Our financial system is crumbling this week.

[Hungary Jack]

also, i'm very surprised at the low amounts of rage you guys are exhibiting on this whole thing. in the early 80's we had a similar collapse. banks were running funds that were buying bank stocks, inflating their own value by taking out loans to buy their own stocks. the economy collapsed leading to triple digit inflation rates, and a recession that took 10 years to overcome.

when they were caught, public rage forced both a complete rebuild of the regulation process, and put a few dozen bank executives behind bars. (some are just getting out now). we are by the way, pretty immune to the problems facing the US and europe right now, due to said regulation.

i'm not seeing this happen with the american public. it's like you guys are accepting this as "necessary evil". is this true? aren't you guys enraged with these people? your gov't is spending $1T of your money to fix a mess a few wall st. people made which will lead to lack of spending on stuff you need, to inflation and probably a huge recession. and you guys don't even seem pissed off...

Huh? I don't recall triple-digit inflation or 10 years of stagnation. I do recall financial deregulation in the 1970's and early 1980's leading S&L to invest in speculative properties and other risky assets. When the tax laws changed in 1986, property markets took a dive, many S&L's became insolvent, the FSLIC took over, and guys like Charles Keating went to jail for fraud.

I'm no fan of bailouts, but by many measures the S&L bailout by the federal government was a success. The government became owners of a vast amount of properties would take decades to sell off one by one, so they bundled some decent properties with the toxic waste and sold the bundles much faster than anyone anticipated, and at a much lower cost.

This bailout promises to be much larger in $$. The government will buy $100 of billions of mortgage-backed securities that are dragging down the balance sheets of financial firms and causing them to not offer short-term credit, which is vital to the US economy. So unlike 1987, when Joe Taxpayer owned a bunch of crummy properties, Joe Taxpayer will own a whole mess of crummy securities. There may never be a market for these things. I expect this bailout to cost much, much more. And that sucks.

[arnie.k]

also, i'm very surprised at the low amounts of rage you guys are exhibiting on this whole thing. in the early 80's we had a similar collapse. banks were running funds that were buying bank stocks, inflating their own value by taking out loans to buy their own stocks. the economy collapsed leading to triple digit inflation rates, and a recession that took 10 years to overcome.

when they were caught, public rage forced both a complete rebuild of the regulation process, and put a few dozen bank executives behind bars. (some are just getting out now). we are by the way, pretty immune to the problems facing the US and europe right now, due to said regulation.

i'm not seeing this happen with the american public. it's like you guys are accepting this as "necessary evil". is this true? aren't you guys enraged with these people? your gov't is spending $1T of your money to fix a mess a few wall st. people made which will lead to lack of spending on stuff you need, to inflation and probably a huge recession. and you guys don't even seem pissed off...

Huh? I don't recall triple-digit inflation or 10 years of stagnation. I do recall financial deregulation in the 1970's and early 1980's leading S&L to invest in speculative properties and other risky assets. When the tax laws changed in 1986, property markets took a dive, many S&L's became insolvent, the FSLIC took over, and guys like Charles Keating went to jail for fraud.

I'm no fan of bailouts, but by many measures the S&L bailout by the federal government was a success. The government became owners of a vast amount of properties would take decades to sell off one by one, so they bundled some decent properties with the toxic waste and sold the bundles much faster than anyone anticipated, and at a much lower cost.

This bailout promises to be much larger in $$. The government will buy $100 of billions of mortgage-backed securities that are dragging down the balance sheets of financial firms and causing them to not offer short-term credit, which is vital to the US economy. So unlike 1987, when Joe Taxpayer owned a bunch of crummy properties, Joe Taxpayer will own a whole mess of crummy securities. There may never be a market for these things. I expect this bailout to cost much, much more. And that sucks.

i don't live in the US, and am not an american. i was describing israel's history. i sincerely hope the current situation doesn't lead you guys down the same path.

i thought my origins were common knowledge on this forum. sorry for not prefacing with them.

[Hungary Jack]

also, i'm very surprised at the low amounts of rage you guys are exhibiting on this whole thing. in the early 80's we had a similar collapse. banks were running funds that were buying bank stocks, inflating their own value by taking out loans to buy their own stocks. the economy collapsed leading to triple digit inflation rates, and a recession that took 10 years to overcome.

when they were caught, public rage forced both a complete rebuild of the regulation process, and put a few dozen bank executives behind bars. (some are just getting out now). we are by the way, pretty immune to the problems facing the US and europe right now, due to said regulation.

i'm not seeing this happen with the american public. it's like you guys are accepting this as "necessary evil". is this true? aren't you guys enraged with these people? your gov't is spending $1T of your money to fix a mess a few wall st. people made which will lead to lack of spending on stuff you need, to inflation and probably a huge recession. and you guys don't even seem pissed off...

