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bamacre

Lifer
Jul 1, 2004
21,030
1
61
Originally posted by: Evan
If someone thinks something other than free markets was the main reason for collapse (after all, AIG, Bear, Lehman, etc. were not run by the gov't, they were private), those people will first have to actually address specifically what the gov't did. Uh oh, time for bamacre to wimp out. :laugh:
:laugh: This information is readily available to anyone with half a brain that doesn't have their head up their ass and isn't willing to swallow the drivel the government says.

And I just happen to have Thomas Wood's Meltdown in front of me...

1. Fannie Mae and Freddie Mac

http://en.wikipedia.org/wiki/FNMA
http://en.wikipedia.org/wiki/FHLMC

Both created by Congress, both Government Sponsored Enterprises (GSE's).

FNMA was privatized in 1968, and FHLMC was created in 1970 to presumably compete with FNMA. But even though both are private, both receive "special tax and regulatory privileges." "Their securities are designated as "government securities," and they have a line of credit through the Treasury. Not exactly free market is it? Even worse, investors knew that if these companies ever got into trouble, they'd be bailed out by the government. And right they were, as both were placed into conservatorship, and at that time they held almost half of the country's mortgages. They also had a big hand in the political drive to lower lending requirements, so people who (in a free market) wouldn't be able to afford a home, were able to, gasp, "afford" a home.

2. The CRA and "affirmative action in lending

http://en.wikipedia.org/wiki/Community_Reinvestment_Act

The CRA under Clinton "opened up banks to crushing discrimination suits if they did not lend to minorities in numbers high enough to satisfy the authorities."

Stan J. Liebowitz in Oct 2008...

These changes in lending herald what we refer to as mortgage innovation. (My emphasis) One man?s innovation can be another man?s poison, in this case a poison that infected the entire industry. What you will not find, if you read the housing literature from 1990 until 2006, is any fear that perhaps these weaker lending standards that every government agency involved with housing tried to advance, that congress tried to advance, that the presidency tried to advance, that the GSEs tried to advance?and with which the penitent banks initially went along and eventually enthusiastically supported?might lead to high defaults, particularly if housing prices should stop rising.
Within a few months of the appearance of the Boston Fed study, a new manual appeared from the Boston Fed. It was in the nature of a ?Nondiscriminatory Mortgage Lending for Dummies?3 booklet. The president of the Boston Fed wrote in the foreword:

The Federal Reserve Bank of Boston wants to be helpful to lenders as they work to close the mortgage gap [higher rejection rate for minorities]. For this publication, we have gathered recommendations on ?best practice? from lending institutions and consumer groups. With their help, we have developed a comprehensive program for lenders who seek to ensure that all loan applicants are treated fairly and to expand their markets to reach a more diverse customer base.

Early in the document, the Boston Fed gracefully reminds its readers of a few possible consequences of not paying attention:

Did You Know? Failure to comply with the Equal Credit Opportunity Act or Regulation B can subject a financial institution to civil liability for actual and punitive damages in individual or class actions. Liability for punitive damages can be as much as $10,000 in individual actions and the lesser of $500,000 or 1 percent of the creditor?s net worth in class actions.
3. "The government's artificial stimulus to speculation"

The increase of home ownership, the relaxed lending standards, all spilled into the the rest of the market, higher income and speculators. Flip houses, make money. No need to get a job, just buy a house, wait a few months, then sell it for a huge profit.

And the Federal Reserve's Greenspan was pushing and recommending ARM's (adjustable rate)...
http://www.usatoday.com/money/...3-greenspan-debt_x.htm

Yeah! :laugh:

And here's the trick, the majority of the ARM's were prime compared to subprime mortgages.

4. "The 'pro-ownership' tax code

Government at all levels encouraged people to buy a home. On the federal level, if you rent, or buy a home outright (with no mortgage), then you get nothing, the government taxes you more. And then developers were getting even free land and tax privileges just to build new homes. And on the local levels, for example, in Washington, DC people received a $5k tax credit for buying a first home. And in 1997, a new law dropped capital gains taxes for houses...
http://www.nytimes.com/2008/12/19/business/19tax.html
So, you buy $100K worth in stock, sell it for $200K, and you pay capital gains tax on the profit. But a $100K house, sell it for $200K, and pay NO capital gains tax on the profit.

