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When You Don't Allow Forest Fires, Catastrophic Fires Ultimately Result
- Thread starter ByLoSellHi
- Start date
Blindly blaming this on a lack of regulations is plain stupid. There's much more to this. And neither party seems to have a clue.
http://www.elitetrader.com/vb/showthread.php?threadid=138166
http://www.elitetrader.com/vb/showthread.php?threadid=138166
Quote from Landis82:
There were no "regulations" in the OTC mortgage-backed securities market to begin with!
That was why there was 33:1 leverage used by investment funds. It was the use of leverage that took down the banking system; counter-parties and all.
I don't believe that anyone actually thought for a minute that there was a Greenspan/Bernanke/Paulson "put" out there . . . but what people here on ET fail to realize is just how the capital markets work, and what the effects of failed "trades" have on counter-party risk and the market place in general.
It is highly naive to simply claim or think that this is about people who put a bad "trade" on.
See AIG.
Quote from Landis82:
Then you are advocating for a Depression.
not necessarily. The depression was caused by much more than a collapse in stocks. Smoot-Holly, etc. Lots of stupid decisions and an economy no where near as sophisticated as now.
I am advocating a sharp recession, which I think is needed.
Don't worry though, no one is listening to me!
Of course there was "oversight"!!!
The fucking FED/white house has been propping the markets up for several years with ALL kinds of stupid shit, from low rates/free money, tax rebates, etc all in an effort to avoid some BS "recession". Well the MOTHER of all recessions finally shows up as a result and these dumbfucks are now out of bullets!
The fucking FED/white house has been propping the markets up for several years with ALL kinds of stupid shit, from low rates/free money, tax rebates, etc all in an effort to avoid some BS "recession". Well the MOTHER of all recessions finally shows up as a result and these dumbfucks are now out of bullets!
Quote from Landis82:
How ironic that you advocate Economic Darwinism at this point and time, when there was no oversight or regulation on the WAY UP that created this mess in the first place.
Quote from risktaker:
Of course there was "oversight"!!!
The fucking FED/white house has been propping the markets up for several years with ALL kinds of stupid shit, from low rates/free money, tax rebates, etc all in an effort to avoid some BS "recession". Well the MOTHER of all recessions finally shows up as a result and these dumbfucks are now out of bullets!
Yep!
Don't know how much to blame the White House though as the FED marches to their own drum. Always has.
Quote from MKTrader:
Blindly blaming this on a lack of regulations is plain stupid. There's much more to this. And neither party seems to have a clue.
With all due respect, you are incredibly ignorant.
You obviously do not have any understanding of the mortgaged-backed securities market.
Do some homework.
Quote from ByLoSellHi:
I'm so fatigued hearing that the world will end tomorrow if an unknown quantity of a plan, with little to no certainty of working, paid for by the U.S. taxpayers, having inflationary and USD debasing effects, isn't passed.
Let the failures work the sick actors out of the system. Quit propping up failed institutions.
Let opportunistic capitalists pick over the carcasses and begin the process of rebuilding those worthy of it, and make money in the process, while our system is rebuilt through normal market mechanisms, even if they're painful.
This all resulted from a failure to spend money wisely, a failure to implement risk management, too much money expansion, and too many bad loans and bad lines of credit being made - why use the hair of the dog that bit us to try and fix it? This isn't a good hangover recipe.
I agree. There is too much scaremongering. Anyone remember Asia in 1998? Supposedly it was going to have its own great depression. Because of US pressure, the Asian economies did not have the option of going the Keynesian bailout route. They had to take IMF austerity programs and were effectively forced to allow wholesale bankruptcy and liquidation of their banking & financial sector. This had severe knock-on effects on industry and the consumer.
Yet fast forward to 2000, 2001, 2002, and where was the depression? The economies got back to growth within 18 months! And these were economies far less liquid than the USA, with far less educated workers and entrepreneurs, inferior companies, worse regulations and systems of law, more restrictions on capital.
The same thing happened in Russia in 1998, Brazil 2000-02, it has happened time and time again. A severe recession after a prior credit bubble is not a bad thing, it is a good and necessary thing. The economy will not die, it will simply spend a year or two on a hospital bed whilst its tumours are excised, and then it will recover even stronger than before.
Even if the entire US banking system goes belly up, within a year or two new banks will spring up. People need somewhere to put their savings, those with cash need to earn a return, and foreigners will be drooling at the opportunity to earn 200+ extra basis points by funding sound US businesses compared to sound foreign businesses. The idea the we face Depression if some firms have wiped out their balance sheets and don't get propped up is not supported by past evidence from credit crunches far more severe than this one.
Quote from ElCubano:
if anything they have grossly UNDERSTATED it....peace
But they are focusing on the short-term, not long-term consequences.
These are the guys who 18 months ago were saying everything is fine, while people like Soros, Robertson, Faber, Rogers and others were saying there would be a nasty recession due to the deflation of the housing bubble.
Paulson and Bernanke are making the same mistake now - looking at today's news and extrapolating ad infinitum, ignoring the likelihood of changed circumstances, ignoring the inherent dynamism of a free economy, the power of creative destruction and market clearing. They think that unsound firms going bust will be a bad thing. It will be a bad thing for shareholders and bondholders, and a bad thing in the short-term for the consumer and economy. In the long-run it will be a very good thing.