TheAgitator.com
Sound Familiar?
Saturday, March 29th, 2008So once again, several parties in a particular sector of the economy made some dumb decisions. And once again, instead of letting the people who made those bad decisions be punished by market forces, the federal government is figuring out how to bail them out, thus conditioning the public to the idea that risky ventures in America’s mixed economy really aren’t that risky at all. The government will always be along to pick you up, dust you off, pat your butt, and send you on your way.
Instead, the government’s proposed “solution” is–surprise!–more government, more power, and more regulation. Hey, maybe the mortgage meltdown will give us another legislative gem like Sarbanes-Oxley!
It’s sorta’ like when the politicians tell us we need to decrease our dependence on fossil fuels, then rail against rising gas prices, and demand the government take steps to lower them. We can’t trust the market. Better to put your faith in the professional politicians. Put your trust in them pull all the right levers. Because everyone knows that the skills it takes to win an election are directly applicable to running the world’s largest economy.
Yeah, I’m just so glad we have limited-government republicans running the administration.
*slits wrists and dies*
I agree with you with a minor caveat: it’s not solely the government solution. There are those within the financial sector that are begging for the government to step in based on the wrong headed notion that doing so will increase trust and stability into the market. It’s cyclical and total crap. In 5 years time those same folks will be complaining about over-regulation and lobbying Congress to strip away at the regulations. Kabuki theater for Wall Street and one that will likely end us up in Japanese style economic malaise.
I was flabbergasted when I read this morning that they’re contemplating all this new regulation so they can maybe try to prevent the cyclical recessions that occur every 5-10 years. Has there ever been a truly stable, long-term stable, economy in the history of the world? Oh, wait, maybe if we just eliminate the whole “free market” idea…
The only role of the government in the markets is to enforce laws against fraud, so We the People don’t have to shoot the bastards ourselves.
An “AAA” rating is roughly equivalent to “can pay debts in any circumstances except perhaps for a nuclear war”. Joe Sixpack does NOT merit a “AAA” rating, no matter how many Joe Sixpacks you stack on top of eachother, since any number of Bad Things can happen to Joe Sixpack to affect his ability to pay his debts, which would not have an impact on an unfortunately oversized government.
Savings are at an all-time low, credit card debt at a high, and now we’re bailing out mortgages? Exactly what financial responsibilities will people have to actually incur themselves?
It wouldn’t seem possible to encourage LESS financial responsibility in the US, but this might do the trick.
Wall Street firms are now borrowing directly from the Fed to ease their credit woes. I think I read that since this was implemented a couple months ago, the firms are borrowing over 100% more than they normally would have been (from banks, previously, rather than the Fed).
This is very very bad. Not only will it make things that much worse if these firms fall, but it directly impacts the government and the money supply.
We’re looking not at a recession here (we’re already in one, despite what the talking head economists say), but economic devastation in the very near future. Government attempts to ease recessionary cycles over the past 20 years are about to come back to roost, so to speak, and the results will be catastrophic. Maybe not Great Depression levels (barring a worldwide famine or some other Act of God), but along the same lines…
“The ultimate result of shielding men from the effects of folly, is to fill the world with fools. ” — Herbert Spencer
Would it be better for us all to have a big crash, recession/depression, asset price correction and ruin? Personally I think so and I think that that might be the only long-term solution. The Fed inflated the economy to shield us from the dot-com bust and that led (in part) to the housing bubble. Who knows what will be the next phase of the crisis of capitalism.
If the government is so desperate to get involved they should at least exact some pain: Perhaps a forced tender of all mortgages and mortgage securities for cash at a 30% discount of face, and the renegotiation of all mortgages with homedebtors providing a 20% haircut and a fixed 30-year rate of 5% but with a promise to pay back any and all part of that 20% when and if the home sells for between the discounted price and the mortgage value today. (that latter part only available to those who pay 30% or more of their income on housing payments — a means test)
That way the govt comes out ahead, the industry is appropriately chastised and homeowners are on the hook to repay the government’s largess thus being unable to profit very much from this action.
This is not what I would really want, but almost anything is better than an inflationary cycle of bailouts that simply rewards schemers, crooks and idiots.
And when the economy completely collapses, and the dollar is worth nothing, and suddenly there is an amazing new currency and North American Union trotted out that “will save the day”, and everyone fawns over it because government is their master and savior, I will say I TOLD YOU SO to many people. There are no big accidents or coincidences in government, stuff is very well planned out across the globe.
