Ex-Fed official blasts Bear Stearns bailout

[senseamp]

Originally posted by: LegendKiller

Originally posted by: senseamp


How will a business get a loan to employ the hobo if there is no bank?

Because if we let stupid banks fail no one will replace them?

Because they were replaced so quickly after 29 that business picked up within weeks, right?[/quote]

Yeah, and bailing out stupid banks worked out so well for Japan in the 90s.

 

[LegendKiller]

Originally posted by: senseamp

Originally posted by: LegendKiller

Originally posted by: senseamp


How will a business get a loan to employ the hobo if there is no bank?

Because if we let stupid banks fail no one will replace them?

Because they were replaced so quickly after 29 that business picked up within weeks, right?

Yeah, and bailing out stupid banks worked out so well for Japan in the 90s.
[/quote]

So well that they went into a depression, had 25% unemployment, with Osakie's roaming the country for work, and millions losing homes.


Ohhh, wait.

 

[Blackjack200]

I don't think people realize how close the financial industry came to total collapse when The Fed "saved" Bear. If they didn't get liquidity to Bear, Lehman Brothers would've failed almost immediately, and probably Merrill as well. There's no way the industry could have absorbed a shock like that.

 

[smack Down]

Originally posted by: Blackjack200
I don't think people realize how close the financial industry came to total collapse when The Fed "saved" Bear. If they didn't get liquidity to Bear, Lehman Brothers would've failed almost immediately, and probably Merrill as well. There's no way the industry could have absorbed a shock like that.

Which is what is supposed to happen when you make bad decisions.

 

[LegendKiller]

Originally posted by: smack Down

Originally posted by: Blackjack200
I don't think people realize how close the financial industry came to total collapse when The Fed "saved" Bear. If they didn't get liquidity to Bear, Lehman Brothers would've failed almost immediately, and probably Merrill as well. There's no way the industry could have absorbed a shock like that.

Which is what is supposed to happen when you make bad decisions.

People like you (the ignorant ones) pretend like banks failing do not affect anybody else but the banks.

 

[Jhhnn]

Sadly, LK is right. If we want to put this in perspective, we need to examine all of the decisions leading up to the current situation, and we need to realize that this isn't just a few banks here and there, but a systemic problem. Allowing the Nation's banking giants to go under isn't a realistic option- we all depend on the financial markets' functioning whether we realize it or not.

The ramifications of that are incalculable, and very negative. They've been discussed and speculated ad nausem.

The even sadder truth is that we, as a nation, have made poor choices in terms of who we've elected and in acceptance of their ideology- an ideology that's led to some very negative consequences in the distant past. We listened to the wrong voices. The reasons for partitioning insurance, commercial banking and investment banking into separate endeavors hasn't change a bit in 70 years, nor has the benefit of insisting that all of those industries be composed of more smaller players than we have today. It's self-defense against the kind of problems generated by fundamental conflicts of interest, the kind we have today.

 

[senseamp]

There is a systematic problem, and that problem is that the Fed action is telling banks, go ahead risk your money on inflating bubbles, be as reckless as you want, we'll bail you out later, because you are "too big to fail."

 

[LegendKiller]

Originally posted by: senseamp
There is a systematic problem, and that problem is that the Fed action is telling banks, go ahead risk your money on inflating bubbles, be as reckless as you want, we'll bail you out later, because you are "too big to fail."

The problem isn't the fed bailing people out. It's the fact that they are allowed to get into the problems in the first place.

You want to slap a band-aid on gaping chest wound. Only fools do that.

 

[Jhhnn]

I won't argue that bankers have exploited what is referred to as the "Greenspan Put"- they have. And that's because we've allowed entirely too much convergence and consolidation in the industry. If there were more players headed in more directions on a regular basis, the effects of failure wouldn't be nearly as profound as what we have the potential for today. We've also failed to adopt apppropriate regulations and enforcement methods as the various players have developed and exploited new and better ways to get around the system...

Hey, we voted them in, the "free market pro growth" rah-rah cheerleaders who promised us great things from supply-side trickle-down economics, remember?

We don' need no steenking rules and regulations, right?

 

[senseamp]

Originally posted by: LegendKiller

Originally posted by: senseamp
There is a systematic problem, and that problem is that the Fed action is telling banks, go ahead risk your money on inflating bubbles, be as reckless as you want, we'll bail you out later, because you are "too big to fail."

The problem isn't the fed bailing people out. It's the fact that they are allowed to get into the problems in the first place.

You want to slap a band-aid on gaping chest wound. Only fools do that.

It's not a band aid, it's called responsibility. If you bail firms out, you shift responsibility for their solvency from their leadership to the fed. These firms committed suicide by being completely inept in managing risk. The fed should not be keeping them alive.