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***US financial crisis/bail-out master thread***

i hope there is no detroit bail-out. i also think there also should not have been a bail-out of the banks either. it's time that buissineses learn that if they mis-manage, then they fail. and it's not up to the tax payer to bail them out.
 
This is a pretty amazing economic scenario. Right now the inflation rate is supposedly negative yet the interest rate is at 1%.. which means our money supply is contracting with practically the lowest possible interest rates... that's virtually impossible.

So much of this shit is because lack of oversight. Inflation in america has been dramatically misstated for the past 28 years. Grossly so. We've been running 4-9% inflation for 3 decades and yet the stated rate has been 1-2%. This has allowed the fed to hemmorage the money supply like crazy with insanely low rates which caused 2 massive expansionary bubbles. The entire things is contracting like crazy now. Inflation is still over 6% probably. Unemployment is probably 16%... Meanwhile we are running a trillion+ dollar deficit..

this shit is all kinds of fucked up. for no better way to put it.
 
smiles828 said:
i hope there is no detroit bail-out. i also think there also should not have been a bail-out of the banks either. it's time that buissineses learn that if they mis-manage, then they fail. and it's not up to the tax payer to bail them out.
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Just very briefly: you people who think the banks shouldn't have been bailed out: you realise what the consequences would be:

We'd lose all the money in our bank accounts. (Because if a bank went bust, regular deposit holders would be unsecured creditors, and they'd be very unlikely to get anything at all back).

We'd risk losing our houses (This is less certain, but if a bank collapses, a private equity fund buys its assets and debts, they might decide to just call all the debts in, and demand immediate repayment, rather than run it as a business).

We'd risk our employers going bust because they can't get credit for day to day operations (We're basically seeing this now, just because the banks are in trouble - if they actually failed, then huge numbers of businesses would go bust - healthy businesses, that are successful, but can't get credit).

The banks fucked up, badly. There needs to be a reckoning, and then greater regulation. But right now, we need them.
 
Oops, yeah, that. Must have been half asleep when I posted :)

Still: compensation from the Icelandic banks is only just starting to be paid out now, weeks after they went broke. The deposit holders had no access to their money till then. How fast would the FDIC be?

(And I didn't even mention that much of the trouble we're in now is the consequence of the failures of just Lehman Brothers. It would be far far worse if other banks had failed).
 
The government needs to suspend the real estate license of every agent in the country who sold more than 1 variable rate mortgage that foreclosed in the past 6 years. They should also sue each and every rating agency and other middle man that was involved in this.

There was a huge amount of profiteering that resulted from this and the entire world is feeling the fallout. These people should be blackballed from ever working in any financial or realty business again for their entire lives. From the one time real estate agent who sold a house or two to the big lending houses that turned these bad mortgages into AAA packages and sold them off to IRAs. They should ALL be punished by revoking their ability to work in finance or real estate INDEFINITELY and they should also be fined where appropriate. Businesses of any size who are found to have been complacent should be liquidated and their assets seized by the government.

Yes it would put a lot of people out of work. I don't care. There needs to be a reckoning and I'm not talking about jail time. Losing their careers and assets and being told to get a new legitimate career would be more punishment than federal prison. The FBI should have a task force to go individual by individual and company by company.
 
Losing their careers and assets and being told to get a new legitimate career would be more punishment than federal prison.
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Really? no job > fuck me in the ass prison imo..

I think banks being able to LEVERAGE is the root of the problem. It is complete bullshit that an institution can lend money it doesn't have, charge interest, fees and penalties on that money, then seize assets when a default occurs. Should the default occur, the bank doesn't actually loose any money because they didn't have the money to begin with. All they have done is cause inflation. Am I wrong?
 
Mehm said:
Really? no job > fuck me in the ass prison imo..

I think banks being able to LEVERAGE is the root of the problem. It is complete bullshit that an institution can lend money it doesn't have, charge interest, fees and penalties on that money, then seize assets when a default occurs. Should the default occur, the bank doesn't actually loose any money because they didn't have the money to begin with. All they have done is cause inflation. Am I wrong?
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Nope, people shouldn't be able to sell stuff they don't own either (see my post on the previous page).
 
Mehm said:
Really? no job > fuck me in the ass prison imo..

