'Atlas Shrugged': From Fiction to Fact in 52 Years

People seem to have a hard time understanding that it was the leverage not the bad loans that put us in the situation we are in. Make enough bad loans, you go out of business. That's as far as the damage from the housing bubble should have gone. But it didn't stop there.

We went to the brink because of massive overleverage allowed by lack of regulation. For example, AIG blew up because they wrote 100's of billions in swaps that were specifically exempt from regulation and so they did not reserve against them because they didn't have to. "TARP" stand for "Troubled Asset Relief Program". The troubled assets this targets are the UNREGULATED ASSETS! There would be no need for a $700 BILLION TARP without these.

When someone douses themselves in gasoline and catches on fire, who do you blame? It was only a matter of time... if it wasn't the housing bubble that burst they would have kept levering up until something else got them. There were no controls to stop it from happening. It was assumed these were big boys that knew better than to blow themselves up.
 
Quote from lrm21:

It never ceased to amaze me how many sheep dutifully believe what the state tells them.

Independent thought is such a burden
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Well you always need someone to take the other side of your trades :D
 
Quote from Cygnus Atratus:

Well you always need someone to take the other side of your trades :D
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Great point.....except that their beliefs tend to elect people who will take our money by force.
By the way, when I first read some Ayn Rand in my early twenties, it was like water to someone lost in the desert. All I had ever heard was "share, share, share....live your life for others". I didn't know there was any other view.......it was then that I realized that you can look out for #1 in business and SIMULTANEOUSLY be helping others at the same time. Been self-employed ever since.....never been sued, never sued anyone, never cheated anyone that I am aware of. Stosh
 
Stoch. Your post is an example of what I mean by the liberals have taken over the school system K thru College.
They really out number conservatives by a larger margin each year.
Do your own projection of the future of this country if the situation continues.
At my age it doesn't matter, but you youngsters if of a mind should seriously consider your future.
 
It isnt simply a matter of leverage or reserves.

Unfortunately, the required reserve levels even for regulated assets is miniscule - fractional reserve banking is a joke, the actual reserve levels are far less than the oft-quoted 10%....usually 1% to 2%. THIS is the true cause of catastrophy. You cant be leveraged like that and sustain any significant defaults without going under. Therefore, the problems ARE systemic. If we had, for example, required reserves of 30% or so, we could have a sustainable banking business model. But we dont.
 
Quote from odysseus11:

It isnt simply a matter of leverage or reserves.

Unfortunately, the required reserve levels even for regulated assets is miniscule - fractional reserve banking is a joke, the actual reserve levels are far less than the oft-quoted 10%....usually 1% to 2%. THIS is the true cause of catastrophy. You cant be leveraged like that and sustain any significant defaults without going under. Therefore, the problems ARE systemic. If we had, for example, required reserves of 30% or so, we could have a sustainable banking business model. But we dont.
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Don't your 2 paragraphs contradict themselves? You ended up making the case that it was a matter of leverage and reserves and more strict regulation would have prevented a lot of our problems.
 
Quote from clacy:

This economy expanded artificially through cheap creadit.
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The impetus for that cheap credit came from the private sector, not from some kind of state edict or policy. The margins had been squeezed out of traditional mortgage lending so the money center institutions moved on to the next stage - originating and securitizing poor quality debt to keep the game going.

Primarily, it was simply the free market at work.

Bubbles are a consequence of human nature and will happen regardless of economic or regulatory structure.
 
Quote from slacker:

This is incorrect. If you watch her in any of her interviews she is a very committed advocate for free markets and the story was just a commercial way to spread her philosophy.
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'Committed' is just a word and Ayn wrote a story that on many occasions turned in upon it self.

If Ayn was committed, I fear that it was more towards a love of her own opinion than to the reality of life itself.

She and 'Atlas' became a cult, which meant that it became fashionable to read Ayn, or at the very least, say that you had read Ayn.

For all her objectivity, she displayed the same level of emotion in her not-so private life that others display in their own lives.
The difference being that she wore her objectivity as a mask.

Oddly enough, "Atlas" was both objective and convoluted in my opinion ... no mean feat to combine these two.

regards
f9
 
Quote from lemeeeplay:

rofls, we are in this mess partially because of the influence of this book. Lack of regulations and cowboy capitalism led to the mess, not the other way around.
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I have but one rebuttle to Ayn Rand brainwashed pinheads

'Allan Greenspan was her economics newsletter editor'

and it doesnt matter what excuse they might give for it 'he didnt live by the priciples, bla bla bla'

doesnt matter

when his rubber hit the road, the wheels came off the bike

alland greenspan, more than anyone, created this disaster

nobody have ever confiscated for wealth for 'colectivists' than greenspan, nobody - he destroyed conservative savers for the benefit of whoever was currently favored by his whims

and NOBODY was more central to the practical application portion of her ideology than greenspan

i can shut down ayn rand pinheads faster than nancy grace can shut down a hard on

http://www.youtube.com/watch?v=alVaJsjEAkQ
 
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