Huh? I don't recall triple-digit inflation or 10 years of stagnation. I do recall financial deregulation in the 1970's and early 1980's leading S&L to invest in speculative properties and other risky assets. When the tax laws changed in 1986, property markets took a dive, many S&L's became insolvent, the FSLIC took over, and guys like Charles Keating went to jail for fraud.

I'm no fan of bailouts, but by many measures the S&L bailout by the federal government was a success. The government became owners of a vast amount of properties would take decades to sell off one by one, so they bundled some decent properties with the toxic waste and sold the bundles much faster than anyone anticipated, and at a much lower cost.

This bailout promises to be much larger in $$. The government will buy $100 of billions of mortgage-backed securities that are dragging down the balance sheets of financial firms and causing them to not offer short-term credit, which is vital to the US economy. So unlike 1987, when Joe Taxpayer owned a bunch of crummy properties, Joe Taxpayer will own a whole mess of crummy securities. There may never be a market for these things. I expect this bailout to cost much, much more. And that sucks.

i don't live in the US, and am not an american. i was describing israel's history. i sincerely hope the current situation doesn't lead you guys down the same path.

i thought my origins were common knowledge on this forum. sorry for not prefacing with them.

Oh gosh, I didn't know that. Are you in Tel Aviv?

[arnie.k]

i don't live in the US, and am not an american. i was describing israel's history. i sincerely hope the current situation doesn't lead you guys down the same path.

i thought my origins were common knowledge on this forum. sorry for not prefacing with them.

Oh gosh, I didn't know that. Are you in Tel Aviv?

yea. i live in tel-aviv. if you know the city, i'm a few minutes walk from the basketball stadium.

[Freed Roger]

who knew it was so easy to fix the economy? they should have done bailouts months ago?

an idear on best way to expedite a bailout - just let people download $100 US bills from a website and print them on their PCs.

[Arthur Dent]

also, i'm very surprised at the low amounts of rage you guys are exhibiting on this whole thing.

We only get outraged about pointless stuff like whether some politician made a comment that can be interpreted as an insult to our lifestyle.

so are they going to fix this at the core, by regulating the markets, and addressing managerial compensation. or are they just giving the money away and waiting until this happens again on a bigger scale? one of these days wall st. will gamble on amounts the US gov't can't cover...

I'm optimistic that some new regulation will be enacted. Part of the problem is that during boom times, there is pressure to eliminate these "outdated" regulations.

[arnie.k]

also, i'm very surprised at the low amounts of rage you guys are exhibiting on this whole thing.

We only get outraged about pointless stuff like whether some politician made a comment that can be interpreted as an insult to our lifestyle.

i know that was meant as a joke, but it is crazy to watch from the outside sometimes... i don't like referring to 300 million people as "you people", but nonetheless, "you people" can work yourself into a complete frenzy over something like abortions that may effect 0.1% of the population and even then once in a lifetime... and when it comes to 10,000 people who gambled away all of 300 million people's standard of living every day henceforth, and such a huge percentage of your tax dollars, you're letting it pretty much slide as "well, that's the crazy economy for you".

[planet planet]

I hate George Bush and I hate hearing him talk about this crisis. Please go away and let whoever is elected clean up your messes.

[Arthur Dent]

i don't like referring to 300 million people as "you people", but nonetheless, "you people" can work yourself into a complete frenzy over something like abortions that may effect 0.1% of the population and even then once in a lifetime... and when it comes to 10,000 people who gambled away all of 300 million people's standard of living every day henceforth, and such a huge percentage of your tax dollars, you're letting it pretty much slide as "well, that's the crazy economy for you".

I'm with you, of course, but I don't know how many Americans view the crisis as being about, "10,000 people who gambled away all of 300 million people's standard of living." I imagine it's closer to, "some crazy thing involving a lot of money that I don't understand." There is a strong record of voters blaming whoever happens to be in power for a bad economy, but there doesn't seem to be much in the way of sustained pressure to fix the problems.

---------------------

...wouldn't surprise me

Blame them a little, but blame those responsible for federal oversight of them more.

I'll go ahead and blame them both. In the culture of high finance, it seems to be acceptable to do anything you like to pursue short term profit, even if it involves screwing everyone else. The only constraints are externally imposed. Behavior like this would be regarded by normal standards as psychopathy.

[arnie.k]

...wouldn't surprise me



Blame them a little, but blame those responsible for federal oversight of them more.

I'll go ahead and blame them both. In the culture of high finance, it seems to be acceptable to do anything you like to pursue short term profit, even if it involves screwing everyone else. The only constraints are externally imposed. Behavior like this would be regarded by normal standards as psychopathy.

in a meritocracy of greed, said "psychopaths" are just "trying to be the best"