I think is more “hazard” to let the financial system be destroyed and turn the world into some sort of “mad max” movie than the cost to taxpayers for this bailout, honestly. Perhaps the comparison with mad max is very extreme, but 20% unemployment and the closing of hundreds of companies (which may be very very efficient but can not survive without access to credit)… Not a very friendly world. If the banks can be fixed (somehow), and the rating agencies (somehow), and some otc derivatives (somehow), and structured credit (somehow), and level III assets(somehow), and m-2-m versus fair value accounting (somehow) and a lot of stuff can be fixed during the coming months-year… what is the problem with that? I am sure this plan will not avoid a recession (and I agree that the world is not “wonderland” and the market will not go up forever and ever), but the world just needs to fix this huge financial-banking problem. My point is that some “cleaning” of inefficient companies (like what you propose) is not the risk we are facing: we are facing the “cleaning” of every company and the world we know.
hala_madrid Wrote: ------------------------------------------------------- > I think is more “hazard” to let the financial > system be destroyed and turn the world into some > sort of “mad max” movie than the cost to taxpayers > for this bailout, honestly. > Except nobody is talking about destroying the financial system and turning the world into “mad max” ( I love max, btw) > Perhaps the comparison with mad max is very > extreme, In fact, so extreme that it’s an unwarranted and inappropriate shock tactic > but 20% unemployment and the closing of > hundreds of companies (which may be very very > efficient but can not survive without access to > credit)… Not a very friendly world. > Hundreds of companies close all the time. I’ve seen estimates that hundreds of companies closed because of the lapse of the uptick rule (not that I believe it). 20% unemployment is bad, very bad, but there are things that are worse. What’s especially worse is to overturn notions of private enterprise and accountability and then have 20% unemployment. > If the banks can be fixed (somehow), important, let’s figure out how to do it. It’s going to take awhile and there is going to be suffering. > and the > rating agencies (somehow), Not part of the govt’s plans that I know of. > and some otc > derivatives (somehow), Nothing wrong with the derivatives which is why some people buy them and some people sell them. > and structured credit > (somehow), and level III assets(somehow), and > m-2-m versus fair value accounting (somehow) and a > lot of stuff can be fixed during the coming > months-year… what is the problem with that? > Ditto, etc. There is nothing wrong with that. There is lots wrong with govt nationalization of the banks, especially with limited legislative oversight. > I am sure this plan will not avoid a recession > (and I agree that the world is not “wonderland” > and the market will not go up forever and ever), > but the world just needs to fix this huge > financial-banking problem. > Yep. The question is how to do it. You shouldn’t be jumping on-board just because someone says they need to fix this and have a solution that causes equity markets to go up. If you want equity markets to go up in the short-term I have 30 different ways for govt to make that happen, most of which I would disagree with (and some of which I wouldn’t). > My point is that some “cleaning” of inefficient > companies (like what you propose) is not the risk > we are facing: we are facing the “cleaning” of > every company and the world we know. Says who? If this was so, I think we would hear about it from the people that have brought us these solutions. And now the govt that got us here is nationalizing the banks and you think that will make things better? Would it have made things better if they nationalized the banks 10 years ago? During the Depression? Has anything good ever come out of nationalizing huge industries like that?
It seems you are surprised at government intervention while this really happens everyday. What do you call FOMC actions? What do you call fiscal policy of deficit spending and tax cuts, etc? These are all interferences if you haven’t noticed.
C’mon. Central banks conducting monetary policy and gov’ts conducting fiscal policy is fine. Nationalizing banks is not. Gov’ts taking a huge equity stake in a fundamental business like banking is a huge sea change in the way that western, democratic gov’ts conduct themselves. It is really important for you to work out why that is different than the Fed conducting monetary operations or the gov’t spending money on normal govt functions.
virginCFAhooker Wrote: ------------------------------------------------------- > It’s bad for taxpayers but it’s good for the > market. > > I got my firesale anyway so I’m pretty psyched. > I’ll gladly take another firesale (but give a few > weeks to recover from the last!). So now you’re all for the bailout ?
ptrainer, are you bitter b/c you have been wrong the last few days? your posts the last few days have been pathetic
Yes Recessions are Good, but Depressions are BAD!
Joey, pure classical followers do consider what we call today fiscal policy and monetary policy a flagrant intervention by the government. There are also anti-fiat system groups who think the Fed should not have anything to do with money. They have an issue with the Fed monetizing the wealth of this country via the so called fiat system that we have. In their view, there is no inflation, thus no need for the Fed. It’s all intervetion, but at varying degrees.
Without getting into a semantic discussion about “varying degrees”, world govts have crossed some really important lines that traditionally divide democratic govts from Fascist ones. To say that the govt conducting fiscal and monetary policies in any way justifies nationalizing the banks is really dangerous.
in the long run every Government is the exact symbol of its People, with their wisdom and unwisdom; we have to say, Like People like Government. emerson
Joey, so what do you think we should do to stop our government from doing this? Vote all the incumbents out? But the new people will still be controlled by interest groups. Another American Revolution???
I don’t know at this stage, but I think the US govt does stupid fascist things all through history. The country usually survives and they get fixed up eventually. There is not much an individual can do - write to your congressmen, vote, and post your opinions in places others will hear or read.
I could be wrong, but couldn’t we do the same thing that the government is planning on doing just by lowering capital gains taxes or corporate income taxes? That way we wouldn’t have to worry about inflation, debt, or any of the other countless problems that come with borrowing almost (or over depending on whom you talk to) 1 trillion dolalrs. Thoughts?
This is my understanding of the situation: The government’s intervention at this scale is just postponing a financial disaster, not avoiding it. Moreover, nobody, from the common person up to the president has been held accountable for any actions they took to bring us here. Furthermore, the Dicks and Harries of the world will stay in a slumber for a few more years. When you get cancer, you could keep postponing surgery while maintaining some semblance of life by taking heavy drugs. But you have to face your fears and go on with the surgery some day to remove the tumor. I have the same feeling I had when US was about to invade Iraq. This is not going to work out. Failure can be a good thing. Anyone who ever failed in life knows how it made them a better person. Why can we not have the courage to be better people?
I worry that we will need another round of capital injections. There is no way the GOVT could have performed the necessary due diligence on these companies that is required to committ this kind of capital. Bernankes oped is just more of the PR strategy–if you want to call it that–to buy time in the hopes that things get better. All the while FNM and FRE are taking on toxic assets at a rate of $25B per month.
Just found this classic thread…
And now, here in 2015, $4.5 TRILLION overvalued. 
And the potential for _ in _efficiencies is even riper.