5. "The Federal Reserve and artificially cheap credit

The biggest factor in creating the bubble. Because of course, the answer to the question, "where did all the money come from?," is the Federal Reserve. Artificially low interest rates, easy money, easy credit, fueling the entire mess.

Greenspan, after 9/11, in an attempt to fuel the economy set rates very low, 1% for an entire year. More dollars were "created between 2000 and 2007 then in the rest of the Republic's history."

Under a free market, with sound money and no central bank, interest rates would naturally rise as the amount of available capital is loaned out. Supply and demand. But with an unlimited supply of new money created by the Fed, all the rules are tossed out the window, and chaos occurs. It encourages speculation, fuels massive borrowing and creates malinvestment. Sound familiar? It should.

6. "Too big to fail mentality"

"Greenspan solidified a reputation for himself among investors as Mr. Bailout, what with his 1994 bailout of the Mexican peso, the special rate cuts meant to ease the distress of the Long Term Capital Management hedge fund, and the flooding of the banking system with fresh reserves."

http://mises.org/story/1627
Since Alan Greenspan took office, financial markets in the US have operated under a quasi official charter, which says that the central bank will protect its major actors from the risk of bankruptcy. Consequently, the reasoning emerged that when you succeed, you will earn high profits and market share, and if you should fail, the authorities will save you anyway.

Under the protective shield provided by the central bank, the US financial system has became tilted toward relentless expansion. In a process that began as early as 1987, Greenspan's monetary policy has transformed the American economy toward the predominance of the financial sector.

After just two months in office as Fed chairman, Greenspan set the standard when facing the stock market crash of October 19th, 1987, and he famously declared: "The Federal Reserve, consistent with its responsibilities as the nation's central banker, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system."

Greenspan's prime monetary policy rule has remained the same since then. It is a rule which he formulated when referring to the response to the stock market debacle in 1987: "It wasn't a question of whether you would open up the taps or not open up the taps. It was merely how you would do it, not if."
From Feb 2000...
"Greenspan Urges Congress To Fuel Growth of Derivatives"
http://www.nytimes.com/2000/02...th-of-derivatives.html


So there you have it. One massive FUBAR'd mess created, fueled, and encouraged by our wonderful government. And paid for by US taxpayers.
 

shadow9d9

Diamond Member
Jul 6, 2004
8,132
1
0
Responsibility?

Everyone else for tempting companies to be corrupt, greedy, and reckless. It is NOT the companies fault for their actions!!!???

Seriously? This is your response?
 

First

Lifer
Jun 3, 2002
10,518
271
136
Originally posted by: bamacre
Originally posted by: Evan
If someone thinks something other than free markets was the main reason for collapse (after all, AIG, Bear, Lehman, etc. were not run by the gov't, they were private), those people will first have to actually address specifically what the gov't did. Uh oh, time for bamacre to wimp out. :laugh:
:laugh: This information is readily available to anyone with half a brain that doesn't have their head up their ass and isn't willing to swallow the drivel the government says.

And I just happen to have Thomas Wood's Meltdown in front of me...

1. Fannie Mae and Freddie Mac

http://en.wikipedia.org/wiki/FNMA
http://en.wikipedia.org/wiki/FHLMC

Both created by Congress, both Government Sponsored Enterprises (GSE's).

FNMA was privatized in 1968, and FHLMC was created in 1970 to presumably compete with FNMA. But even though both are private, both receive "special tax and regulatory privileges." "Their securities are designated as "government securities," and they have a line of credit through the Treasury. Not exactly free market is it? Even worse, investors knew that if these companies ever got into trouble, they'd be bailed out by the government. And right they were, as both were placed into conservatorship, and at that time they held almost half of the country's mortgages. They also had a big hand in the political drive to lower lending requirements, so people who (in a free market) wouldn't be able to afford a home, were able to, gasp, "afford" a home.
Now, please delineate precisely where the federal gov't asked dictated that Fannie Mae and Freddie Mac flip/leverage these risky mortgage securities to other financial institutions. You will have trouble finding said information because it doesn't exist. Fact is banks over-leveraged mortgage securities and compounded it by spreading the risk and then getting them insured by the likes of AIG. It is literally statistically impossible for homeowners to be more at fault, since the rate of foreclosures or homeowners behind on payments represents by itself a relatively minor portion of the losses Lehman, Bear, Countrywide, etc. experienced. This is fact; for e.g., homeowners not able to pay back mortgages was "only" $300B+, which in magnitude is dwarfed by the multi-trillion dollar shadow banking market collapsing plus a subsequent trillion dollar CDS/CDO implosion leaving banks with virtually no capital for operations. This has been clear for a few years; here's just one of many overviews from last summer:

