate and things will go on as before. What will cause the reflation? What does "a new normal" actually mean? To us, as investors.
On Nov 06 01:38 AM ebworthen wrote:
> Refreshing - thank you for sharing.
>
> They actually should have let them fail.
>
> Rather than "save" them with interest free money from the taxpayer;
> the government should have not backstopped them.
>
> Then the trillions in liquidity could have been given to the banks
> and firms still standing.
>
> Punishing bad behavior and rewarding conservative management and
> prudence.
>
> Instead - we have rewarded bad behavior, Charlie is spot on.
>
> Those animal spirits like being rewarded.
>
> The "Ouroboros" end to a lack of adult behavior will be a collapse.
We do not let you be a loser!
Your mistakes will be rewarded handsomely.
When you bought a clunker that you should not have, we give you $4,500.
When you bought a mansion that you cannot afford, we're going to bail you out.
When you bought any inefficient appliance or anything, we'll pay you no matter how old they are.
When you lost your job, we extend your benefit.
When you do not have saving, we give you free health care.
When you have saving or a job, we take away your health care.
Teenagers, the more babies you have, the more benefits you have.
Drunk drivers, no one will prosecute you as the entire jury and even the judge are drunk.
Old ladies, your driver's license is also a license to kill.
Black kids, special pass to go to college and jobs.
Prisoners, you will get the flu shots first and free dental care.
Fatsos, do not worry as our up-coming drugs will melt all your fat while you sleep.
All athletes are rewarded with millions for taking drugs.
We voice loudly and disapprovingly on foreign athletes doing same.
It is an America invention!
When you cheated billions, you can retire in a resort-like 'prison'.
Also, the billions your wife hid is hers - no questions asked.
No other developed country lets their citizens own guns.
NRA and his puppet politicians will give you millions of funny 'reasons'.
When your company fails, we bail it out.
The executives are rewarded with bailout money for bringing down a company.
You die penniless, we give you $500.
You die with millions, we share your wealth.
The small catch.
We need you to re-elect us in 4 years.
The children cannot vote today, so let's pass our debts to them.
China does not have a voice here, so let's pass all the blames to them.
Even the entire world agree with us.
Our president is awarded the Nobel prize for doing nothing for peace, so why you need to work hard?
Is he serious? Anyone w/ a bundle of big bucks who doesn't invest them in buying his share of the government can hardly be said to be pursuing his "enlightened self-interest." And, maybe I'm missing something, but isn't that what capitalism is about? Do you think stupid people graduate w/ advanced degrees in economics and finance from Ivy League colleges? That the Savings & Loan crisis of two decades ago was an exercise in stupidity? Reagan tossed out regulation, but kept the taxpayer-backstop. Bankers pursued their enlightened self-interest and maxed out risk-taking because the profits were all theirs, but the risks were picked up by the taxpayers.
It kills me to hear people talking about our "not having learned anything" from all these prior disasters: of COURSE we learned! We learned that it was absolutely painless to screw the American People. We learned that business' top bureaucrats could walk away with labor's share of everything. The American worker has never had it as good as in 1950 because that goose that lays the golden eggs has been laying them in the pockets of the executive suite.
SOB.
So, instead of canonizing Greenspan we should be castigating him.
"There weren’t enough Americans with (bad) credit taking out loans to satisfy investors’ appetite for the end product. The firms used (financial bets) to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when (hedge funds) bought a credit-default swap, (they) enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets (hedge funds) and others made with firms like Goldman Sachs and AIG. (Hedge Funds), in effect, were paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all."
“They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,” (Eisman) says. “They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans."
Blaming the crisis on CRA or subprime lending is flat out wrong: there simply were not enough subprime borrowers to cause a catastrophe of this magnitude. For that, you needed greed-induced leverage, a complete lack of ethics, and a set of parasitic financial institutions.
As we noted in April, 2008:
"With the development of toxic (derivative and subprime lending) financial products, the relationship between investment banks and the economy has turned parasitic."
You also need a compliant (non functioning) regulatory apparatus, something we warned about in 1998:
"“The nature of financial market activities is such that significant dislocations can and do occur quickly, with great force. These dislocations strike across institutional lines. That is, they affect both banks and securities firms. The financial institution regulatory structure is not in place to effectively evaluate these risks, however. Given this, the public is at risk.”
There is a very simple and elegant solution we should all be pursuing in the case of the likes of GS (some call it Goldman S..cks!, excuse me! I agree, they S..ck!). As they gained from the federal bailout, converted themselves to a bank without being a bank WITH FED GUARANTEES, borrowed money again from us at 0%, then leveraged it 29-31 times (currently, still at 13-14 times when the regulators balked AT THE HUGE RISK TAKING THERE!!!!), GS took enormous risk AGAIN IN 2009, EVEN WHEN MS CHANGED THEY RISK TAKING STANCE!!! (smarty pants at GS hedge risk always and make it a society problem), They basically had WINDFALL profit, and CONGRESS SHOULD PASS A LAW THIS YEAR TAXING THESE PROFITS AS WINDFALL PROFIT.
