Fannie May, Freddie Mac, Indymac, Oil

Off Topic Politics and World Issues
41

[quote]jsbrook wrote:

Based on your theory, why would should there be a federally insured limit at all?
[/quote] actually no, but that’s not realistic. The private market could underwrite banks as well or better than the Fed. But whatever.

[quote]
And do you really not understand risk-return. Of COURSE, savings is an investment. But historically, they have been considered quite safe ones. ALMOST non-investments. That’s why interest rates on savings accounts are low. The risker the investment, the higher the rate of return must be.
[/quote] anyone with half a brain knows that they are safe the insured levels. what aren’t you getting?

Then you are not paying attention. Someone else did a better job of elborating. Look for the moral hazard post.

[quote]
The only thing that will really work for the future is regulations that force executives to give up their bonuses and face criminal penalties for irresponsible lending practices. Make it in their self-interest to behave properly and live the details to them.
[/quote] This is rediculous. How could you get any closer to nationalization. Prosecute someone for being a bad businessman? If there was any fraud, there are already laws that cover this.

Your kidding right? SOX is a disaster and is causing companies to go private to avoid it.

By your reasoning all wars shoudl be good for the economy. We should just stay in a perpetual state of war. Maybe that’s why the economy is slow. Stop bringing the troops home, it’s fucking up the market. Which economists by the way? Smith, Von Mises, Hayek, Bastiat, Hobbs, Hume, Friedman, Rothbard, Haslett? I don’t think so. Christ, even the Keynesians wouldn’t agree. Greenspan didn’t even believe that. You need to quite reading highshcool economics books.

[quote]
But if you’re an Adam Smith fan, you should agree with the point about making it it executives self-interest to behave properly. We should have some common ground on that point.[/quote]
It already is. No additional regulation is needed.

42

[quote]Neuromancer wrote:

Mufasa

Imagine the outrage that would be generated from the proponents of unfettered,uncontrolled capitalism,if the Government was involved in regulating all these companies before anything happened!

It would be a monumental shitstorm…so they have to be content just trying to clean up after the fact.

Because everyone just knows we can ‘trust’ big business…

[/quote]

This the very purpose of an underwriter. If the fed is going to underwrite these banks, they better damn well be on top of things like this. Any Capitalist with half a brain would agree. Most would also agree that this wouldn’t have happened with a competent private underwriting company.

43

[quote]Zap Branigan wrote:
Mufasa wrote:
Another “burn” of mine…

(JS…you just alluded to this in your post):

I just got this in my mailbox:

“…The FBI has launched an investigation into possible fraud at now-defunct IndyMac bank corporation…”

(I’m sure other “investigations”, at taxpayers expense, will follow…)

Dammitt…

Yep…our Government is always ready to jump in, guns blazing…

AFTER the fact…

Mufasa

Yup. Where were they 5 years ago?[/quote]

Preparing for Katrina.

Everyone knew that someday the ‘big one’ would hit. Highly intelligent people planned for it. What happened?

44

That’s one of the problems, Neuro…

There WERE problems with these companies before this big mess occured…

And people from Congress to regulators to private watch-dog groups tried to alert people to the needed changes (namely Congress).

Their response was a couple of meaningless fines with no real meaningful change in Legislation.

Just yesterday, I read a quote by a now EX congressman who said that you knew from DAY ONE to keep you hands off of Fannie and Freddie…

I think people on this Forum are savvy enough to know why it all has gotten to this point…(but I’ll state the obvious anyway):

There were people making a LOT of money…

The bonuses alone of some of these executives was staggering…

Mufasa

45

[quote]Neuromancer wrote:
Mufasa wrote:
Another “burn” of mine…

(JS…you just alluded to this in your post):

I just got this in my mailbox:

“…The FBI has launched an investigation into possible fraud at now-defunct IndyMac bank corporation…”

(I’m sure other “investigations”, at taxpayers expense, will follow…)

Dammitt…

Yep…our Government is always ready to jump in, guns blazing…

AFTER the fact…

Mufasa

Imagine the outrage that would be generated from the proponents of unfettered,uncontrolled capitalism,if the Government was involved in regulating all these companies before anything happened!

It would be a monumental shitstorm…so they have to be content just trying to clean up after the fact.