I think banks being able to LEVERAGE is the root of the problem. It is complete bullshit that an institution can lend money it doesn't have, charge interest, fees and penalties on that money, then seize assets when a default occurs. Should the default occur, the bank doesn't actually loose any money because they didn't have the money to begin with. All they have done is cause inflation. Am I wrong?
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Federal prison for white collar crimes isn't the same kind of prison.

The entire fractional reserve system is based upon lending money that doesn't exist. You aren't being realistic. I'm offering up something here that's actually enforcible and is some kind of punishment for the people at the root of the problem. Changing our entire monetary system over from fractional reserve is a dream.
 
Here's another "7 trillion" dollar article... lol.. who is writing this shit??

http://money.cnn.com/2008/11/26/news/economy/where_bailout_stands/index.htm?postversion=2008112615

Lets go item by item and highlight in red all the stuff that is actually coming from tax payers.. and then add that up. Lets highlight stuff in blue that has nothing to do with bailing shit out at all.

SAVING WALL STREET
The government has taken these steps to aid financial institutions.

Term-auction facility: $1.6 trillion in loans to banks so far in exchange for otherwise unwanted collateral. The Fed increased its monthly auction limit to $300 billion in October, up from $20 billion when the Fed began the program.

Dollar swap lines: Unlimited dollars to 13 foreign central banks to provide liquidity to foreign financial institutions. The Fed lifted its cap after raising it to $620 billion in October from $24 billion in December.


Bear Stearns: $29 billion in a special lending facility to guarantee potential losses on its portfolio. With the lending facility, JPMorgan was able to step in to save Bear from bankruptcy.

Lending to banks: $70 billion lent on average every day to investment banks, after facility opened to non-commercial banks for first time in March. $92 billion a day to commercial banks.

Cash injections: $250 billion allocated to banks from $700 billion rescue package in exchange for equity stake in the financial institutions in the form of senior preferred shares.

Citigroup: $300 billion in troubled asset guarantees and $45 billion in cash-injections to prevent fourth-largest bank from failing. ALL OF WHICH CAME FROM TARP

Fed rate cuts: Down to 1% in October 2008, from 5.25% in September 2007.

SAVING MAIN STREET
Consumers are benefiting from the government's actions in recent months.

Stimulus checks: $100 billion in stimulus checks made their way to 140 million tax filers to boost consumer spending and help grow the economy. NEARLY 9 MONTHS AGO

Unemployment benefits: $8 billion toward an expansion of unemployment benefits, to 39 weeks from 26 weeks. Some states must now offer 39-week benefits after an extension act was passed in November.

Bank takeovers: $15.5 billion drawn down so far from the FDIC's deposit insurance fund after 22 bank failures in 2008. FDIC IS NOT THE TAXPAYERS.

Rehab foreclosed homes: $4 billion to states and municipalities in assistance to buy up and rehabilitate foreclosed properties. QUESTIONABLE

Student loan guarantees: $9 billion so far in government purchases of student loans from private lenders. Higher borrowing costs made student loans unprofitable for a number of lenders, many of whom stopped issuing the loansQUESTIONABLE.

Money-market guarantees: $50 billion in insurance for money-market funds. The Fed then began to lend an unlimited amount of money to finance banks' purchases of debt from money-market funds. The Fed then agreed to purchase up to $69 billion in money-market debt directly. In October, the Fed said it would loan up to $600 billion directly to money-market funds, which was extended for six months in November.

Housing rescue: $300 billion approved for insurance of new 30-year, fixed-rate mortgages for at-risk borrowers. The bill includes $16 billion in tax credits for first-time home buyers. But lenders have been slow to sign on.

Deposit insurance: $250,000 in insurance for interest-bearing accounts, up from $100,000. The FDIC also issued unlimited guarantees on non-interest- bearing accounts and newly issued unsecured bank debt.

Consumer loans: $800 billion extended to consumer loan-backed securities, including $200 billion for assets backed by credit cards and car loans and $500 billion in mortgage-backed securities. The Fed will also buy $100 billion of Fannie Mae and Freddie debt to try to make loans cheaper.

SAVING CORPORATE AMERICA
Uncle Sam has intervened to help companies in the following ways.

