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The rest of the economy may be ed, but I just looked at my 401k and my Pepsico stock options. The richers keep getting richer! Cha-CHING!!!
http://www.npr.org/templates/story/s...oryId=94771320
the case for intervention. I don't care about the consequences of not intervening. What this nation needs is some serious consequences; if we're going to spend our time ing about lipstick and whether Obama is a muslim even as the walls of Babylon are crumbling, I think some true and serious economic hardship is in order. Something to catalyze people out of their ideological stupor.It's come to this: One prominent economist now refers to the U.S. as "the United Socialist State Republic of America." And he refers to Treasury Secretary Henry Paulson as "comrade."
It's hyperbole. But many economists aren't happy with all the federal intervention that has been going on lately.
Don Boudreaux, a professor at George Mason University in Virginia, says that the Federal Reserve's $85 billion loan to AIG, which comes in exchange for a huge stake in the company, turns the rules of capitalism upside down.
"The basic tenets of capitalism are that you are free to take whatever risks you want as long as you are willing to bear the costs for those risks," says Boudreaux. "And you get the upside of it too. If you have huge gains, great, you get the gains. But no one helps bail you out or subsidize you."
Boudreaux says the government is now serving as a safety net for a corporate an that should have known better. And taxpayers are stuck with the risk.
A Bad Precedent?
The Fed's deal with American International Group, the world's largest insurance company, followed a federal bailout of Fannie Mae and Freddie Mac and a government-assisted rescue of the investment bank Bear Stearns.
Boudreaux worries about the precedent. "Other firms either tomorrow or next year are going to suffer problems and there'll be political calls to treat those firms in the same way," he predicts.
There is also an issue of fairness, he says. The government has come to the rescue of a multinational corporation that threatens global finance. But if you're an ordinary citizen, don't count on the same treatment.
Boudreaux says a friend who owns a coffee shop and employs six people wrote to him in jest this morning to pose a question since he, too, is having a tough time: "He was asking me if I thought he could go to Secretary Paulson and ask for a bailout."
Recalling The New Deal
Tyler Cowen, a fellow economist at George Mason, says the last time the federal government intervened like this in the financial sector was during President Franklin Roosevelt's New Deal. And even then, not at this pace.
Cowen decided to look for other examples of similar government action, anywhere on the globe.
"I did some Googling this morning and I tried to learn in what other countries had this happened," he says. "The only example I could find was Ethiopia. Now, when you are sharing your policy space with Ethiopia and no one else, it's not exactly a good sign."
Lawrence Summers, who served as Treasury secretary under President Clinton, says "there are no attractive choices" for resolving this financial crisis. He says the risks were so great that the government had to be bold.
"The thinking here was that by moving to contain the situation, ultimately risks would be reduced," Summers says. "You know, it's very tempting to always think that the government should stand back and let the private sector sort these problems out. That's the kind of thinking that made the Depression great."
The Case For Intervention
The government decided that AIG was so intertwined with the global banking system that a company collapse could have a cascading effect.
Mark Zandi, co-founder of Moody's Economy.com, a research Web site, says that the financial crisis — if unchecked — could slam the broader population.
"What if the Fed and Treasury did not step in aggressively, and in fact they were right?" says Zandi. "Then the impact on the economy, and on jobs, on incomes, on profits and therefore on tax revenue would be even more serious."
He also says the government has an important psychological role to play at times like these.
"The financial markets are built on faith and trust. And there's no way to restore that faith and trust without the help of an aggressive federal government," Zandi says.
Judging from the continued volatility in the stock market, we have a long way to go before that faith is restored.
You subsidize and remove the true consequences of unbridled capitalist/personal greed and you know what you get- a bunch of zombies who only care about lipstick and xenophobia while their government rapes them to subsidize corporate losses. Not only is this a bad precedent in terms of economic practice, it's also setting a very dangerous ideological precedent in that American society is accepting something that just should not be, all in the name of avoiding consequences. I find that mind state sickening.
Last edited by balli; 09-19-2008 at 11:23 AM.
The rest of the economy may be ed, but I just looked at my 401k and my Pepsico stock options. The richers keep getting richer! Cha-CHING!!!
There are a lot of banks out there that have acted responsibly and didn't get caught up in the frenzy. The banks that acted irresponsibly and took on the high flying/high risk/high return investments are now being rewarded, their losses assumed by the taxpayers and the prudent banks are being penalized by having to continue to compete against these. This is just plain wrong. I could live with the taxpayers assuming the bad debts if they shut these crooks down, eliminated their outrageous executive salaries and bonuses, and liquidated their assets but we are just assuming their bad debts and letting them continue to operate.