Simple suggested formula - if any firm got bailed out, took federal or state money, had federally provided guarantees (eg FDIC etc.) or changed their charter (eg became a bank from an investment bank), for the year Y2009+ time frame to extend to X years beyond that, they would be allowed 10% return on the equity THEY PROVIDED BEFORE ANY BORROWING FROM GOVT OR OTHER ENTITIES LIKE BANK (except direct deposits and firm's equity). Any profits beyond that would be taxed as WINDFALL PROFIT TAX, to be taxed at 90% - THIS WAY THEY STILL GET 20% RETURN ON THEIR MONEY - NOT BAD CONSIDERING THEY WOULD HAVE GONE UNDER AND LOST 100%!!! I am sure the smart group of people here have other ways TO BRING THE MONEY BACK TO WHERE IT RIGHTFULLY BELONGS - TO THE COMMON TAXPAYER.
Lets get your ideas going and to the lawmakers to institute this Windfall Profit Tax as a part of the comprehensive tax and financial reform currently underway in the house.
Long live America and the freedom loving people!
When the bills cannot be paid, the entitlements cannot be funded, the have not's will take to the streets. Combine with this the amount of debt to other nations that cannot be paid. How do you erase that debt and mobilize your population outward to prevent inner collapse? You go to war. This is what history teaches, certainly not what I want.
This is true of any of the nations involved. If China loses internal control, going to war will be a way to stoke nationalism and prevent civil war. Any perusal of their parades, the opening ceremonies of the Olympics, and the control of industry by the People's Liberation Army hints at the risk.
On Nov 06 10:44 AM thotdoc wrote:
> Do any of you really believe that we will ever be able to pay back
> the $$ we've 'borrowed?" At the rate of paying back 500 Billion per
> year, it would take almost 2 decades to pay it back.
>
> This is not a political question. We need to have this conversation,
> I think.
On Nov 06 11:01 AM theobannion wrote:
> "How anyone considering themselves to be a capitalist can support
> this arrangement is beyond me."
>
> Is he serious? Anyone w/ a bundle of big bucks who doesn't invest
> them in buying his share of the government can hardly be said to
> be pursuing his "enlightened self-interest." And, maybe I'm missing
> something, but isn't that what capitalism is about? Do you think
> stupid people graduate w/ advanced degrees in economics and finance
> from Ivy League colleges? That the Savings & Loan crisis of
> two decades ago was an exercise in stupidity? Reagan tossed out
> regulation, but kept the taxpayer-backstop. Bankers pursued their
> enlightened self-interest and maxed out risk-taking because the profits
> were all theirs, but the risks were picked up by the taxpayers.
>
>
> It kills me to hear people talking about our "not having learned
> anything" from all these prior disasters: of COURSE we learned!
> We learned that it was absolutely painless to screw the American
> People. We learned that business' top bureaucrats could walk away
> with labor's share of everything. The American worker has never
> had it as good as in 1950 because that goose that lays the golden
> eggs has been laying them in the pockets of the executive suite.
>
>
> SOB.
We should have a windfall profits tax imposed on them THIS YEAR TO CHECK THEIR OBNOXIOUS BEHAVIOR. Call your senator or congressman to get this done - 90% (or more) windfall profits tax for Goldman S..ucks!
On Nov 06 10:44 AM thotdoc wrote:
> Do any of you really believe that we will ever be able to pay back
> the $$ we've 'borrowed?" At the rate of paying back 500 Billion
> per year, it would take almost 2 decades to pay it back.
>
> This is not a political question. We need to have this conversation,
> I think.
>
> We are all assuming that we will reflate and things will go on as
> before. What will cause the reflation? What does "a new normal"
> actually mean? To us, as investors.
On Nov 05 08:23 PM noirblood wrote:
> The addict will kill himself with a fix before giving his habit up.
Real capitalism, oddly enough, is what you get during deflation, not inflation. Real capitalism is firms fighting for their life in a tight money environment, competing by lowering prices, with only the strongest firms surviving -- and this is great for the consumer, in fact.
Fascism -- state capitalism -- is based on a government/business alliance and price fixing among companies in any industry insuring that ALL companies survive and the consumer pays the bills. No one fails -- as prices rise, and interest rates go down, to lure in more consumers who take on more and more debt, funding higher and higher prices.
We need real deflation to get back to real capitalism. Sorry, you defenders of Inflationism. (Inflationism is not capitalism -- it's state capitalism -- made famous by many, including by Adolph Hitler.)
- the only non-government person in the room (their CEO?) and the person deciding to dole out $800 B without condition was his old buddy Paulson in the same room! Charlie - get to the bottom of this and the next point
- they commissioned a study in UK TO GIVE TO THE US GOVT. AS TO HOW TO SAVE THE CURRENT FINANCIAL SYSTEM and would not even share the copy with A UK regulator!!!!!!!!!!! I think I know why it was done far away from NYC and what it said!
- their role in orchestrating every recession and depression is widely documented - but wait, they always profited from it! IT IS LIKE THE MAN WHO TAKES ON A BIG POLICY ON SOMEONE AND THEN GOES ON TO MAKE SURE THEY DIE!!!!! Criminals they are!!!!!!!!!!!!!!!!
On Nov 06 10:37 AM manuel wrote:
> Why does Goldman not just saY: we were part of the mess, with Government
> tax paYers moneY we have been rescued, we made moneY in the same
> Year, we have an Image of Serious and Responsible bankers who make
> moneY not by not working(as some believe) but by working up to 12
> hours a daY, we are part of a System that creates Wealth, we are
> supposed to support Efficient Allocation of Capital, sometimes we
> have taken too much risk, we will not commit this mistakes again,
> thanks for having helped us to get out of the mess, and we consider
> it Fair to devolve this Years Bonuses to Good causes Like Global
> Warming or Cancer research......
