Weren't the bad loans Japanese banks made in the 80's much more conservative lending than the derivatives that our banks speculated on? the point is any investment can go wrong and is at some degree of risk - which probably isn't always possible to quantify. We can't bail out speculative losers dude, sorry but that is not a long term solution to anything. I get your point that the massive banks collapsing would have a hugely negative impact.. but then why the fuck do people continue to bank there?
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the problem with romney prescription for excessive risk taking
- Thread starter Free Thinker
- Start date
Weren't the bad loans Japanese banks made in the 80's much more conservative lending than the derivatives that our banks speculated on? the point is any investment can go wrong and is at some degree of risk - which probably isn't always possible to quantify. We can't bail out speculative losers dude, sorry but that is not a long term solution to anything. I get your point that the massive banks collapsing would have a hugely negative impact.. but then why the fuck do people continue to bank there?
Quote from futurecurrents:
Seems pretty obvious. If we're going to allow banks to be that big then we must regulate them so they don't do stupid stuff and crash the economy like they did. If banks stay below a certain size then they can have more freedom but no bailouts would be allowed.
Anyone who thinks we should have just let the banks fail must be ignorant of how dire the situation was. But most of these folks don't even think that far. They just see a business being saved from their own stupidity.
That Mitt would have no problem with a large corporation screwing-over the little guy is no surprise.
Just how dire was the situation smartass? go ahead and tell us all would would have happened if these banks failed. And where did the big corporation screw over the little guy in this example?
Quote from Ricter:
Then we disagree, because if letting a "big boy" fail, for the sake of ideological purity, means that tens of thousands or more will lose their livelihoods or worse, then it's not worth it. It's just the mirror opposite of totalitarian Marxism.
Yes it is the opposite of totalitarian Marxism.. which doesn't work. Are you essentially saying that people are entitled to their jobs?
So tens of thousands have to find new jobs. Let me explain this a little, why I don't think it would be as big of an issue as is commonly accepted. All of these individuals have experience working at a huge bank, other smaller banks would probably take many of these people in thus filling 'the void' left behind by the big banks destruction. they would expand themselves, not for the good of the economy, but for their own good. A perfect opportunity to gain market share. Not that it would happen overnight, but it would be a 'natural' progression of things as opposed to the make believe solution of the govt bailout. As for the debt itself, the toxic assets, it would be forgiven after bankruptcy proceedings, that is the point of bankruptcy law.
Also, what about companies like GM, not a bank, by what criteria are they too big to fail? Outside of their debtors/investors/employees, how is the American economy DEPENDENT on GM?
Oh, I was not referring only or even principally to the bank employees, but rather to the larger, credit dependent economy, and its tens of thousands of employees from sole proprietorships on up. I had thought to use "millions", but didn't want to sound shrill. Of course, it was in fact millions who lost their jobs in this recession.Quote from PiggyBank:
Yes it is the opposite of totalitarian Marxism.. which doesn't work. Are you essentially saying that people are entitled to their jobs?
So tens of thousands have to find new jobs. Let me explain this a little, why I don't think it would be as big of an issue as is commonly accepted. All of these individuals have experience working at a huge bank,
Quote from Ricter:
Oh, I was not referring only or even principally to the bank employees, but rather to the larger, credit dependent economy, and its tens of thousands of employees from sole proprietorships on up. I had thought to use "millions", but didn't want to sound shrill. Of course, it was in fact millions who lost their jobs in this recession.
A more messy problem I agree, but that is much harder to get a handle on (the numbers), but like you said millions have lost their jobs anyway. If they were allowed to fail many eyes would be opened up to the absurdity of credit dependency. There is truth in the saying "if you can't buy it in cash.. you can't afford it" or however it goes. It would be a lesson similar to putting your hand on the stove as a kid. Let's be real here and admit that the avg consumer was/is part of the problem, their ignorance doesn't get them off the hook. You can't spend money you don't have (or shouldn't).
Quote from PiggyBank:
Yes it is the opposite of totalitarian Marxism.. which doesn't work. Are you essentially saying that people are entitled to their jobs?
So tens of thousands have to find new jobs. Let me explain this a little, why I don't think it would be as big of an issue as is commonly accepted. All of these individuals have experience working at a huge bank, other smaller banks would probably take many of these people in thus filling 'the void' left behind by the big banks destruction. they would expand themselves, not for the good of the economy, but for their own good. A perfect opportunity to gain market share. Not that it would happen overnight, but it would be a 'natural' progression of things as opposed to the make believe solution of the govt bailout. As for the debt itself, the toxic assets, it would be forgiven after bankruptcy proceedings, that is the point of bankruptcy law.
Also, what about companies like GM, not a bank, by what criteria are they too big to fail? Outside of their debtors/investors/employees, how is the American economy DEPENDENT on GM?
OK, please read all the way through, my point may be misconstrued.
I think we need, or at least want, GM for a few reasons. The military relies on them for the equipment we desperately need for our worldwide activities. They employ a great portion of our workers, and their supply chain is even larger. We need to export products, and keep our edge in global manufacturing.
I AM NOT saying that they deserved the bail out, and I'm not saying Obama saved the day or anything close. Just that we need manufacturing jobs to pull out of the recession. And, it's nice to have the top auto manufacturer on our soil, not Korea, Japan, or Germany.
Don't throw the baby out with the bathwater. We, as Americans, want to be number one. Not become a socialist nightmare. We man not agree with Obama's interference, but we still want to have GM, GE, and other major companies instead of having all this go to other countries.
Quote from PiggyBank:
Just how dire was the situation smartass? go ahead and tell us all would would have happened if these banks failed. And where did the big corporation screw over the little guy in this example?
You're joking right? Are we talking about the same thing? About the financial crisis in '08 that was caused by huge unregulated banks doing stupid stuff and crashing the economy and wiping out billions in retirement funds and housing equity and that would been much worse had it not been for the bailouts ? Maybe I'm talking about something different than you are.
Quote from futurecurrents:
You're joking right? Are we talking about the same thing? About the financial crisis in '08 that was caused by huge unregulated banks doing stupid stuff and crashing the economy and wiping out billions in retirement funds and housing equity and that would been much worse had it not been for the bailouts ? Maybe I'm talking about something different than you are.
What else would I be talking about? Let's not pretend the banks were completely unregulated, or that the regulators have a clue. Fact is many jobs were lost, the real estate market declined, the stock market crashed, retirement accts were devastated, credit tightened, some people lost their homes, and the assets at the heart of the mess, or more directly the banks positions in them, still exist. So yes it seems almost certain that it would have been worse without the bailout, but the question is would it be better NOW? Sometimes things HAVE to get worse before they get better - boom/bust cycle.
Seriously what if the economy or real estate market declines before it gets better.. what has the bailout actually done to solve the central problem of these banks highly leveraged positions in illiquid derivatives? If there were no interventions and the banks did actually go bankrupt, what would happen to the 'toxic' assets? I THINK, during bankruptcy restructuring/liquidation, they would be offered to and acquired by potential buyers, whom the large banks could not or would not sell to without eating a potentially fatal loss, which forced the mark-to-market, and basically was the catalyst for the crash. Would it be a huge fucking mess, absolutely, but it would be over.
here is a decent article by Soros (IMO): http://www.turkishweekly.net/news/64216/the-crash-of-2008-by-george-soros-.html, who I disagree with about politics. I agree with his most of his description and assessment of what happened (except the blatant hindsight and politics).. but not his solution(s). the idea that these securities should be traded on regulated exchanges would largely prevent this type of crash in the future, and if the banks are going to be forced to mark to market then they should HAVE a marketplace.