Paul Krugman is Still Selling a Fake Alien Invasion as a Boost to the Economy
- Thread starter JamesL
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Quote from PiggyBank:
This is a dilemma for me. On the one hand I think that what happened preceding 2008 was a once a century type fuck up for Wall St and that overall they know what they're doing (relative to the govt at least) so I feel like if they have decided to trade their way back to prosperity instead of lending.. well it will work out.
On the other hand, they did turn to socialism and scare tactics to get bailed out of the mess they created. goldman even decided to cannibalize its own clients, gotta admire their survival instinctI believe the bailout money was granted for them to lend as well, so how they end up not lending and just speculating is a little mysterious. I'm sure the fed govt could lean on them more but maybe they just defer to these guys in private. I can picture barney frank blabbering on to save face in public but then when meeting with the bank execs /board they tell him how it has to be.. same with bubble ben. Anyway, I find it hard to argue for these banks after what has happened, and I hope the fed has demanded a decent rate of return on all this 'stimulus' money. IMO there shouldn't have been a bailout. What do u think would have happened if there wasn't a bailout.. and more specifically do you think the economy would have survived?
The banks believe they can trade their way back. Actually, to call them banks is rather misleading, as many do not have the traditional model. Can you tell me where the nearest Goldman Sachs branch is so I can open a checking account?
They call themselves banks to get bank treatment. But they're really hedge funds with direct Fed access. Borrow all the money you want at near zero rates and use it to buy Treasuries that yield a point or two higher. It's free money - quite literally. Then take that money and speculate on commodities and the stock market. Rinse/repeat. Why lend when you take a risk on not being repaid? The Fed has encouraged this behavior, despite claiming the opposite.
If they had not been bailed out, we would have had a much deeper, much shorter recession, and been on our way to prosperity by now. Rigged markets simply do not work.
Oh? Please educate us. What is that other factor that has weight in the equation?
Do you even understand what the relationship is to commodities being down AND Treasuries being down?
Houses are up? Against what?
Looking forward to you answering any or all of these questions - just this once.
I agree with what you're saying, but I think it would have been really, really ugly had we just let the whole thing come crashing down. Tens of thousands of businesses that managed to hang on would have closed. Tens of millions more people would have lost their jobs. America would have burned, literally. The risk of a complete meltdown of our society was just too great.
The real probelm was the free money was/is not being managed properly by those giving the money away. That would be our glorious political representatives.
I think you are severely overestimating the impact it would have had. Regardless, we will be able to see what would have happened when it actually does happen. The day of reckoning has only been pushed back, not avoided. Eventually, since we never fixed anything but instead created zombie institutions bent on risk taking, these TBTF banks will break again. This time, we won't be able to bail them out and we'll have to see what happens.
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But it won't be, that's just it
It'll probably seem like the end of the world for the big banks, and those who live off them. No mistaking it will be very hard. But the system will adapt and survive if LEFT ALONE. If the politicians mess with it and the fed tries to prolong the sick system without finally putting a stop to the risk taking, then all bets are off and it quite possibly could be.Quote from Tsing Tao:
But it won't be, that's just it
I don't think we can dismiss, and I'm not implying that you are, the consequences of this at the street level. There will be violence and bloodshed that won't be easily contained.
Sorta like the TSA following 9/11?