On Nov 06 08:22 AM swaps wrote:
> Insightufl post. Except that ulitmately Citi did not benefit from
> the abolition of Glassman - Steagall. Look at its stock price.<br/>
>
> I agree the financial industry is destroyed. But like poker players
> they are trying to outbluff the world and win the pot with a pair
> of deuces, backed up by trillions issued by the privately owned Fed
> and backed up by I guess the public....but that is not clear when
> it comes to fiat money.
On Nov 06 11:39 AM ebworthen wrote:
> I agree with you. We cannot pay it back. The result will be a collapse,
> either an economic one, societal, or both.
>
> When the bills cannot be paid, the entitlements cannot be funded,
> the have not's will take to the streets. Combine with this the amount
> of debt to other nations that cannot be paid. How do you erase that
> debt and mobilize your population outward to prevent inner collapse?
> You go to war. This is what history teaches, certainly not what I
> want.
>
> This is true of any of the nations involved. If China loses internal
> control, going to war will be a way to stoke nationalism and prevent
> civil war. Any perusal of their parades, the opening ceremonies of
> the Olympics, and the control of industry by the People's Liberation
> Army hints at the risk.
On Nov 06 08:50 AM Graham and Dodd Investor wrote:
> "There will a be a new heaven and a new earth."
>
> After the fall.
Instead of taking our medicine and trying to set the house in order, we've opted for more drugs, more drinks, more dancing, more party...which is what spending money you don't have is all about. Our immoral life-style has to stop. Spending money you don't have is immoral and leads to an Armageddon. If you ignore this truth, then the punishment will be even worse the next time.
There is no 'getting comfortable again' with the lies of the 'party lifestyle'. We did a deal with the devil for riches and power on the earth. Now the devil wants our soul. You don't get to get comfortable when the devil is trying to collect your soul.
On Nov 06 08:26 AM tooncat wrote:
> Man I get tired of the super negative predilective headings on the
> Alpha and competitors articles. Charlie's interview and opinions
> are well thought out, alarming, and nostradamus-like predictions.
>
>
> But dang-it, do you have to name the article "Another crash has to
> happen"?? There is so much angst and nervousness in the market right
> now and you guys keep pumping up the panic. Why don't you take a
> chill pill for awhile and let investors start to feel comfortable.
>
>
> Oh well, at least people are reading your articles. I guess that
> is what is important to you.
If Obama wants to preserve the cancer, then he won't get a second-term. But I'm not sure the Republicans will have an answer either. Sarah Palin? Are you serious? Ron Paul -- maybe? But Ron Paul, for all his common sense, looks like an old-fashioned version of Ross Perot, with less charisma. I think Ron Paul is smart, and sincere, and honest....all of which makes me like him. I'm just not sure he can trigger a mass movement. Maybe I'm wrong.
I think the next split will be in the Democratic party between moderates (Obama) and radicals (those ready to set Wall Street on fire), which will be made up of angry Republicans and angry Democrats and angry independents. The two-party system is an illusion. I am both a Republican and a Democrat: and the new party will be like myself, Republican and Democrat combined, traditionalists who love America with a soul and a social conscience.
The day may come when you are begging me for a gun to protect and feed your family.
And don't consider me some kind of weirdo. I am a Vietnam vet and one of my sons is an Iraqi vet. We are hard-core Americans who have fought for this country.
On Nov 06 10:58 AM TonyP4 wrote:
> * A Nation of No Losers *
>
> We do not let you be a loser!
> Your mistakes will be rewarded handsomely.
>
> When you bought a clunker that you should not have, we give you $4,500.
>
> When you bought a mansion that you cannot afford, we're going to
> bail you out.
> When you bought any inefficient appliance or anything, we'll pay
> you no matter how old they are.
>
> When you lost your job, we extend your benefit.
>
> When you do not have saving, we give you free health care.
> When you have saving or a job, we take away your health care.
>
> Teenagers, the more babies you have, the more benefits you have.
>
> Drunk drivers, no one will prosecute you as the entire jury and even
> the judge are drunk.
> Old ladies, your driver's license is also a license to kill.
> Black kids, special pass to go to college and jobs.
> Prisoners, you will get the flu shots first and free dental care.
>
> Fatsos, do not worry as our up-coming drugs will melt all your fat
> while you sleep.
>
>
> All athletes are rewarded with millions for taking drugs.
> We voice loudly and disapprovingly on foreign athletes doing same.
>
> It is an America invention!
>
> When you cheated billions, you can retire in a resort-like 'prison'.
>
> Also, the billions your wife hid is hers - no questions asked.<br/>
>
> No other developed country lets their citizens own guns.
> NRA and his puppet politicians will give you millions of funny 'reasons'.
>
>
> When your company fails, we bail it out.
> The executives are rewarded with bailout money for bringing down
> a company.
>
> You die penniless, we give you $500.
> You die with millions, we share your wealth.
>
> The small catch.
> We need you to re-elect us in 4 years.
>
> The children cannot vote today, so let's pass our debts to them.
>
> China does not have a voice here, so let's pass all the blames to
> them.
>
> Even the entire world agree with us.
> Our president is awarded the Nobel prize for doing nothing for peace,
> so why you need to work hard?
"Not to absolve government, but..." - but of course you would like to absolve government.