The scale of long-term risky and relatively illiquid assets financed by very short-term liabilities made many of the vehicles and institutions in this parallel financial system vulnerable to a classic type of run, but without the protections such as deposit insurance that the banking system has in place to reduce such risks. Once the investors in these financing arrangements?many conservatively managed money funds?withdrew or threatened to withdraw their funds from these markets, the system became vulnerable to a self-reinforcing cycle of forced liquidation of assets, which further increased volatility and lowered prices across a variety of asset classes. In response, margin requirements were increased, or financing was withdrawn altogether from some customers, forcing more de-leveraging. Capital cushions eroded as assets were sold into distressed markets. The force of this dynamic was exacerbated by the poor quality of assets?particularly mortgage-related assets?that had been spread across the system. This helps explain how a relatively small quantity of risky assets was able to undermine the confidence of investors and other market participants across a much broader range of assets and markets.
The reality is that these shadow banks should be subject to banking regulations like any other banks. These hedge funds need to be held accountable and the SEC needs to be given the proper tools to actively oversee those funds. Mae and Mac's decisions were not exacerbated the gov't, if it were that obvious it would have been stopped immediately since neither GSE benefits from regulations that hurt them from making money unless it's to protect public interest, as anti-cartel/monopoly laws are intended for.

Also, no one is interested in more Libertarian hysteria from the likes of Thomas Woods.

Originally posted by: bamacre

2. The CRA and "affirmative action in lending

http://en.wikipedia.org/wiki/Community_Reinvestment_Act

The CRA under Clinton "opened up banks to crushing discrimination suits if they did not lend to minorities in numbers high enough to satisfy the authorities."

Stan J. Liebowitz in Oct 2008...

These changes in lending herald what we refer to as mortgage innovation. (My emphasis) One man?s innovation can be another man?s poison, in this case a poison that infected the entire industry. What you will not find, if you read the housing literature from 1990 until 2006, is any fear that perhaps these weaker lending standards that every government agency involved with housing tried to advance, that congress tried to advance, that the presidency tried to advance, that the GSEs tried to advance?and with which the penitent banks initially went along and eventually enthusiastically supported?might lead to high defaults, particularly if housing prices should stop rising.
Within a few months of the appearance of the Boston Fed study, a new manual appeared from the Boston Fed. It was in the nature of a ?Nondiscriminatory Mortgage Lending for Dummies?3 booklet. The president of the Boston Fed wrote in the foreword:

The Federal Reserve Bank of Boston wants to be helpful to lenders as they work to close the mortgage gap [higher rejection rate for minorities]. For this publication, we have gathered recommendations on ?best practice? from lending institutions and consumer groups. With their help, we have developed a comprehensive program for lenders who seek to ensure that all loan applicants are treated fairly and to expand their markets to reach a more diverse customer base.

Early in the document, the Boston Fed gracefully reminds its readers of a few possible consequences of not paying attention:

Did You Know? Failure to comply with the Equal Credit Opportunity Act or Regulation B can subject a financial institution to civil liability for actual and punitive damages in individual or class actions. Liability for punitive damages can be as much as $10,000 in individual actions and the lesser of $500,000 or 1 percent of the creditor?s net worth in class actions.
Lord, same old CRA drivel you don't have the first clue about. The stats are already out on this and have been for some time; CRA mortgage loans were at/near par compared to standard prime mortgages and the bad ones made up less than http://www.federalreserve.gov/.../kroszner20081203a.htm Read:

The research focused on two basic questions. First, we asked what share of originations for subprime loans is related to the CRA. The potential role of the CRA in the subprime crisis could either be large or small, depending on the answer to this question. We found that the loans that are the focus of the CRA represent a very small portion of the subprime lending market, casting considerable doubt on the potential contribution that the law could have made to the subprime mortgage crisis.

