“I have no problem with the markets being well regulated and policed, but the Federal Reserve does not regulate the markets.”
I agree. The Fed should have one job, keep the money supply stable. The Fed doesnt regulate markets nor should it.
The crisis point comes when a credit panic becomes a ‘systemic’ issue. I think the right thing is indeed to have a separate entity handle this from an asset persepctive while Fed manages the system’s liquidity.
” Honest people do make mistakes, and they also get to pay for them. The current shrieking that they shouldn’t be responsible for their mistakes makes me doubt their honesty.”
Nobody wants to defend irresponsibility, but when you have a chain of bad debtors, from a foreclosed homeowner, to a Fannie Mae bad asset, to bank going bankrupt, you have a question of who pays? You cant make the deadbeats pay, and the debts are large enough to threaten the system.
It’s like the old saw. If you owe $100 and cant pay it, you have a problem, if you owe $1 billion and you cant pay it, the bank has a problem.
Exactly how to make deadbeats pay up? You cant. The USA and our economy as a whole has a problem. We need to consider that this bailout isnt for *their* good but *our* good. Either we have a painful liquidation process which in the interim probably causes a steep recession/depression ... or we pay up with a Govt bailout and have a smoother liquidation process. Either way, we will pay a price, but the price of inaction seems more severe.
“The money system need not be privatized, just return monetary responsibility to the congress. “ Egads, Pelosi, Schumer, Reid etal?!?! Surely you jest. They would bollox things up horribly. I would take private money, gold standard, anything, over a politicized Congress control over money.
I think the Fed setup is a good compromise. At least with the ‘separate’ Federal reserve, you get less political pressure for inflation, ‘targetting’ unemployment and other keynesian nonsense. Not saying it never happens, but the degree of it is less.
Who is the "us" in "our good" when Paulson assures us that the CEO's that made horribly bad business decisions in making loans to folks who can't apy, bundling, writing derivatives against and leveraging these loans will get to keep their golden parachutes.
And it isn't the USA as whole that has this problem. A lot of us have lived prudent and careful lives and howled about this for years. Why should we pay, while the crooks go free. You don't think that the bunglers on Wall St. who made fortunes doing this are crooks? Well what are they? Oh yes, in your words, good kind hearted Mugabe style socialists.
If you mean the Speaker of the House and President of the Senate, whomever that may be then yes. Of course, I also favor repealing the fifteenth and sixteenth amendments.
The people selected for leadership may be much different if the legislature didn’t mainly just meet to divide up the spoils.
Those holding the mortgage. They got a good deal on 'em precisely because there was substantial risk that the notes wouldn't pay off. They gambled, they lost, the buck stops with them.
The whole motive of the banking system IS the risk of non-payoff. I deposit money in a bank and get paid an interest rate precisely because there is the chance that it won't be there when I go back to withdraw my money. That money may be "insured" by FDIC, but even there the "payment" of having that insurance involves the risk that FDIC can't pay up. Ditto with investments: while you'll probably make a profit from an investment, there's the chance that you won't - and that profit comes precisely because of the odds that you won't get even get your investment capital back. In this case, big banks invested in big high-risk mortgages - and lost the bet, so it's up to them to eat the results or go bankrupt.
Of course, the "eat the results" sentiment in turn does ripple back through other companies & individuals - but those relationships were VOLUNTARY, and in turn were gambles that the risk would pay off, which it didn't. Those involved pay pursuant to their involvement; those not involved shouldn't.
We're faced instead with the feds trying to short-circuit this natural voluntary chain of risk & responsibility, spreading the cost of failure across EVERYONE. Great, now I have to cough up $7000 for my imputed share of this debacle; thing is, I don't have $7000 to cough up ... I can barely swing enough to cover the deductable for insurance-covered roof damage.
At what point do people, in large numbers, just give up and start dropping out of the system? Some debt-free property, a large garden, and a little home business can go a long way to living independently of such nonsense.