"... these dopes would have immolated even without the incentives." - Dopes? These guys gamed the entire U.S. economy and banking system to thier advantatage and walked away with Billions, leaving us with the tab. We got immolated: the shareholders, the bondholders, and the taxpayers, not the bankers. The dopes are us, the ones paying for the mess, believing our "trusted public servants" will keep the "stupid evil bankers" from robbing us. If that's what you think then "moral hazard" is the only card you've got left to play. BTW, you're just the half-wit tinpot calling the kettle black.
On Nov 05 04:33 PM wobatus wrote:
> Not to absolve government, but these dopes would have immolated even
> without the incentives. Moral hazard is such an over-played card.
> Did all the shareholders and bond-holders of LEH really expect to
> get bailed? Well that was wrong, wasn't it? Same with ma and pa Citi
> shareholder. And then we get half-wit tinpot commentary from financial
> illiterates.
On Nov 06 10:58 AM TonyP4 wrote:
> * A Nation of No Losers *
>
> We do not let you be a loser!
> Your mistakes will be rewarded handsomely.
>
> When you bought a clunker that you should not have, we give you $4,500.
>
> When you bought a mansion that you cannot afford, we're going to
> bail you out.
> When you bought any inefficient appliance or anything, we'll pay
> you no matter how old they are.
>
> When you lost your job, we extend your benefit.
>
> When you do not have saving, we give you free health care.
> When you have saving or a job, we take away your health care.
>
> Teenagers, the more babies you have, the more benefits you have.
>
> Drunk drivers, no one will prosecute you as the entire jury and even
> the judge are drunk.
> Old ladies, your driver's license is also a license to kill.
> Black kids, special pass to go to college and jobs.
> Prisoners, you will get the flu shots first and free dental care.
>
> Fatsos, do not worry as our up-coming drugs will melt all your fat
> while you sleep.
>
>
> All athletes are rewarded with millions for taking drugs.
> We voice loudly and disapprovingly on foreign athletes doing same.
>
> It is an America invention!
>
> When you cheated billions, you can retire in a resort-like 'prison'.
>
> Also, the billions your wife hid is hers - no questions asked.<br/>
>
> No other developed country lets their citizens own guns.
> NRA and his puppet politicians will give you millions of funny 'reasons'.
>
>
> When your company fails, we bail it out.
> The executives are rewarded with bailout money for bringing down
> a company.
>
> You die penniless, we give you $500.
> You die with millions, we share your wealth.
>
> The small catch.
> We need you to re-elect us in 4 years.
>
> The children cannot vote today, so let's pass our debts to them.
>
> China does not have a voice here, so let's pass all the blames to
> them.
>
> Even the entire world agree with us.
> Our president is awarded the Nobel prize for doing nothing for peace,
> so why you need to work hard?
If we didnt have to specify a time frame, we can all be Prophets! When the even finally happens then the Prophets can come out and say, "Didnt I say this is going to happen!"
On Nov 06 08:25 AM gebby wrote:
> sorry but i dont see gasparino as a credible reporter. he never
> fails to knock much needed regulation and robert rubin. he has a
> market fundamentalist republican philosophy. and it is this philosophy
> which is the starting point for all the financial troubles. remember
> the sacings and loan bailout under reagan? and then under gwbush?
> come on. knocking regulations that were designed to protect the
> banking system from abuses and then rubin associated with the highest
> reaches of the democratic party. also i am sure fnm and fre and
> bill clinton, not a republican congress.
The market recovery to April 1930 was sustained by professional market game players doing short selling and buying what they thought were bargains amid various other footwork schemes and insider pure money play maneuvers. None of it was any real investing in anything. Just manipulation of the financial system for personal gain. The underlying causes and abuses in the system were never addressed. People were deluded into thinking the water tight doors on the Titanic would hold. The other shoe dropped. And the rest was history.
Any similarities to March 2009-November 2009?
Will there be a second panic, crisis, and break?
I have been thinking about this a lot because the charts are so similar and the failure to address underlying abuses so in parallel. Then it was the prevalent ideological passivity not to "interfere in markets" Now it is more and more obvious that it is the unholy alliance between the halls of Washington D.C. and Wall Street. This article points out a feeling of great unease to me.
Where will the next catastrophic event of hubris come from with nothing being really done to address the rivets on those supposedly water tight doors under the water line?
The greatest thing that suddenly jumped out at me from this article is the image of Goldman Sachs as now the greatest wild eyed Al Qaeda suicide bomber on Earth. Skin taught. Half dollar sized eyes sunken into darkness. Three days growth of stubble beard. A TRADING INVESTMENT BANK bank now backed by the Federal Reserve and the machinery of the Government of the United States and it's TAXPAYERS! The bomb is now a strapped on FINANCIAL NUCLEAR WEAPON parcel suspended in the olive drab web gear. Any instrument of deranged excessive risk that leads to endless bonuses for the insiders. can now take down the entire world AGAIN on ROUND TWO! Any new kind of open ended derivatives scheme in the unregulated OTC market and the sea water can come rushing in to pull the ship down, then vertical, the the engines breaking lose to crash out the bottom and rip the hull full open to the sea.
Very sobering. We have now created something perhaps not seen since the treasury of Spain was put behind the conquest of Inca Gold that eventually bankrupted the country. A TRADING BANK backed by the TAXPAYERS OF THE UNITED STATES!
We live in amazing times and it just seems to go on and on with no end in sight.