It took 50 years to implement the EU, but they did it piece by piece. They started it with an “economic agreement” in their steel industries, added other industries over time, and then sealed the deal in the past few years. Hurray for globalism and global government! I love the UN!
……In 2001, McCain founded the Alexandria, Va.-based Reform Institute as a vehicle to receive funding from George Soros’ Open Society Institute and Teresa Heinz Kerry’s Tides Foundation and several other prominent non-profit organizations.
Arianna Huffington, syndicated columnist and creator of the HuffingtonPost.com, has served on the Reform Institute’s advisory committee since the group’s inception.
McCain used the institute to promote his political agenda and provide compensation to key campaign operatives between elections.
In 2006, the Arizona senator was forced to sever his formal ties with the Reform Institute after a controversial $200,000 contribution from Cablevision came to light. McCain solicited the donation for the Reform Institute using his membership on the Senate Committee on Commerce, Science, and Transportation. In a letter to the Federal Communications Commission, he supported Cablevision’s push to introduce the more profitable al la carte pricing, rather than packages of TV programming.
The July 6, 2001, homepage of the Reform Institute archived on the Internet lists founder McCain as chairman of the group’s advisory committee………….
http://www.wnd.com/index.php?fa=PAGE.view&pageId=56177
When we are little we are told the story of the grasshopper and the ants. We grow up trying to be ants. Then we realize that:
a. There are far more grasshoppers than ants in the world
b. The ants did not have to deal with a federal government that allowed the grasshoppers to be foolish without consequence
c. No matter how hard they work, how well they manage their lives, in the end the government will probably redistribute a significant portion of the fruits of their labor to the grasshoppers
I hate to say it, but what Elroy said. No matter what, you can plan all you like, but so long as the big boys get their palms greased, it makes little difference.
Your 401(k) will be looted, if only by inflation rendering your savings null, so why bother? Gold? Should have put money in that; 1K an ounce and rising. Hard to believe that before the Fed and FDR monkeyed with it by making it illegal for Americans to own gold specie (hard to believe, no?), it was worth about $20 an ounce. Bread could be bought for pennies a loaf, same with milk at pennies a gallon. Now, staples will go through the roof; get used to eating beans and rice like a Mexican, ’cause that’s where things are heading.
William Jennings Bryan had it all wrong: Mankind was not crucified on a cross of gold, but on one constructed by fractional banking. And the fractional bankers of the Fed have been laughing their arses off. Welcome to the New Serfdom…
The problem is that these financial companies have become too large to fail. It occurred specifically because American banks told the Federal government that they needed to consolidate if they were going to compete with European multi-national banks and investment institutions. What they didn’t mention is that in Europe Brussels is up their rectum with a flashlight. So we ended up with a bad combination of very large financial organizations willing to take very large risks with other people’s money so that they can score very large bonuses. If they screw up, upper management gets shuffled around, the people who made the bad decision go work somewhere else, the shareholders have a temporary setback, and the people who actually invested the money lose it all. (see CitiBank, Morgan Stanley, Montana Power)
What exactly are the inhibitions to taking stupid risks in this environment? Why should BearSterns be saved? Is “it will damage the markets” another way another way of saying that the markets won’t be appreciating sufficiently to encourage stupidity? I thought the stock market was supposed to function as a place to raise money to start and support capital enterprise, now more than ever it’s an end to itself.
BearSterns was a very aggressive risk taker for the last decade, they made their stockholders, investors, and employees a shitload of money, now its unraveling and “damaging” our economy; do the folks here on this forum approve of an economic model that zooms and lurches from crisis to crisis. Where the MO is the best part of the buzz is right before you pass out? Is this the way we want our country to work? (sorry for all the frakin’ ???)
After the dotcom bubble burst Greenspan and friends made a conscious decision to keep liquidity high to prevent the looming wealth evaporation, the result was the real estate bubble, just like the dotcom era, people were saying that the old model no longer applies, when you hear that you can be sure that there is a cliff at the end of this road. There are always going to be people who think that they are smart enough to pull a James Dean and jump out before the car goes over the cliff, but now we’re allowing them to stuff the back seat with passengers, AND they’re using their Dad’s car.
One point about the EC, the constitution put a strict limit on the level of debt countries can have, It took Italy, Greece and Spain years of economic doldrums to comply, but now their better off. But then I’m a rigid deficit hawk, and believe that it’s wrong for government to provide a safe haven for private capital. If all the eggs are put at risk, I think we’d be far more likely to build better baskets.