Crunch

[BeautifulBurnout]

I have to say I am amazed at Poulson's plan to buy up the bad debt in the market rather than nationalise, like we did with Northern Rock here. At least with a nationalisation, the government would gain some benefit from the continued operation of these banks. As it stands, the government and the American tax payer will be taking a huge hit for seemingly no benefit at all, aside from "keeping the market viable".

However, I am incensed at Poulson's suggestion that if the US go down this route of sponging up all the gambling debts of the rich Wall Street players to keep the market afloat, that other countries should follow suit. For what? So the same greedy-bastard players can continue to make private fortunes out of non-existant equity while taxpayers suffer further cuts in funding for health, education, welfare, etc. etc., not to mention the risk that their personal taxes will be hiked up to fill this greed-and-stupidity black hole?



And excuse me but - wtf?!
$2,500,000,000 divided by 10,000 is $250k, if my maths is right. What possible reason could there be for paying these schmucks an average quarter of a million bonus each? For doing such a good job in fleecing the people, the shareholders and the government and still having a company left to sell to Barclays? Give me strength!

[Strangelet]

Originally Posted by BeautifulBurnout

However, I am incensed at Poulson's suggestion that if the US go down this route of sponging up all the gambling debts of the rich Wall Street players to keep the market afloat, that other countries should follow suit. For what? So the same greedy-bastard players can continue to make private fortunes out of non-existant equity while taxpayers suffer further cuts in funding for health, education, welfare, etc. etc., not to mention the risk that their personal taxes will be hiked up to fill this greed-and-stupidity black hole?

Hear, f'ing, hear.

And once again I'd like to trot out my man Ron Paul who, because he called this years ago, is now back on the news and being asked for comment, this time with a lot less smirk and more wide eyes.

I understand the free market/strict constitutionalist bent may tarnish his logic for some of you, but I think everyone on the left can see this bail out in similar terms. a fabricated debt ridden solution to a fabricated debt ridden problem. extra points for those that see the fascist elements.

[Strangelet]

....and look what happened.

http://www.bloomberg.com/apps/news?p...Q&refer=canada

clockwork....

[jOHN rODRIGUEZ]

Originally Posted by Strangelet

I understand the free market/strict constitutionalist bent may tarnish his logic for some of you, ...

Just a little bit.

[jOHN rODRIGUEZ]

http://money.cnn.com/2008/09/22/mark...ex.htm?cnn=yes

"...go on and BLOW it..." I think satan's got something for you. Shell.

[Dirty0900]

I just hope penny chews don't go up.

[Deckard]

Originally Posted by Strangelet

http://www.youtube.com/watch?v=3qLefrvxbq8

I'm really no economist, so I have to grasp at what little I can and make limited judgments on that. But these two points of Paul's just make me worried... (worried that he's right, not worried that he's wrong)

"You can't solve the problem of inflation - that is, money and credit out of thin air - with more money and credit out of thin air"

"The bubble has been blown up, it needs to deflate - but they won't allow it"

I've been reading similar comments to this elsewhere. Can the government/Fed/whoever* (*see, that's how ignorant I am about this) really have got it that wrong, or been that short-sighted?

[Deckard]

Originally Posted by Dirty0900

I just hope penny chews don't go up.

Now that's the kind of economics I understand.

[Strangelet]

Originally Posted by Deckard

I'm really no economist, so I have to grasp at what little I can and make limited judgments on that. But these two points of Paul's just make me worried... (worried that he's right, not worried that he's wrong)

"You can't solve the problem of inflation - that is, money and credit out of thin air - with more money and credit out of thin air"

"The bubble has been blown up, it needs to deflate - but they won't allow it"

I've been reading similar comments to this elsewhere. Can the government/Fed/whoever* (*see, that's how ignorant I am about this) really have got it that wrong, or been that short-sighted?

Its both the Fed (federal reserve) and government. The federal reserve is a private entity that controls the money supply. They've been responsible for artificially extending the bubble by keeping down interest rates on loans between banks. If its down, then banks can loan more money to people for things like businesses and houses and stuff.

They've been printing money far past the net worth of the country's assets. Which is the *real* cause of the food and oil spikes. Its not that these things are more scarce, its that inflation has caused these things to be more expensive because the dollar is weakened. Which causes a feedback loop because investors that would normally be in the money are moving to commodities like gold and oil to hedge off inflation, which causes even more inflation! You see that exact thing happening in the bloomberg article I posted. The fed prints money like its the new york times sunday paper, the dollar falls, and everything goes up in cost.

This has been happening since just after WW1 in this country and we've seen the value of the dollar drop like this ever since.

The thing is we've always managed to create enough objective wealth through technology and innovation to shoulder up the economy later. So the american economy has been like an irresponsible uncle going through the earnings of the family business, so far so good, or at least that's the shit crazy optimism we console ourselves with. In other words we can afford to act irresponsibly because of the margins provided by innovation.
But there's a limit and so why not just act responsibly? this is the perspective that you just don't see these days.

Its like the housing market. Before, to get into a house you had to have 10% - 20% down for a fixed interest, conventional loan. And the value of the house would be well within the 2.5 times your annual salary ceiling. Which was easy because housing was a shit load cheaper than it is now. The majority of mortgage loans were conventional. Now the vast majority are exotic ARM, interest only jobs, and I don't think many people in the past 4 years bought houses valued less than 2.5 times their annual income. That's because nobody can afford a conventional loan anymore.

And this is my point. Its not like the 2.5 annual or 10% minimum down are arbitrary or political or subject to whim. They fall out of the reality of mortgates. If you have any chance of paying the fucker back, the math dictates the probabiliity of risk optimized around these margins.

So who the hell thought it was a good fucking idea to throw money at anyone with a 600 credit score to buy a mcmansion where a farm used to be? The same fuckers we're bailing out, watering down my savings that I've put aside for my conventional home loan so that responsible people like me get fucked both ends.

[cacophony]

Originally Posted by Deckard

"You can't solve the problem of inflation - that is, money and credit out of thin air - with more money and credit out of thin air"

pshaw. tell that to zimbabwe.