On Nov 06 11:11 AM tarantilla wrote:
> It's nice to see a bunch of right minded comments noted above. However,
> it's easy to predict a "crash". WHEN is another story. And note that
> the government/Goldman Sachs will do all in their power to keep/pretect
> their money, and in the case of "banks", their position of controlling
> the government. Nothing short of major, radical change will shift
> this scenario. Unfortuneately, the right wing lunatic fringe has
> the army, and the money, and will ultimately be used by elite/billionaire/banks
> to remain in power, and "keep order", like in Germany, when the Nazi's
> came. If there IS any "crash" and many are out of work, look for
> this right wing scenario. Sorry if I sound like a nut.
After my military service, I began a tool and die apprenticeship. I had the pleasure of working with Germans who grew up under Adolph Hitler and also fought in WW2. One of them spent five years in Russian POW camps.
Before that war, if you had wanted to buy a car in Germany, you would fill a book with stamps which you purchased with cash. When full, the book was traded for the car. No credit involved. Just sound financial principles. Priciples that seem to have been lost in this 'modern' world.
As I said, please don't take this wrong. Hitler was a butcher along the lines of Stalin and Idi Amin. I am in no way an admirer of Adolph Hitler. I only want to figure out how to maneuver through this mess we are in so I can give my grand-daughter the best possible chance.
Which is why I follow a lot of you all on SA. I am actually getting pretty good at playing the stock market. The insights I glean from reading these comments are worth their weight in gold, whether I agree with them or not.
Thank you, everybody!
On Nov 06 11:57 AM Michael Clark wrote:
> A black-eye for capitalism, surely. But this isn't real capitalism,
> it's state-capitalism, which is a fascist system in which the government
> backstops big-business for the sake of both.
>
> Real capitalism, oddly enough, is what you get during deflation,
> not inflation. Real capitalism is firms fighting for their life in
> a tight money environment, competing by lowering prices, with only
> the strongest firms surviving -- and this is great for the consumer,
> in fact.
>
> Fascism -- state capitalism -- is based on a government/business
> alliance and price fixing among companies in any industry insuring
> that ALL companies survive and the consumer pays the bills. No one
> fails -- as prices rise, and interest rates go down, to lure in more
> consumers who take on more and more debt, funding higher and higher
> prices.
>
> We need real deflation to get back to real capitalism. Sorry, you
> defenders of Inflationism. (Inflationism is not capitalism -- it's
> state capitalism -- made famous by many, including by Adolph Hitler.)
This is the level of discourse we get. If moral hazard alone allowed this to happen, that would seem odd, since no one had any way of knowing who would get saved and who wouldn't, as witness what actually happened. Did Citi shareholders really think of themseleves as "bailed out" with shares worth $4 that were worth $50? How does Dick Fuld feel about his shareholding in LEH? How do some LEH bondholder's feel?
My point here is not to feel sorry for them. Merely to point out that there were some misunderstanding of risk here that could not have been from moral hazard, but from simple misapprehension of the risk. nd that, awful as the government's role has been, it is being chastised often by the same people for intervening too much on one hand and too little on the other. or for allegedly making bankers some how greedier than they might already be. Let's face some facts: compensation practices were completely askew. yes some folks knew the risks. Others evidently did not (ratings agencies didn't get it or willfully ignored the risk, and so did huge shareholders and many executives). And the fact you could reap wild benefits in good times and even if you made nothing in bad times no one made you give it back. That is what fed the risk mostly.
And whose fault is that? Corporate governance. Shareholders not having enough say, not understanding, but mostly simply not caring. The vast majority of shareholding is done by institutions who don't rock the boat. They invest other people's money. They vote with their feet (i.e., hold or sell shares), not by proxy. They let this happen on their watch, cozy board's, no management oversight and no reigning in of the compensation practices. And then you get the WSJ et al come in and pooh pooh the admittedly awful spectacle of government pay dictation, when they trumpet the "free" market that let this happen, were huge drum-bangers to end Glass-Steagall, to let leverage go where it might in the free market, even knowing of the distorting effects of moral hazard, Fannie and Freddie, CRA, etc.
In the vast scheme of things, plenty of blame to go around: wall street, government, rating agencies, mortage brokers, certain borrowers, and yup, the institutional shareholders and managements they empower that let this happen as thieves of OPM.
On Nov 05 04:33 PM wobatus wrote:
> Not to absolve government, but these dopes would have immolated even
> without the incentives. Moral hazard is such an over-played card.
> Did all the shareholders and bond-holders of LEH really expect to
> get bailed? Well that was wrong, wasn't it? Same with ma and pa Citi
> shareholder. And then we get half-wit tinpot commentary from financial
> illiterates.
Frankly, we get overly simplistic explanations meant to sell books and give red meat to the angry investing and non-investing populace. Everyone pushes their own axe-to-grind political explanation of the causes without acknowledging their own side's sins. A colossal foul-up from which almost nobody in this country can be completely absolved.
On Nov 06 01:38 AM ebworthen wrote:
> Refreshing - thank you for sharing.
>
> They actually should have let them fail.
>
> Rather than "save" them with interest free money from the taxpayer;
> the government should have not backstopped them.
>
> Then the trillions in liquidity could have been given to the banks
> and firms still standing.
>
> Punishing bad behavior and rewarding conservative management and
> prudence.
>
> Instead - we have rewarded bad behavior, Charlie is spot on.
>
> Those animal spirits like being rewarded.
>
> The "Ouroboros" end to a lack of adult behavior will be a collapse.
Let's face it, true unemployment is 20% not that bogus number they are trying to feed us.