Of course, loan originations are only one path that banking institutions can follow to meet their CRA obligations. They can also purchase loans from lenders not covered by the CRA, and in this way encourage more of this type of lending. The data also suggest that these types of transactions have not been a significant factor in the current crisis. Specifically, less than 2 percent of the higher-priced and CRA-credit-eligible mortgage originations sold by independent mortgage companies were purchased by CRA-covered institutions.
And of those 2%, less than 1/4th of them went bad. CRA loans did not cause or contribute to the crisis and if you're going to use it as an argument I want you to point out exactly how <0.5% of bad CRA-related loans is numerically significant to a multi-trillion dollar crisis.

Originally posted by: bamacre

3. "The government's artificial stimulus to speculation"

The increase of home ownership, the relaxed lending standards, all spilled into the the rest of the market, higher income and speculators. Flip houses, make money. No need to get a job, just buy a house, wait a few months, then sell it for a huge profit.

And the Federal Reserve's Greenspan was pushing and recommending ARM's (adjustable rate)...
http://www.usatoday.com/money/...3-greenspan-debt_x.htm

Yeah! :laugh:

And here's the trick, the majority of the ARM's were prime compared to subprime mortgages.
What? How the hell did Greenspan recommending more ARMs 5 years ago create a crisis of $6T in bank assets being at risk at some point in the last 6 months? Do you know what ARMs are and how they would cause a crisis because frankly this seems like something you pulled from thin air.

Originally posted by: bamacre4. "The 'pro-ownership' tax code

Government at all levels encouraged people to buy a home. On the federal level, if you rent, or buy a home outright (with no mortgage), then you get nothing, the government taxes you more. And then developers were getting even free land and tax privileges just to build new homes. And on the local levels, for example, in Washington, DC people received a $5k tax credit for buying a first home. And in 1997, a new law dropped capital gains taxes for houses...
http://www.nytimes.com/2008/12/19/business/19tax.html
So, you buy $100K worth in stock, sell it for $200K, and you pay capital gains tax on the profit. But a $100K house, sell it for $200K, and pay NO capital gains tax on the profit.
Uh, you just listed the benefits for owning a home, tax incentives. Exactly what in the hell does reducing the cost of home ownership for people have to do with people not being able to afford housing? I can't even believe this is a serious post.

Originally posted by: bamacre

5. "The Federal Reserve and artificially cheap credit

The biggest factor in creating the bubble. Because of course, the answer to the question, "where did all the money come from?," is the Federal Reserve. Artificially low interest rates, easy money, easy credit, fueling the entire mess.

Greenspan, after 9/11, in an attempt to fuel the economy set rates very low, 1% for an entire year. More dollars were "created between 2000 and 2007 then in the rest of the Republic's history."

Under a free market, with sound money and no central bank, interest rates would naturally rise as the amount of available capital is loaned out. Supply and demand. But with an unlimited supply of new money created by the Fed, all the rules are tossed out the window, and chaos occurs. It encourages speculation, fuels massive borrowing and creates malinvestment. Sound familiar? It should.
Finally, at least the part about lowering interest rates too low for too long makes somewhat reasonable sense. Greenspan's prolonged interest rate cuts certainly fueled some excessive borrowing and contributed to the crisis. This is, so far, out of all the things you've said, the only sensible thing that you've posted. Of course, that alone still doesn't account for the majority of the reason for this crisis; terribly risky leverage decisions by private banks, which were somehow mysteriously not made by the vast majority of banks in the rest of this country. Gee, I wonder how they avoided getting sucked into the gov't plot to increase investment. Yet something else you can't properly explain.

Originally posted by: bamacre

6. "Too big to fail mentality"

"Greenspan solidified a reputation for himself among investors as Mr. Bailout, what with his 1994 bailout of the Mexican peso, the special rate cuts meant to ease the distress of the Long Term Capital Management hedge fund, and the flooding of the banking system with fresh reserves."

http://mises.org/story/1627
Since Alan Greenspan took office, financial markets in the US have operated under a quasi official charter, which says that the central bank will protect its major actors from the risk of bankruptcy. Consequently, the reasoning emerged that when you succeed, you will earn high profits and market share, and if you should fail, the authorities will save you anyway.

Under the protective shield provided by the central bank, the US financial system has became tilted toward relentless expansion. In a process that began as early as 1987, Greenspan's monetary policy has transformed the American economy toward the predominance of the financial sector.

