Posted on 02/02/2009 12:41:18 AM PST by Tempest
All kinds of activities are part of "the market." It sounds like you're equating the "market" with the sobering final reckoning and not counting all the "irrational exuberance" and chicanery as part of "the market."
I'm not saying that markets are to blame or free markets caused this, but I don't think one can simply and entirely absolve "the market" from things that happen in market situations.
I suspect "the market" -- that sobering final reckoning and liquidation of the whole mess will solve this, but I can't say that all of the antics that led up to this weren't a part of market activities.
The way the sentence is structured it gave me the impression that it was some sort of bright idea.
I understand the concept of doing what is necessary to provide for you family.
“The worst part is we haven’t repealed any of the legislation/regulation that got us into this mess.”
US Democrats draft plan to curb Credit Default Swaps trade
I blame CRA so I stand by my statement.
> Ah, we are in the process of perishing so whatever you want to call it...doesn’t work.
What I call it is freedom. And yes, we are in the process of giving it up.
Bump to read later, maybe.
"Connected all the dots..." Maybe the one on his pointy little head, if anything. So far you have demonstrated to the world little understanding of anything other than to make baseless accusations. I pointed out several areas that the author completely missed with his broad smear brush. Read my posting over again and try thinking for a change. Plus, you couldn't know my ideology unless you are a telepath. Big mistake on your part to make such a silly stretch, btw. I do have a well tuned BS detector, and as far as BS goes, this ignorant VV Lefty could start a fertilizer farm and get busted by the EPA for excessive stupidity emissions.
You are right, However if you apposed the lending practices of Fannie And Freddie then you were a racist! Bush called for better over sight of these two entities in 2001, but the Democrats blocked it. Fannie and Freddie needs more funds by the way after they were given 300 billion dollars last summer! To buy up some of their toxic mortgage loan portfolios. Between the two they have 6 trillion dollars in mortgage loans out. They caused most of this mess we are in now!
The free market naturally punishes "irrational exuberance and chicanery". The question now is why didn't it do so this time and if you follow that line of inquiry it will lead you right back to government interference.
We can expect business failures and we can expect criminal behavior. But such things should be randomly distributed in time and across the various sectors of the economy. When so many simultaneous occurrences happen in a single market sector we can be certain it is not happening naturally - it's not being caused by the market.
Including everyone who had ever worked as a tax collector. I'd settle for that.
This is a history of the crisis through the lense of a believer in the efficacy of big government and regulation. The author comes up with some interesting new observations, but does not answer the questions that a free marketer like me has: (1) why did AIG accept insufficient premiums for the level of risk that it was assuming? (2) why did US banks make loans to NINJAs when the government told them to: I would sacrifice market share rather than do that
1.)Why Did AIG and so many otherrs leverage itself 60 to 1?
2.) Commisions and bonus checks.
Interestingly enough, there will be a double whammy here, because the incomes have been artificially suppressed by offshoring of jobs, and by high taxes.
So we're going to see manufacturing drop to even lower than baseline, and (hopefully) prices as well.
Cheers!
“I just don’t think the Obama plan is going to help.”
Come on. Be a sport. Paying women to have abortions and giving Chrysler my money so it can pay workers to quit and buy a car will go 3/4ths of the way to solving the derivatives problem.
Why so negative?
As I said to a liberal coworker, "If only we had about thirty million more young people to pay into social security..."
Cheers!
bttt
Don’t feel bad, the free traitors hate the voice of opposition. Especially the ones that point out how they’re trying to sell out America.
This article is indeed full of useful information, although I agree with only SOME of the article writers conclusions and draw a few more of my own.
Derivatives are not going to cook the world’s economy in spite of the massive amounts of money involved. The main problem still is mortgages and other loans for which the house or other security, was overvalued due to a classic “bubble” situation; and are now resuming their true values in relationship to income and GDP. This is a serious problem, as actual monetary value, which had been artificially “created” as the assetts rose in value and people borrowed against that value, is now in the process of being destroyed. There are enough trillions involved, to “cook the world’s economy”.
Derivatives, though, never had any inherent value as an assett like a house or a security or a share. They are like an insurance policy or a bet. We could add up the value of all the world’s insurance policies and it would be higher than the $600 trillion value estimated for derivatives. A hypothetical event involving that that all insurance policies had to be paid out on, would be a similar catastrophe to all derivatives having to be paid out on; ignoring, of course, the destruction of assetts that required the insurance policies to be paid out on.
An even better analogy, is the gambling industry. If they suddenly and miraculously had to pay out on long odds on all bets placed with them simultaneously, they would of course be broke, and the people who had placed the bets would not get to collect their winnings. This is exactly what should happen with derivatives. I agree completely with the article writer that it is immoral and illegal that taxpayers money be used to pay out on these gambles. I agree too that prosecutions are in order if there was collusion between the dealers and/or the financial institution management; and the “counterparty” to the derivative.
But the net effect on the world economy is close to neutral, as what happens is that a whole lot of money gets transferred from some players in the system to some other players in the system. Sure, some have lost and some have won; but unlike with assett value bubbles, there has not suddenly been a whole lot of monetary value just evaporate. The “winners” have to do something with the money they have won. That is another question that the article writer should be asking, besides who these “winners” are: what are these “winners” doing with the money? Then we will see what part of the world’s economy is being stimulated at the expense of those who have been on the losing end of the gambles, which includes of course the investors in the financial institutions that have collapsed. Of course, they might be buying gold.......
These investors were in all likelihood enjoying the handsome returns that resulted from the derivatives trade; therefore there is an element of morality in the risk factor coming back to bite them now. I think the article writer is too willing to prejudge fraudulent intentions on the part of the derivative dealers. Every level of this morass involved people acting perfectly knowingly on the assumption that house prices can never fall; the writers of subprime mortgages, house buyers, speculators, the bundlers of “CDO”’s and other securities; the purchasers of those securities; and the sellers of the derivatives and credit default swaps that were an “insurance” against the failure of those securities.
The only people in this whole process who laid their money on the line in a calculated gamble that there was a bubble about to burst, are the people who BOUGHT the derivatives as fast as the industry created them. The article writer is absolutely correct in insisting that the identity of these people become known. But even so, prosecution may not be justified.
These people are “guilty” of being able to assess a fake economic boom over which almost everybody else had lost their heads; note that there was no lack of warnings concerning this situation from hundreds of experts of which Ron Paul is merely a well-known example. Such people can hardly be blamed for taking the attitude that, “oh well, if you won’t listen to me, don’t blame me for making a pile on the side out of my superior wisdom”.
Others will have kept their thoughts to themselves and quietly profited. I am picking that George Soros and John Paulson will be among the big winners. If Ron Paul and Peter Schiff and Paul Kasriel and Nouriel Roubini and the hundreds of other people we refused to listen to have profited from our stupidity, so be it. Another possibility is that clever “sovereign” operators such as the Chinese or the Saudis or the Russians are involved, perhaps even as a form of war on the USA.
The fact that Henry Paulson went down on bended knees pleading for the money to pay some of these “counterparties” out, gets one thinking.
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