Good luck to all.
Also, shareholders have very little input into the companies they own. Even somone as big as Carl Icahn can have little influence and get rebuked. How was Jerry Yang allowed to exist in any management role? The system is somewhat of a joke, and managements can basically suck capital out of a company without much of a problem. This is the #1 reason it is critical to find companies with good management (and honorable). Mr. Buffett is role model #1.
The beatings will not stop when morale improves but until the system is cleared of all the paper waste.
The answer is "bail out" - the question is "shareholders or depositors?" The mistake in 1998 was not to bail out Wall St, but to bail them out WITHOUT diluting or eliminating shareholders like when you bailed out GM etc.
And if that's not sufficiently guaranteed to give self-regulation and you want market discipline over the cost of capital, don't bail out Tier 1 / preferred capital either - give them 40% of the stock in New Merrills and take their risks to earn back their lost $ the long, slow way.
Guarantee if the management was looking at a Bear Stearns scenario rather than a Merrill Lynch one ($50 a share funded by the govt?? Idiots! Should be $0.50!) they would behave themselves next time around.
Repeat after me: "'Too big to fail' does not apply to shares!" until the whole country gets it, then publish the policy so it's clear what happens next time. Then watch things change.
On Nov 05 08:23 PM noirblood wrote:
> The addict will kill himself with a fix before giving his habit up.
Just allow one 2-cent worthless thought from me. You said "...The Second Great Depression is upon us" - - - Would that be more becoming instead to say "...A Multitude of Greater and Greater Depressions leading to the Greatest Depression is upon us"?
TK
On Nov 06 04:14 AM Denis Gould wrote:
> It is amazing that this crisis has changed so little. Banks are set
> to pay huge bonuses, cautious investors (like insurance companies)
> continue to pile on ever more derivative exposure, and people still
> treat markets like casinos rather than venues for investment. Capital
> markets are there to facilitate the efficient allocation of capital
> but that is now so far removed from what they actually do that nobody
> is really aware of it. Only when these things change will we have
> reached the end point, and it looks like the crisis necessary to
> take us there needs to be magnitudes larger tthan the one we have
> just experienced. The second Great Depression is upon us.
Sure.
"I don’t know when it’s going to happen, but if history is any guide, it has to happen again"
It will. So what?
Amid all the people being blamed, I don't see the feckless and ignorant American voter, who has consistently made clear to the people that he elects that he wants "more stuff, and someone else should pay for it, some other time, but no, not me, not now".
The root of our trouble was the collusion of voters and leaders in the biggest fudge of them all, the "implicit guarantee". What is an implicit guaranty? You think anyone would let you sign for a loan with an "implicit guarantee"?
This is a perfect capture of the nature of the outrage.
On Nov 06 04:22 PM GotLife wrote:
> My KISS analysis is, Lever up, fall farther. Corporations, banks,
> government entities, and individuals all saw the benefit of leverage
> (controlling assets in the present you cannot afford) but became
> blind to the risk of defaults. My grandfather and father saw this
> risk real time and were inherently financially conservative. We Baby
> Boomers, and later generations, are getting are own noses stuck in
> the pile, have still not internalized this message but will learn
> to remember this stench for a lifetime. And we will have a long way
> to fall, as defaults at all levels will continue for a spell.
>
> The beatings will not stop when morale improves but until the system
> is cleared of all the paper waste.
On Nov 06 04:26 PM The Wog wrote:
> Good work in general, but repeated one horrible mistake - although
> to be fair a horrible mistake made by everyone. The question is not
> "bail out or not bail out." The answer is not "let them fail." You
> experimented with that once (Lehman) - don't make that mistake again.
>
>
> The answer is "bail out" - the question is "shareholders or depositors?"
> The mistake in 1998 was not to bail out Wall St, but to bail them
> out WITHOUT diluting or eliminating shareholders like when you bailed
> out GM etc.
>
> And if that's not sufficiently guaranteed to give self-regulation
> and you want market discipline over the cost of capital, don't bail
> out Tier 1 / preferred capital either - give them 40% of the stock
> in New Merrills and take their risks to earn back their lost $ the
> long, slow way.
>
> Guarantee if the management was looking at a Bear Stearns scenario
> rather than a Merrill Lynch one ($50 a share funded by the govt??
> Idiots! Should be $0.50!) they would behave themselves next time
> around.
>
> Repeat after me: "'Too big to fail' does not apply to shares!" until
> the whole country gets it, then publish the policy so it's clear
> what happens next time. Then watch things change.