After just two months in office as Fed chairman, Greenspan set the standard when facing the stock market crash of October 19th, 1987, and he famously declared: "The Federal Reserve, consistent with its responsibilities as the nation's central banker, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system."

Greenspan's prime monetary policy rule has remained the same since then. It is a rule which he formulated when referring to the response to the stock market debacle in 1987: "It wasn't a question of whether you would open up the taps or not open up the taps. It was merely how you would do it, not if."
I mean seriously, this is so far and away garbage it's just incredibly sad to see you think anyone intelligent or informed takes Mises seriously. To even pretend that Greenspan was setting new precedent with the Fed shows no understanding of history. What happened years earlier under Volcker, in the early 80's? Latin America (essentially) went bankrupt, and suddenly U.S. companies' who had held Latin bonds had worthless paper. What did Volcker do? He told these companies they didn't have to write them down. The gov't federalized various railroad operations during WWI to guarantee operation, before handing it back over to private enterprise. This is nothing new, and pretending the S&L crisis was the start for or main reason in creating a bail-out mentality ignores that thousands of U.S. banks have been able to get by just fine without despite what you claim is the gov't giving them incentive for malinvestment. What's really the issue is that we didn't forsee the need to properly regulate firms that have a substantial amount of assets that, if they were to go under, would threaten the financial system in the process. Not some nonsense about moral hazard, at least not in this case.

Originally posted by: bamacreFrom Feb 2000...
"Greenspan Urges Congress To Fuel Growth of Derivatives"
http://www.nytimes.com/2000/02...th-of-derivatives.html
WTF? What the hell is wrong with fueling the growth of derivatives? Please please explain this. :laugh:
 

First

Lifer
Jun 3, 2002
10,518
271
136
Originally posted by: shadow9d9
Responsibility?

Everyone else for tempting companies to be corrupt, greedy, and reckless. It is NOT the companies fault for their actions!!!???

Seriously? This is your response?
What's more surprising is the depth of these guy's own self-delusion; as if the Fed was on the boards of these companies making all the bad ABS decisions on their own. It's fucking insane shit to claim. Was the gov't somehow forcing private institutions to make bad loans, when facts are CRA-loans (in particular) made up such a small % to begin with that it is literally statistically impossible for them to have had any impact?

Actually, what I find the saddest is that essentially none of that post was in bamacre's own words and/or he pulled it from some Mises page. Maybe I'll go digging into that nutjob Mises' web site to see if I find a cut and paste of this information that bamacre didn't credit. ;)
 

marincounty

Diamond Member
Nov 16, 2005
3,227
5
76
Originally posted by: BassBomb
Originally posted by: IamDavid
Originally posted by: ironwing
They don't tell the companies how to build cars. They set a mileage standard and tell the builders to meet it any way they can. It promotes cleaner air and energy conservation while providing a level playing field for all manufacturers. It encourages innovation in efficiency and cleaner technologies.
And somehow this is the governments job to do? Free markets will take care of any problems far quicker than our pathetic elected officials.
Need proof? Take a look at Tesla. I know they've still in the very early stages but they're already light years ahead of the Billion dollar companies..
So far ahead that they already need a bailout :)
Does anyone doubt that Tesla will be crushed by Honda and Toyota (or even Ford) once electric vehicles become viable?

The hybrid cars are far more complex than a pure electric vehicle, and the reliability is already very good.
 

bamacre

Lifer
Jul 1, 2004
21,030
1
61
Originally posted by: Evan
Now, please delineate precisely where the federal gov't asked dictated that Fannie Mae and Freddie Mac flip/leverage these risky mortgage securities to other financial institutions. You will have trouble finding said information because it doesn't exist. Fact is banks over-leveraged mortgage securities and compounded it by spreading the risk and then getting them insured by the likes of AIG. It is literally statistically impossible for homeowners to be more at fault, since the rate of foreclosures or homeowners behind on payments represents by itself a relatively minor portion of the losses Lehman, Bear, Countrywide, etc. experienced.
You completely miss the point, the big picture. There was no risk. It was a no-lose situation. If they win, big profits. If they lose, hey, here come the bailouts, the taxpayers suck up the losses.

