Posted on 02/17/2009 5:48:34 PM PST by rabscuttle385
OK, I get you and JasonC confused. I wouldn’t want to defend the his “mainstream voters” statement either.
Right, debt doesn't matter.
Unintended Consequences: Stimulus Package Speeds Up Potential For US Ratings Downgrade
Greenspan...that wrinkled old fart should be in jail. He led the charge into this wreck!
A “primary dealer” - you mean a bank?
Greenspan, of all people, should know there is nothing swift or orderly about government except where the confiscation of the fruits of the citizens' labor is concerned.
Couldn't have said it better!
http://www.cnbc.com/id/29260072
Bernanke apparently opposes nationalized banks.
Nationalizing banks would result in massive capital outflow from the U.S. — complete lack of confidence in our economy. The stock market would drop another 50%. Unemployment would skyrocket to 15% - 20%. It would be a complete disaster.
The banks are facingt $1-2 trillion in loan losses because they paid out actual money to men who walked away with it. Those men are the deadbeats who aren't repaying their loans, and they all vote. The depositers who lent to those deadbeats are their actual final claim holders. The bankers are just middlemen and underwriters. As is the government, which made guarantees to those depositers and on those mortgages (through the FDIC on the one hand, and Fannie and Freddie et al on the other).
There isn't any mystical reckless financier class. Everybody in the country participated in the bubble, as a borrower or a lender or both. Middlemen relationships obscure this and let populists play their hate-baiting games, but it is all utter tosh. Only depositers as a whole have that kind of money, and only homeowners as a whole borrowed it.
When the entire world is baying against a class of honest men who have just been slaughtered by market actions, you can be sure they do not deserve a tenth of it and all the blood-baying hatred is interested. But the mainstreet populists can scream all they like, they are up against a law of nature, not politics. And they will pay. Every deadbeat's defaulted debts will be repaid in full to lenders of capital. Until it is, everyone else stays in the poorhouse. No one's approval of a particle of it, required.
When a bunch of people decide to be deadbeats and welsh on their debts all at once, they hand losses to their lenders. This erodes their lender's capital and their ability to make any new loans. It makes financial capital scarcer, objectively. It also increases the perceived risks to making any sort of loan, especially those similar to the ones experiencing high losses, but also just to all of them, since financial capital is fungible and flows to higher bidders and better credits first, when it is scarce.
This automatically raises the rates that everyone has to pay to borrow capital. Regardless of what authorities try to do to make capital cheaper or to keep interest rates low. Less capital existing to serve a market in which higher risks exist, loan rates must rise. Since the authorities are trying to keep rates low, this occurs as a vast increase in the spreads between the highest quality credits and lower credit tiers, rather than as a parallel shift higher for all interest rates. But it happens. The Fed can send rates to zero, but the only people who get access to borrowings at those near zero rates, are the government and government-guaranteed banks and other underwritten financial institutions. All the actual borrowers have to pay more, a lot more. Vastly wider spreads than before the deadbeat epidemic.
You can't make capital cheaper by refusing to pay for it.
You make it more expensive instead.
The only way to make capital truly cheaper again for the end borrower, is to fill the financial coffers again, to restore loan capital, to replace the losses financiers already experienced, and to attract new replacement capital by offering higher rates and actually delivering on them, through better repayment experience, as well. This takes time and it is intensely painful for anyone reliant on financing during the wide-spread period, but it must occur. The only way to have cheap capital again is to have fat and happy capitalists.
Until every penny of it is repaid, everyone sweats harder for every scrape of capital they use. This economizes on its uses and also tends to encourage higher savings that gradually reconstitutes finance capital. As people tend to be risk-averse after past losses, they pile into safe forms of investment - treasuries, guaranteed bank CDs - and their mutual fear makes them do so even at rates near zero. This means they are providing more and more loan capital to intermediaries at lower costs, at the very moment anyone willing to run banker-style risks can charge wide spreads to lend it out again to riskier places.
Everyone trying to stiff financiers is inherently self defeating. Just like trying to stiff bread providers in a famine, it can only drive prices higher still.
BNP Paribas Securities Corp.
Banc of America Securities LLC
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Securities America Inc.
Deutsche Bank Securities Inc.
Dresdner Kleinwort Securities LLC
Goldman, Sachs & Co.
Greenwich Capital Markets, Inc.
HSBC Securities (USA) Inc.
J. P. Morgan Securities Inc.
Mizuho Securities USA Inc.
Morgan Stanley & Co. Incorporated
UBS Securities LLC.
Nothing is temporary with these guys. We are moving so fast it’s hard to catch one’s breath. McCain? The manchurian candidate at it again. RINOs pushing socialism, not surprising at all.
Not so fast slick, not "everyone." I don't welsh on my debts, but the banks expect me to pay for their bad investments. Are you saying that in your bizarre world, when a bank screws up, that debt is now mine because the bank can't pay?
The shareholders and workers of the financial sector, who have collectively lost well over $1 trillion in value after ponying up an extra $300 billion in capital to cover loan losses from all the world's deadbeats.
I don't blame shareholders, nor do I blame most financial workers, but the banks' decision makers. Who forced banks to become obligated to buy assets which were supposed to be paid by "deadbeats?"
Every deadbeat's defaulted debts will be repaid in full to lenders of capital.
If they paid their debts they would not be deadbeats. So I think the truth is, you are expecting the money to come from people other than deadbeats.
More like people whose job it is to provide bread, but who don't have any flour because they lost it in a craps game.
Lots of people, including Barney Frank, Chris Dodd and a young community organizer from Chicago.
To some extent, they did pressure mortgage lenders to make bad loans. I was talking about Wall Street investors that bet 10 times the money they actually had to buy up the bad mortgages. At some point, somebody should have realized what was going on and blown the whistle, but neither congress, the Bush administration, nor the financial community wanted to pop the bubble.
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