On Nov 06 06:20 PM Old Wizard wrote:
> The analysis by Gasparino is correct as far as it goes in identifying
> root causes, but doesn't go far enough. I also don't believe that
> regulations couldn't be adopted that would check the out of control
> " risk taking" which I would better label gambling and misrepresentation
> bordering on fraud. Today the banks are borrowing money from the
> taxpayers [ re; gov] at close to zero and then from the subset of
> taxpayers, those who are saving money in banks, at 1% and then lending
> it at 5% or greater. To make matters worse the Gov [ re: taxpayers]
> under the guise of getting credit flowing again buy 300b of securities
> from banks much of which banks had loaned to the Gov[re: taxpayers]
> at between 2and 3% to ensure a safe haven. In all this machination
> the handlers of all these transactions are profiting[ this includes
> the government officials as well as the "bank" officials, those in
> fannie may and freddie mac, past and present, and all the agents
> of the gov who handle the bond transactions for the Gov of which
> Goldman Sachs is a big player]. Then the treasury says the people
> should save more and wall street says that the economic recovery
> will occur when the consumer spends more. Anybody see any inconsistencies
> here. The one salient constant here is that the hardworking individual
> who pays one's bills saves a portion of one's income and generally
> keeps a positive cash flow is the loser. Now meaningful reform can
> occur with some simple laws1] No mortgage or loan can be sold in
> any form more than once 2] Commodity traders must pay at least 50
> cents on the dollar on purchases. 3] hedge fund managers must pay
> at the individual tax rate for income tax 4] No mortgage shall be
> granted by any lending institution with a down payment of less than
> 10%. 5] Lines of credit for small businesses will not be greater
> than 10% of gross sales or for start ups be administered by a special
> officer of the bank and a pool established by the banks with .1 of
> 1% of their profits. 6] Credit card limits for any holder will be
> no more than 10% of an individual's annual income and interest rates
> will be no higher than 10% annually.7] Rating agencies can not be
> part of any other company. While these may not do it all , they would
> go a long way toward decreasing the gambling, exploitation and fraud
> we've experienced and maybe just maybe get capital to make long term
> investments borne of the conviction that new products and services
> will bring adequate returns. All the parties who are now profiting
> don't have enough skin in the game and until the system allows them
> to play[gamble] with other people's money with little skin in the
> game, it ain't goona get any better.
"The Sellout pulls no punches in chronicling the rise and fall of excessive Wall Street leverage and risk taking,"
What risk?
I am not against risk-taking, high risk taking, speculation, or whatever you want to call it. But in 2008 and 2009 I ask myself, what risk did they take? The simple answer to that was, with the exception of LB, there was no risk.
Risk has rewards and risk should also have consequences (failure). But that's why they should be making the big bucks, they are putting their necks on the line. Shouldn't be getting big buck for putting taxpayer $$$ on the line when they fail.
Now G-20 is talking about a "speculation tax" of all things. Economies will go nowhere and we will all live like the "boy in the bubble."
Why is nobody talking about the date 4/15/2010, yes tax time. For the past year all CD's, saving accounts and all other saving concepts have about a 1% to 3% interest rate, and if the information is correct, over 30% is in these type of saving for the 50 year old and older. In the past these folks paid taxes on their accounts that earned 5% to 9%. That will be a huge hit to the US Gov. in the collection dollars, a BIG DROP.
Now the 2nd part. in 2009 the IRA folks did not have to Mandatory Distribution, those dollars will stay in the accounts and no taxes paid on these dollars ... that will be the SECOND big hit to the tax collector. All in all I feel the US. Gov. will be short about ? %( my guess will as good as anyone else) in the dollars needed to run the country. And nobody is talking about it ... WHY
please see link and consider signing I have.
sanders.senate.gov/pet...
"Depression-squared."
On Nov 06 10:08 PM Teutonic Knight wrote:
> Dennis - - -
>
> Just allow one 2-cent worthless thought from me. You said "...The
> Second Great Depression is upon us" - - - Would that be more becoming
> instead to say "...A Multitude of Greater and Greater Depressions
> leading to the Greatest Depression is upon us"?
>
> TK
The reason it's beyond him is because executives and business owners who use government to their advantage are not capitalists. They are governmentalists.
Capitalists employ capital from savings, borrowings or the earnings of their successful businesses. Capitalists don't have lobbyists pounding doors in the halls of Congress, they're too busy running their companies.
Calvinist financial prudes are just as obnoxious as the shop 'til you drop crowd. There is nothing wrong with using debt in your personal financial picture. But you do need to know where the sensible limits are.
On Nov 06 12:21 PM Michael Clark wrote:
> Spending money you don't have is immoral and leads to an Armageddon. If you ignore this truth, then the punishment will be even worse the next time.
On Nov 07 04:15 PM reveigel@msn.com wrote:
> A greedy, dishonest, ignorant, spendthrift, self-serving and incompetent
> government is the cause of our problems. Until this is changed nothing
> beneficial will ever happen. It sets the standard and the people
> follow, all the way to destruction.
On Nov 07 09:01 PM User 333322 wrote:
> I hope to see a crash every seven years. No better time to make
> money than when everyone is running for the door. Ask Warren Buffett.
But I like how you took a phrase I used and said it meant the exact opposite. Very convenient argument tactic.
And I know a lot of wall street got away with murder. I am talking about the fact that tons of capital did get wiped out, some of it by people who believed they were making rational investing decisions, who did not think they would be bailed out and did not get bailed out. I think there was a large failure to recognize the risk on the part of certain actors that had nothing to do with moral hazard. Yes, moral hazard plays a roll. Government interference in the market plays a roll as well. So does human greed. But these aren't the only factors. To trumpet one aspect above all others, pretty much ignoring the others, is axe-grinding.
On Nov 06 01:05 PM kertch wrote:
> Your comment reflects an ignorant and dangerous way of thinking:
>
>
> "Not to absolve government, but..." - but of course you would like
> to absolve government.
> "... these dopes would have immolated even without the incentives."
> - Dopes? These guys gamed the entire U.S. economy and banking system
> to thier advantatage and walked away with Billions, leaving us with
> the tab. We got immolated: the shareholders, the bondholders, and
> the taxpayers, not the bankers. The dopes are us, the ones paying
> for the mess, believing our "trusted public servants" will keep the
> "stupid evil bankers" from robbing us. If that's what you think
> then "moral hazard" is the only card you've got left to play. BTW,
> you're just the half-wit tinpot calling the kettle black.
