Anyone notice the financial crash hearings just started?

[Craig234]

Buying to resell at a higher price serves a function, it allows people who need to sell quickly to sell quickly to the speculator. The speculators do help, but it is hard to put a dollar value on them. More important are the people who buy, then improve and resell a house. They offer a real value in improving the quality of housing. I think normal speculation is good, it was the bubble and un-realistic expectations of growth that were bad, but that is not unique to housing.

You're both right. The industries closer to the housing, including speculators weren't the problem. Deregulated, undersecured derivates were a problem.

 

[StageLeft]

And the American people wouldn't know that, and they wouldn't miss double digit gains they didn't get.

Maybe, but many were still drinking the Bush koolaid about his approach to the economy and didn't think it was a bubble, so if it had been taken away they would have been pissed.

 

[Craig234]

Maybe, but many were still drinking the Bush koolaid about his approach to the economy and didn't think it was a bubble, so if it had been taken away they would have been pissed.

Taken away they'd be a bit upset but we're not talking abou ttaken away.

We're talking about the reulgations preventing the big increases that people never got.

Skoorb, are you furious about that rule change that didn't increase your home value 30% recently?

No, you aren't - what 30% increase, you ask. How can you be mad about what you didn't know?

On top of that, with good government they'd explain why they're reigning in a problem.

 

[WhipperSnapper]

I'm sure that the hearings will become a dog and pony show where the politicians and everyone agrees that the root cause of our nation's economic problems was the housing bubble and the financial crash when in fact the nation's economy had been trending downward since the turn of the century. It's much easier to put the blame on evil, greedy banks than it is on foreign outsourcing, H-1B and L-1 visas, mass immigration, and worldwide and national population explosion.

 

[tvarad]

AIG probe widens to include Paulson, Friedman

WASHINGTON – A House committee is broadening its probe of secretive bank bailouts to include former Treasury Secretary Henry Paulson and former Federal Reserve Bank of New York Chairman Stephen Friedman.

The Committee on Oversight and Government Reform has invited Paulson and Friedman to testify about their roles in the bailout of American International Group Inc., according to Chairman Edolphus Towns, D-N.Y.

Lawmakers want to know more about deals that funneled billions from AIG to banks including Goldman Sachs Group Inc. Friedman is a Goldman director who resigned from the New York Fed after concerns he had conflicts of interest.

California Rep. Darrell Issa, the committee's top Republican, also said he wants Federal Reserve Chairman Ben Bernanke to answer questions about the bailout, which he helped lead.

A Towns spokeswoman said he is "making decisions daily about witnesses and testimony." A Fed spokesman would not comment.

An earlier watchdog report said the bailouts might have cost taxpayers billions more than necessary because officials did not demand concessions from the banks. The money went to satisfy massive financial obligations that AIG was unable to meet without a government rescue.

The bailouts were managed by the Federal Reserve Bank of New York under the leadership of Treasury Secretary Timothy Geithner. Geithner has defended the deals and will testify on Jan. 27.

.......

Will "Hank the Crank" Paulson (to use Lemon Law's moniker) flip the bird at Congress again? Being that this guy is professionally trained to squeeze out water from a stone, you would have thought that he would have driven a hard-bargain with his alma-mater Goldman Sachs and others, and firmly stated that AIG would be re-floated only on the basis of a partial settlement of their swaps gone bad or nothing at all. Or any deal for the tax-payers than the one which left them holding the bag, given that he was supposed to be working for them.

 

[Modelworks]

They will eventually come to the conclusion that all the problems were caused by some obscure problem that nobody recognized until it was too late and that those at fault had no choice in their actions.

 

[Craig234]

Paul Krugman is watching the hearings too.

Bankers Without a Clue by Paul Krugman

The official Financial Crisis Inquiry Commission - the group that aims to hold a modern version of the Pecora hearings of the 1930s, whose investigations set the stage for New Deal bank regulation - began taking testimony on Wednesday. In its first panel, the commission grilled four major financial-industry honchos.

What did we learn?Well, if you were hoping for a Perry Mason moment - a scene in which the witness blurts out: "Yes! I admit it! I did it! And I'm glad!" - the hearing was disappointing. What you got, instead, was witnesses blurting out: "Yes! I admit it! I'm clueless!"

O.K., not in so many words. But the bankers' testimony showed a stunning failure, even now, to grasp the nature and extent of the current crisis. And that's important: It tells us that as Congress and the administration try to reform the financial system, they should ignore advice coming from the supposed wise men of Wall Street, who have no wisdom to offer.