Because everyone just knows we can ‘trust’ big business…

[/quote]

And here we go…okay…let’s replace everything with Socialism…as in NATIONAL Socialism or Soviet Socialism…way better.

Oh, you bagged on LF Capitalism and we ‘just want some measure of control’. You mean that banks that’ll get bailed out (and they know it) would NEVER take risks with their depositors money? Knowing that they’ve got a safety net made them take on all that risk…afterall, the Fed HAS to bail 'em out.

46

Psssh the real probelm with the economy is the government. Way to give the power of printing our money away to a foreign bank system cause those individuals have our nation’s best interests at heart. But, it’s ok our money is backed by the word of the US government so it is all ok.

I wouldn’t trust anyone in the government with the allowance money I used to make for raking leaves when I was 10. Maybe I was just good with money when I was 10 but I didn’t find it hard to balance the budget of $5.

Look to the distant horizon though cause once Obama comes in everything will be alllllllllllllll better. He is going give us all Teenage Mutant Ninja Turtle bandaids and a kiss on the skinned knee of our economy, all for the extremely affordable cost of increasing the national debt. It’s really going to pile up if any of the big American industries (like auto) start to tank cause I’m sure they’ll swoop right in and save them like the Train/Aviation industry.

Bush has been terrible for the economy and I don’t see Obama being any better…I guess he’ll at least be increasing our debt to help American citizens instead of helping the refugees of a war that was built on a complete fucking lie.

Summary/Closing Thoughts:

If the government didn’t step in the economy would right itself quicker. Also, with the government being irresponsible with money and not having control over the printing of its own currency I don’t see how we won’t eventually have a complete and utter economic collapse. The current currency system basically just needs to be thrown in the trash just like social securities. just deleted a huge social securities rant to keep this on topic

47

[quote]dhickey wrote:
jsbrook wrote:
It’s definitely not moronic to have over $100K in the bank. Bank failure is pretty uncommon. It happened in the depression. It happend in the 70s, and it’s happening now. Despite the Savings and Loans crisis, it was not all that widespread in the 70s. Where do YOU think people who actually have some money and want to take a pretty conservative approach should keep the bulk of it if not banks?

uhhhh… more than one account. Think McFly.[/quote]

Definitely the best way to go. No arguments here about that. That’s different than saying banks are inherently unsafe investments that people would likely expect to fold

48

[quote]dhickey wrote:
Or do a search for “Adam Smith” and “broken window”.[/quote]

I didn’t know Smith covered the Broken Window.

Care to tell us what he wrote about it and where?

49

[quote]lixy wrote:
dhickey wrote:
Or do a search for “Adam Smith” and “broken window”.

I didn’t know Smith covered the Broken Window.

Care to tell us what he wrote about it and where?[/quote]

Who wrote it is irrelevant. It is a true parable nonetheless.

It was Bastiat in the essay “That Which Is Seen, That Which Is Unseen.”

[i] Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation�??“It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”

Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.

Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier's trade�??that it encourages that trade to the amount of six francs�??I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, "Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen."

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.[/i]
50

[quote]LIFTICVSMAXIMVS wrote:

Who wrote it is irrelevant. It is a true parable nonetheless.

It was Bastiat in the essay “That Which Is Seen, That Which Is Unseen.”

[i] Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation�??"

It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?"

Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.

Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier's trade�??that it encourages that trade to the amount of six francs�??

I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, "Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen."

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.[/i][/quote]

Could have sworn it was in Wealth of Nations. Doesn’t matter, I’ve probably read 3 or 4 books that parphrase the same story.

51

[quote]jsbrook wrote:

Definitely the best way to go. No arguments here about that. That’s different than saying banks are inherently unsafe investments that people would likely expect to fold[/quote]

Didn’t think I said that. If I did I meant they have risk like any other investment if deposit more then the insured amount.

52

[quote]dhickey wrote:
jsbrook wrote:

Definitely the best way to go. No arguments here about that. That’s different than saying banks are inherently unsafe investments that people would likely expect to fold

Didn’t think I said that. If I did I meant they have risk like any other investment if deposit more then the insured amount.[/quote]

I wouldn’t argue with that. Maybe I was misinterpreting what you were saying. It’s silly (or at least uninformed) to put in more than the insured amount.