Business stimulus: $68 billion in tax breaks to corporations to help loosen the stranglehold on businesses trying to finance daily operating expenses.QUESTIONABLE

Fannie Mae, Freddie Mac: $200 billion to bail out the mortgage finance giants. Federal officials assumed control of the firms and the $5 trillion in home loans they back.

AIG: $152.5 billion restructured bailout, including a direct investment through preferred shares, a easier terms on a $60 billion loan, and new facilities meant to take on the companies exposure to credit-default swaps.

Automakers: $25 billion in low-interest loans to speed the industry's transition to more fuel-efficient vehicles.

Commercial paper facility: $271 billion in corporate debt purchased so far by the Fed since its so-called Commercial Paper Funding Facility opened. The Fed allocated $1.4 trillion for the program.



Not only have we NOT spent anywhere close to 7 trillion dollars - we've spent - as taxpayers - more like 812 billion. The vast majority of which is either loans, a purchase of a stake in an existing company, or govt. assumption of debt which will be repaid in the future. VERY VERY little of this bailout is handouts. The only handouts we've seen are the stimulus and a few taxbreaks here and there. Everything else is stuff that will be repaid in the future or is stuff coming from the Fed or FDIC NOT the treasury...

this is getting fucking stupid.
 
I even emailed the author of this article at CNN to show him how his article is complete bullshit.
 
You aren't being realistic. I'm offering up something here that's actually enforcible and is some kind of punishment for the people at the root of the problem. Changing our entire monetary system over from fractional reserve is a dream.
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Maybe, but it doesn't de-validate my point.
 
^ I think a non-fractional reserve banking system - ie, a commodity backed money system could have big problems too. I haven't decided which system is "better."
 
a non-fractional reserve seems "more fair" to me only because we wouldn't give a few individuals/corporations the ability to create money and dole it out as they please. It would however severely limit consumerism because credit would be MUCH harder to come by. I'm not really a fan of consumerism though, as I'm primarily an environmentalist (albight somewhat hypocritical as I'm typing this on the internet :\).
 
If there was no debt than there would be no money..It's time for a new way that will replace money...a way that would be impossible to corrupt with greed. :)
 
^ I think the main problem with a non-fiat currency system would be that obviously there's a fixed amount of currency in circulation. The problem arises because technology naturally increases efficiency of production. This causes prices on goods and services to decline which makes each unit of money more powerful. This means that money saved would gain in value (reverse inflation) overtime without even having an interest rate. This means that money could not be lent except at very high rates of interest which means that there would be virtually no credit market. Without credit there is not risk taking in research/development/opening of new businesses.. there's no opportunity for student loans etc. etc. It does eliminate the middle man and it does make saving FAR more powerful.. but it has its drawbacks as well (like the creation of a plutocracy). So I'm not completely sold on the idea.
 
aanallein said:
^ I think the main problem with a non-fiat currency system would be that obviously there's a fixed amount of currency in circulation. The problem arises because technology naturally increases efficiency of production. This causes prices on goods and services to decline which makes each unit of money more powerful. This means that money saved would gain in value (reverse inflation) overtime without even having an interest rate. This means that money could not be lent except at very high rates of interest which means that there would be virtually no credit market. Without credit there is not risk taking in research/development/opening of new businesses.. there's no opportunity for student loans etc. etc. It does eliminate the middle man and it does make saving FAR more powerful.. but it has its drawbacks as well (like the creation of a plutocracy). So I'm not completely sold on the idea.
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No opportunity for student loans? Great, then everyone can get a good education.

Fractional-Reserve is a great scam, if your a bank (thus making mad bank).

The US economy, is based on a house of cards, its only a matter of time before it fails. We are just watching those with the insight and power, milking the last bit out of the tit, before everything crumbles.
 
How is your post constructive at all? My point is that there isn't a black/white here. We had a non-fiat currency system for a long long time and it didn't make things any better for the lower classes (middle class didn't even really exist).

There's a lot of gray in economics in my opinion. I doubt the system will crumble personally. Its built entirely on confidence and at the end of the day we can throw all the invisible money we want around and we'll keep driving our cars and working our 9-5 to pay the bills because none of us is self sufficient any longer. There is no alternative like there was in 1929. We all gotta play ball with the system now cause we're tied to it so strongly.
 
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