Don't worry CC, it will only cost $1 trillion or so.
http://www.nytimes.com/2008/09/20/wa...9cnd-cong.html
What a freakin pathetic move by the US government. They are just setting up the cir stances for it to happen all over again! The US has been "growing" on paper debt backed by nothing for years, and its time that some semblance of reason and balance is brought back into the financial system, but this move won't make that happen. It will simply delay the inevitable pain when the debt has to be repaid or written off.
Yeah, just forget the cornerstones of all successful societies, namely education and health care. Yeah, and forget the old and the poor and the vulnerable...
Who was it that said that a society is truly measured by its level of care for its weaker members?
Last edited by RuffnReadyOzStyle; 09-20-2008 at 01:15 AM.
I am absolutely in love with the current housing market. I am making a killing. Now is the perfect time to buy under valued homes from panicked homeowners. I've already bought 3 homes below (very much) market value for a total of about 630k in total profit.
Agree with the OP. Capitalism is dead. And we're well on our way to killing our democracy as well.
Our great country?
Lol
America is no longer great unless you are rich. Have you not figured that out yet?
This country is a s of it's former self. Land of the free? Wtf is exactly free these days? Oh our freedom? Lol that's a joke without a punchline. I'm at the point where I've almost decided to not have children because I don't want to bring them up in this hole.
Oh if your money is in Wamu get it the out right now.
It's a little thing called the "social contract". Look it up. You might learn something.
Take your idea to it's logical end - you opt out, so does everyone else, and basically you have no society. We all take for granted the machinery that goes into running a well-ordered society such as yours or mine, but without taxes there is no society and you'd end up in Mad Max's world, in which you and I would last about 2 seconds before someone bigger, stronger and meaner killed us. Think of your taxes as an investment in living longer and happier.
There's a difference between paying taxes to cover things like roads, fire, medical (EMT), police, etc. and bailing out idiots who were only making $40K a year but bought a $250K house because they got a great teaser rate ARM.It's a little thing called the "social contract". Look it up. You might learn something.
Take your idea to it's logical end - you opt out, so does everyone else, and basically you have no society. We all take for granted the machinery that goes into running a well-ordered society such as yours or mine, but without taxes there is no society and you'd end up in Mad Max's world, in which you and I would last about 2 seconds before someone bigger, stronger and meaner killed us. Think of your taxes as an investment in living longer and happier.
I think the govt bailing these banks out is lame
cause alot of ppl who have deposits will be affected by losing the lot, but they will get a reimbursement by the government.
i hope the balance i'm fixing to have on this credit card i just got with wamu is eradicated when they go under. That would be cool.
Just wait until my balance transfers over.
Wow..... everything realy is possible in the US!
My profit sharing stocks were with Merrill Lynch. My dad is friends with the broker that handles our profit sharing and this is what my dad said about the buyout (I had asked him if our broker had any idea of the buyout).
ML will operate separately from BofA. There may be some rewording of the name. Broker said BofA has wanted to buy ML for years, but ML stock was too high. After the meltdown over the last few months it became so attractive that BofA paid premium of $10 a share. It should not affect us in anyway
That is what they have to say because they are losing a lot of clients. Trying to put up the "business as usual" sign.
Guess what? Their business as usual caused them to lose over 50 BILLION dollars. They WILL NOT operate separate from BofA. Many brokers from Merrill will leave to private firms or places like Raymond James, LPL, etc. They don't want to be told what to do by BofA.
Well, our broker is staying and he's a good friend of my dad's, so I will take his word for it.
So the brokers that leave want to keep doing the things that lost ML over $50 billion?
Of course you would. No reason to leave him as long as he has taken care of you guys.
However, everyone in the industry(including him) knows that Merrill will no longer play by their own rules. BofA will make their rules. Banks are also generally more conservative in nature. I have already spoken to a few ML clients that say they are prohibited from buying certain products they used to buy. ML can't/won't sell them anymore.
No, just want dont want to be told how to manage their own books. Bank brokerages are more conservative and many cowboys such as ML, UBS, etc wouldn't want to work by someone else's rules when they've essentially had none.
But you just said the cowboys lost $50 billion doing it their way.
Merrill Lynch the company.
Not all the brokers sold the risky stuff.
So the ones that didn't cost the company $50 billion are staying.
some will go to because they don't want to play by BofA's rules.
But their investments wouldn't have been much riskier than BofA's will, so what does it matter?
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