Socialism for the rich, free market darwinism for the poor & middle class

A lot of people do not realize how bad things are. Imagine this just for a second - FED had to invoke a law from 1930s to be able to help the investment banks.

As much as I despise executives large bonuses that are totally not warranted in light of what was done with OTC derivatives, but to let all these institutions to melt would be a disaster.

If it ever happens, a lot of laws would change. One of them could be 1:1 margin for any product, tons of regulations that could prevent people like us to trade and so on.

Yes, it is unfair that these institutions being bailed out, but this is not a fair world last time I checked.

The only things we really need to concentrate is how to profit from all this turmoil.

Regards,
redduke
 
Quote from Raul641:

I disagree.. consider that there's no theoretical or practical limit yet evident in the extent of our current technology. Moore's Law is holding. Quantum computing looks promising, nuclear fusion is on the horizon, medical science is as advanced as it's ever been and advancing still further...

Economic value growth is directly tied to technology, and fractional reserve banking directly drives technological development. That value growth is slowing now is because of greed and the desire to concentrate wealth, a desire to keep the technology locked up in the hands of a few rather than share the windfall. There seems to be a deeply embedded philosophy in our culture that if you don't spend 8 hours (minimum) each day doing "work" (loosely defined), you're not pulling your weight and don't deserve a happy life.

The fundamental question is, with more technology to do work and produce value, do we all want to work less or have everyone working the same amount and have massive inflation (because of unpaid machine labor)?

We keep inventing ever more sophisticated robots to work for us. They make value, and that value concentrates in the hands of their owners. At some point, we have to get over the Protestant work ethic and say enough is enough, we're all just going to work less and enjoy the fruits of our technology. (This has already happened to some extent, with novel innovations like the "weekend" slowly creeping into society.)

Fractional reserve lending is one key component of allowing ever more sophisticated technology to develop, which translates into less and less actual work for humans to do. There is no techological reason why technical growth has to slow right now in our "mature" economy - with nuclear power and computers, we could have completely automated and clean food production in 20 or 30 years. Food would be free. Not cheap; free.

But that goes against the deeply ingrained idea that everyone has to be working constantly in order to not be a freeloader...
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taxes should promote savings and research activities. money supply needs to be controlled.

maybe the fed should watch money supply and risk spreads more closely than inflation and growth rates.
 
Quote from Raul641:

The thing is, it's true. BSC and similar actually *are* too important to be allowed to collapse outright. The Fed was right to bail them out.

That's an unusual privilege in our market economy.. to be spared market forces that would otherwise blow up in your face. The problem is that that privilige doesn't carry any additional responsibility with it.

If they're taking public money, they need to be subject to public scrutiny... With an institution privileged to be spared market forces, they need to institute severe penalties for malfeasance on an individual level... Only then will they stop pulling this crap and expecting the taxpayers to bail them out.
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In today's news: "If big Wall Street investment houses are allowed to run to the Federal Reserve for emergency lending, they must face stepped-up regulation, Treasury Secretary Henry Paulson declared Wednesday..."

:D

Only a week later. They should start sending me checks, so I can do this full-time...
 
Quote from Pa(b)st Prime:

There's so many fallacies in your argument I don't know where to begin.

You keep harping upon "taxpayers". There's not an iota of public funds involved in this deal.
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Since I am more familiar with the UK central banking system than US, and you've worked with US govt securities trading, I passed on this when you challenged me. After a bit of research, it turns out you were totally fabricating this claim that the US taxpayer does not fund the Fed.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aN.cnCGH92GQ&refer=home

"``The fact that Treasury and Congress have been unwilling or unable to be proactive and provide a solution that involves putting taxpayer money at risk means that the Fed has had to take more measures itself, also putting taxpayer money at risk,'' said Laurence Meyer, a *FORMER FED GOVERNOR" - bloomberg.com (my emphasis)

``Americans are being asked to back a brand-new kind of transaction, to the tune of tens of billions of dollars,'' Baucus said in a statement today. ``It's the Finance Committee's responsibility to pin down just how the government decided to front $30 billion in taxpayer dollars for the Bear Stearns deal, and to monitor the changing terms of the sale.''

That's Max Baucus, Senate Finance Committee Chairman.