Consider what has happened so far: The U.S. economy is still grappling with the consequences of the worst financial crisis since the Great Depression; trillions of dollars of potential income have been lost; the lives of millions have been damaged, in some cases irreparably, by mass unemployment; millions more have seen their savings wiped out; hundreds of thousands, perhaps millions, will lose essential health care because of the combination of job losses and draconian cutbacks by cash-strapped state governments.And this disaster was entirely self-inflicted. This isn't like the stagflation of the 1970s, which had a lot to do with soaring oil prices, which were, in turn, the result of political instability in the Middle East.

This time we're in trouble entirely thanks to the dysfunctional nature of our own financial system. Everyone understands this - everyone, it seems, except the financiers themselves.There were two moments in Wednesday's hearing that stood out. One was when Jamie Dimon of JPMorgan Chase declared that a financial crisis is something that "happens every five to seven years. We shouldn't be surprised." In short, stuff happens, and that's just part of life.But the truth is that the United States managed to avoid major financial crises for half a century after the Pecora hearings were held and Congress enacted major banking reforms. It was only after we forgot those lessons, and dismantled effective regulation, that our financial system went back to being dangerously unstable.

As an aside, it was also startling to hear Mr. Dimon admit that his bank never even considered the possibility of a large decline in home prices, despite widespread warnings that we were in the midst of a monstrous housing bubble.Still, Mr. Dimon's cluelessness paled beside that of Goldman Sachs's Lloyd Blankfein, who compared the financial crisis to a hurricane nobody could have predicted. Phil Angelides, the commission's chairman, was not amused: The financial crisis, he declared, wasn't an act of God; it resulted from "acts of men and women."Was Mr. Blankfein just inarticulate? No. He used the same metaphor in his prepared testimony in which he urged Congress not to push too hard for financial reform: "We should resist a response ... that is solely designed around protecting us from the 100-year storm."

So this giant financial crisis was just a rare accident, a freak of nature, and we shouldn't overreact.But there was nothing accidental about the crisis. From the late 1970s on, the American financial system, freed by deregulation and a political climate in which greed was presumed to be good, spun ever further out of control. There were ever-greater rewards - bonuses beyond the dreams of avarice - for bankers who could generate big short-term profits. And the way to raise those profits was to pile up ever more debt, both by pushing loans on the public and by taking on ever-higher leverage within the financial industry.Sooner or later, this runaway system was bound to crash. And if we don't make fundamental changes, it will happen all over again.

Do the bankers really not understand what happened, or are they just talking their self-interest? No matter. As I said, the important thing looking forward is to stop listening to financiers about financial reform.Wall Street executives will tell you that the financial-reform bill the House passed last month would cripple the economy with overregulation (it's actually quite mild). They'll insist that the tax on bank debt just proposed by the Obama administration is a crude concession to foolish populism. They'll warn that action to tax or otherwise rein in financial-industry compensation is destructive and unjustified.

But what do they know? The answer, as far as I can tell, is: not much.

 

[Vic]

i blame the national association of realtors and HGTV.

I'm with you. NAR is one of the most powerful organizations in this country. Its power is deceptive, and most people don't notice it, because it operates mostly at the local levels. But make no mistake, they are at EVERY local level in the nation.

 

[StageLeft]

I'm with you. NAR is one of the most powerful organizations in this country. Its power is deceptive, and most people don't notice it, because it operates mostly at the local levels. But make no mistake, they are at EVERY local level in the nation.

I like their ads with that attractive cougar in her business suit. When the market is up it's booming and when it's crashed "never a better time to buy".

Taken away they'd be a bit upset but we're not talking abou ttaken away.

We're talking about the reulgations preventing the big increases that people never got.

Skoorb, are you furious about that rule change that didn't increase your home value 30% recently?

No, you aren't - what 30% increase, you ask. How can you be mad about what you didn't know?

On top of that, with good government they'd explain why they're reigning in a problem.

Who knows what could have happened but as is obvious many people have a very short time horizon and to have their growing net worth and credit-drunk spending spree kept in check they would have gotten upset. I mean, I'm sure there are many examples of people back in 2006 saying it was no bubble. Of course there are thousands, so if you told them that the gig was up they'd cry foul. For example

http://www.amazon.com/Dow-2008-Diffe.../dp/1893958701

and

http://www.amazon.com/Real-Estate-Bo...ref=pd_sim_b_1

We've all seen these books for sale but they are just too funny not to post again.

 

[JSt0rm]

http://www.amazon.com/Dow-2008-Diffe.../dp/1893958701

and

http://www.amazon.com/Real-Estate-Bo...ref=pd_sim_b_1

We've all seen these books for sale but they are just too funny not to post again.

LMAO a response


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