Amouna

5 Perverse Bailout Consequences

If Americans think that we will have a free lunch by printing fresh money to bail out Wall Street failed institutions then...they better take an Economics 101 class. The price to pay for this behaviour is called "inflation" and this time, it will be severe and will make the seventies look like a sunday picnic...

Bear Stearns, One Year Later

One year ago already! it seems so fresh in memory and yet soo much has happened since...

How Much Worse Can AIG Get?

Utter nonsense...

Now they are the financial wizzards that we need to pay otherwise they blow up the system to a wider degree? LEt them do it, the damage is already there...

By the way, the governement should do something in the likes of "taking their personal assets as collateral" (and those of their families), just in case they dont run off and we get going once and for all!

Just a suggestion of course

An Obama Speech to Light Wall Street on Fire

Thanks for sharing common wisdom!

See, the matrix for re-distributing wealth has been HUGELY skewed during the past ten years and is becoming even more increasingly so, with hard working, saving families giving their life savings to subsidize billionaire tycoons and private equity/HF millionaires on Wall Street and elsewhere. Another american revolution is in the making, and its only a matter of time before it bursts.


On Feb 24 03:11 PM User 363582 wrote:

> This is pure idiocy. Mark to market accounting rules did not cause
> this crisis. What caused this crisis was the decision during the
> Clinton administration pushed by Robert Rubin to not regulate derivatives,
> especially credit default swaps. This allowed a crazy proliferation
> of off balance sheet liabilities that kept expanding and kept creating
> huge piles of income. It became an unregulated, undocumented, unaccounted
> for insurance industry ten times as large as the world's regulated
> insurance industry.
>
> Can you imagine what the consequences would be of not regulating,
> or even requiring the disclosure of insurance companies' capital
> reserves? If you look at AIG, that's sort of what happened. They
> only had to disclose their liabilities on regulated insurance contracts
> and not on unregulated credit default swaps. If I sold insurance
> that I personally underwrote, I could make millions of dollars working
> part time. I'd just not clearly disclose to anyone how much insurance
> I wrote and what my capital was to be able to pay out claims. I
> bet I could make $10 million in the next two years with one part
> time assistant.
>
> The problem with not requiring the banks to mark assets to market
> is that we guarantee bank deposits through FDIC. The Fed also prints
> fresh money to hand to banks. Banks don't have to participate in
> the federal reserve system and they don't have to take FDIC insurance.
> Banks that don't want to mark to market can simply opt out of the
> system and do their own free market thing.
>
> But the banking system in the United States doesn't work like that.
> It's a hugely government-operated system where the banks get their
> money to lend at low rates from the big money printer (Federal Reserve)
> and then charge a higher rate to the public to borrow its own money
> at a higher rate than the people's government loaned it to the banks
> at. Right now Americans are paying 5%, 7%, 9%, etc. to borrow money
> from banks that are getting the same money from the Federal Reserve
> printed out of thin air and lent to them at 0.5%.
>
> That is not a free market capitalist system.
>
> I agree with one of the other posters. Yes, let's have a free market
> solution. Let these banks rot and go bankrupt. No taxpayer money
> to the banks. But also no accounting frauds to pretend they are
> solvent when they aren't and to increase their risk and leverage
> while insured by FDIC and taxpayer money. I'd like to see all the
> banks that received TARP money go bankrupt.
>
> And how can someone like Schwartz who writes "Geithner's Superfund
> is the Real Deal" talk about free market capitalism? I think Schwartz
> should pack his bags and go to another country along with Geithner.
> Free market capitalism means that ordinary taxpayers don't get bilked
> to provide loans and assistance and gifts to rich bankers and investors.
>
>
> There will almost certainly be riots and civil unrest when the deeper
> unemployment and poverty sets in and the fresh memories of trillions
> in tax dollars squandered on rich, greedy pigs sear the memories
> of the newly poor.

An Obama Speech to Light Wall Street on Fire

Maybe you were too young to remember the Savings and Loans debacle of the 80's, or that was nationalisation Soviet style?


On Feb 24 02:34 PM investor5 wrote:

> I agree with Jason. NO Nationalization! Nationalization of all our
> largest financial institutions seems to be happening slowly and it
> is frightening. This cannot continue. We should not let this continue.
> Once they have they're hands in there there's no telling how far
> it will go. A revolution against Nationalization will be necessary
> if this continues.
>
> Write your Congressman. Write the President. Rage against Nationalization!

An Obama Speech to Light Wall Street on Fire

Well Jason, one thing for sure is that you are infatuated with BofA!

Nevertheless, I fail to see how you think that the new transparency method should come from the Fed. Can you please give more details?

In some cases, nationalization is unfortunately the only viable option. The problem is that the whole system is plagued with illiquid products and no one knows the fair price for these assets or wants to buy them. Sending them in the governement's arms will be temporary, allowing these banks to rebuild a viable balance sheet, consolidate the sector if possible and re-privatize.

Another option in my view is to let the free market work and the strong eat the weak, which is not necessarily a bad thing.