>
> On Nov 05 04:33 PM wobatus wrote:
On Nov 07 12:35 PM User 401928 wrote:
> Forgetting ALL Politics and All People that you want to blame ......
> my question is very simple ....
>
> Why is nobody talking about the date 4/15/2010, yes tax time. For
> the past year all CD's, saving accounts and all other saving concepts
> have about a 1% to 3% interest rate, and if the information is correct,
> over 30% is in these type of saving for the 50 year old and older.
> In the past these folks paid taxes on their accounts that earned
> 5% to 9%. That will be a huge hit to the US Gov. in the collection
> dollars, a BIG DROP.
>
> Now the 2nd part. in 2009 the IRA folks did not have to Mandatory
> Distribution, those dollars will stay in the accounts and no taxes
> paid on these dollars ... that will be the SECOND big hit to the
> tax collector. All in all I feel the US. Gov. will be short about
> ? %( my guess will as good as anyone else) in the dollars needed
> to run the country. And nobody is talking about it ... WHY
SEC Comments. Page 6: "Envy, hatred, and greed have flourished in certain capital market institutions, propelling ethical standards of behavior downward. Without meaningful reform, there is a small (but significant and growing) risk that our economic system will simply cease functioning."
www.sec.gov/rules/prop... December 22, 2003.
and:
SEC Comments. Page 2: "Together these practices threaten the integrity of securities markets. Individuals and market institutions with the power to safeguard the system, including investment analysts and rating agencies, have been compromised. Few efficient, effective and just safeguards are in place. Statistical models created by the firm show the probability of system-wide market failure has increased over the past eight years.
Investors and the public are at risk."
www.sec.gov/rules/prop...
"The only thing that can cure it is tough love–allowing firms to fail. That doesn’t mean I wanted the Fed and the Treasury to walk away last year. That would have meant Armageddon. But they should have walked away before that, when the systemic risk was smaller and the damage would have been limited. 1998 would have been a great place to start. "
Mr Gasparino raises intellectual dishonesty to an art form.
Failure IS Armageddon for the failing firm, Mr. Gasparino. It SHOULD have been allowed to happen, right then and there, September 2008. Until you realise this and understand it, just STHU!
Those who invested during the 1929-32 stock market crash are long dead already if not few are still living their last gasps of life. Dow Jones went down 470 to 42 at that time and is now hovering at 10,000 levels these days.
Those who invested during the 1965-80 secular bear markets saw Dow Jones unable to break 1,000 level and went down 470-500 levels before ramping up to 12,000 of year 2000 and 14,200 of year 2007. Many of them are still living but will die soon enough.
I will be long dead or in my old age, and will have better knowledge and wisdom for the latter if not senelity, in order to enjoy the fruits of my labour long before the next "financial crisis of the century" comes along.
Why wait for the next CRASH to happen?
On Nov 06 11:11 AM tarantilla wrote:
> It's nice to see a bunch of right minded comments noted above. However,
> it's easy to predict a "crash". WHEN is another story. And note that
> the government/Goldman Sachs will do all in their power to keep/pretect
> their money, and in the case of "banks", their position of controlling
> the government. Nothing short of major, radical change will shift
> this scenario. Unfortuneately, the right wing lunatic fringe has
> the army, and the money, and will ultimately be used by elite/billionaire/banks
> to remain in power, and "keep order", like in Germany, when the Nazi's
> came. If there IS any "crash" and many are out of work, look for
> this right wing scenario. Sorry if I sound like a nut.
Really? According to the history books, I believe they (the Nazis) had the Communists in Germany hunted down and annihilated. Weren't the Communists leftists too? Please correct me if I am incorrect.
TK
On Nov 08 02:34 PM cranmer wrote:
> The Nazis were leftists - see "Liberal Fascism" by Jonah Goldberg
>
On Nov 08 01:37 PM rennert wrote:
> Deflation and unemployment are the new KoolAid to keep interest rates
> at zero for the Wealthy to fill their coffers even more. While the
> average American gets zero on their savings. Milk here in Florida
> at $8.50 a gallon, everyone is working on my street. only one house
> for sale.Who are they kidding. Food Inflation is here. I can not
> find a tree trimmer or handy man, all have too much work on their
> plate. Are those unemployment numbers really true. Keep interest
> rates at zero, make the Banks even richer.
Listen to someone liek Buffett who has made 150 billion
On Nov 07 12:35 PM User 401928 wrote:
> Forgetting ALL Politics and All People that you want to blame ......
> my question is very simple ....
>
> Why is nobody talking about the date 4/15/2010, yes tax time. For
> the past year all CD's, saving accounts and all other saving concepts
> have about a 1% to 3% interest rate, and if the information is correct,
> over 30% is in these type of saving for the 50 year old and older.
> In the past these folks paid taxes on their accounts that earned
> 5% to 9%. That will be a huge hit to the US Gov. in the collection
> dollars, a BIG DROP.
>
> Now the 2nd part. in 2009 the IRA folks did not have to Mandatory
> Distribution, those dollars will stay in the accounts and no taxes
> paid on these dollars ... that will be the SECOND big hit to the
> tax collector. All in all I feel the US. Gov. will be short about
> ? %( my guess will as good as anyone else) in the dollars needed
> to run the country. And nobody is talking about it ... WHY