"Any such losses would hurt the Fed's balance sheet, and ultimately the taxpayer, because they would reduce the stipend the Fed pays to the Treasury from earnings on its portfolio. The dividend was $29 billion in 2006." - Bloomberg News

If a former Fed Governor, Bloomberg News, and the Senate Finance Committee Chairman say that the taxpayer backs Fed bailouts, doesn't that contradict your claim that "there's not an iota of public funds involved in this deal"?

Can you explain your totally made-up "refutation"? Either you don't have any idea how the Fed is funded (unlikely as a former CBOT bond futures trader), all these Fed experts are totally wrong, or you were deliberately trying to discredit my POV with falsehoods.
 
Quote from Cutten:


"Any such losses would hurt the Fed's balance sheet, and ultimately the taxpayer, because they would reduce the stipend the Fed pays to the Treasury from earnings on its portfolio. The dividend was $29 billion in 2006." - Bloomberg News
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They paid a STIPEND of $29 billion from EARNINGS ON IT'S PORTFOLIO?

What was the TOTAL earnings, and what is the value of the whole portfolio??

If the taxpayer is footing the BSC bailout via the "hidden tax" of having our purchasing power diminished (inflation), then the line that

"The Fed is the lender of last resort" should be changed to
"The Taxpayer is the unwitting lender of last resort".
 
The Resolution Trust was considered a "success" because the taxpayer eventually had to absorb "only" USD75bn of losses.


PS Why can't we all go long gold futures as it seems gold will just go up forever (like housing) and if we get margin called we can call on the Fed can step in and pay our broker and if it eventually turns around they get to keep any profits made. Obviously we get to keep any profits if we are right. Seems to be within the spirit of what's going on.
 
http://en.wikipedia.org/wiki/Federal_Reserve

Budget
The Federal Reserve is self-funded. The vast majority (90%+) of Fed revenues come from open market operations, specifically the interest on the portfolio of Treasury securities as well as “capital gains/losses” that may arise from the buying/selling of the securities and their derivatives as part of Open Market Operations. The balance of revenues come from sales of financial services (check and electronic payment processing) and discount window loans.[68]

Even if the BSC portfolio was worthless the 30b wouldn't break the Fed. The Fed's assets are 800b.

Quote from Cutten:

Since I am more familiar with the UK central banking system than US, and you've worked with US govt securities trading, I passed on this when you challenged me. After a bit of research, it turns out you were totally fabricating this claim that the US taxpayer does not fund the Fed.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aN.cnCGH92GQ&refer=home

"``The fact that Treasury and Congress have been unwilling or unable to be proactive and provide a solution that involves putting taxpayer money at risk means that the Fed has had to take more measures itself, also putting taxpayer money at risk,'' said Laurence Meyer, a *FORMER FED GOVERNOR" - bloomberg.com (my emphasis)

``Americans are being asked to back a brand-new kind of transaction, to the tune of tens of billions of dollars,'' Baucus said in a statement today. ``It's the Finance Committee's responsibility to pin down just how the government decided to front $30 billion in taxpayer dollars for the Bear Stearns deal, and to monitor the changing terms of the sale.''

That's Max Baucus, Senate Finance Committee Chairman.

"Any such losses would hurt the Fed's balance sheet, and ultimately the taxpayer, because they would reduce the stipend the Fed pays to the Treasury from earnings on its portfolio. The dividend was $29 billion in 2006." - Bloomberg News

If a former Fed Governor, Bloomberg News, and the Senate Finance Committee Chairman say that the taxpayer backs Fed bailouts, doesn't that contradict your claim that "there's not an iota of public funds involved in this deal"?

Can you explain your totally made-up "refutation"? Either you don't have any idea how the Fed is funded (unlikely as a former CBOT bond futures trader), all these Fed experts are totally wrong, or you were deliberately trying to discredit my POV with falsehoods.
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Lets face it the rich are riding on the backs of the people at the bottom of the heap. When they start to give up under the burden its really time for the rich to worry. USA's richest Buffett and Gates can see the wisdom of this obvious statement and dont even disagree.
Time for a long overdue change in the USA and Europe. I'm not suggesting Bolshevism, Trotskyism etc. just plain common sense.
Why give so much extra to the obese. Share it around imho
 
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