The reality is that these shadow banks should be subject to banking regulations like any other banks. These hedge funds need to be held accountable and the SEC needs to be given the proper tools to actively oversee those funds. Mae and Mac's decisions were not exacerbated the gov't, if it were that obvious it would have been stopped immediately since neither GSE benefits from regulations that hurt them from making money unless it's to protect public interest, as anti-cartel/monopoly laws are intended for.
LOL, it was the regulators that helped create the problem in the first place. So, what, we have regulators regulating the regulators? Who's gonna regulate the regulators regulating the regulators? :laugh:


Also, no one is interested in more Libertarian hysteria from the likes of Thomas Woods.
Well, his book has been on the best seller list, where's your book? :laugh:


Lord, same old CRA drivel you don't have the first clue about. The stats are already out on this and have been for some time; CRA mortgage loans were at/near par compared to standard prime mortgages and the bad ones made up less than http://www.federalreserve.gov/.../kroszner20081203a.htm Read:

And of those 2%, less than 1/4th of them went bad. CRA loans did not cause or contribute to the crisis and if you're going to use it as an argument I want you to point out exactly how <0.5% of bad CRA-related loans is numerically significant to a multi-trillion dollar crisis.
Yes, they did contribute, to a small degree. And I stated nothing otherwise. Just another small piece of the big picture, which you refuse to grasp.

What? How the hell did Greenspan recommending more ARMs 5 years ago create a crisis of $6T in bank assets being at risk at some point in the last 6 months? Do you know what ARMs are and how they would cause a crisis because frankly this seems like something you pulled from thin air.
:confused: Uhh, yeah, recommend ARM's when interest rates are low. Great idea. :roll:

Know anyone with half a brain that bought a house during that time and got an ARM? :laugh:


Uh, you just listed the benefits for owning a home, tax incentives. Exactly what in the hell does reducing the cost of home ownership for people have to do with people not being able to afford housing? I can't even believe this is a serious post.
It has everything to do with it. It is just more government-fueled encouragement for people to go out and not just buy a home, but borrow a whole bunch of money to do it.

Finally, at least the part about lowering interest rates too low for too long makes somewhat reasonable sense. Greenspan's prolonged interest rate cuts certainly fueled some excessive borrowing and contributed to the crisis. This is, so far, out of all the things you've said, the only sensible thing that you've posted. Of course, that alone still doesn't account for the majority of the reason for this crisis; terribly risky leverage decisions by private banks, which were somehow mysteriously not made by the vast majority of banks in the rest of this country. Gee, I wonder how they avoided getting sucked into the gov't plot to increase investment. Yet something else you can't properly explain.
WOW! You ARE starting to learn! :shocked:

And I say that because, unless my memory fails me, and I don't think it does, you have previously pointed NO fingers at Greenspan and his policy of low interest rates for so long.

But what you fail to see, and obviously because you can never see the big picture, is that the "terribly risky leverage decisions by private banks," was terribly risky for US taxpayers, not the private banks. Am I repeating myself? :D

I mean seriously, this is so far and away garbage it's just incredibly sad to see you think anyone intelligent or informed takes Mises seriously. To even pretend that Greenspan was setting new precedent with the Fed shows no understanding of history.
And obviously you haven't read a newspaper or turned on a damn TV. Because were they right? Were they? Damn right, they certainly were 100% correct. They got bailed out. All the risk they took wasn't a risk to them, it was a risk for US tax payers. They knew it, and that's why they did it.

And yet, again, you fail to acknowledge that this mess was not caused by anything that even resembles a free market.
 

shadow9d9

Diamond Member
Jul 6, 2004
8,132
1
0
Originally posted by: Evan
Originally posted by: shadow9d9
Responsibility?

Everyone else for tempting companies to be corrupt, greedy, and reckless. It is NOT the companies fault for their actions!!!???

Seriously? This is your response?
What's more surprising is the depth of these guy's own self-delusion; as if the Fed was on the boards of these companies making all the bad ABS decisions on their own. It's fucking insane shit to claim. Was the gov't somehow forcing private institutions to make bad loans, when facts are CRA-loans (in particular) made up such a small % to begin with that it is literally statistically impossible for them to have had any impact?

Actually, what I find the saddest is that essentially none of that post was in bamacre's own words and/or he pulled it from some Mises page. Maybe I'll go digging into that nutjob Mises' web site to see if I find a cut and paste of this information that bamacre didn't credit. ;)
Responsibility is not an "in" thing anymore(probably never was). Everything in this society is someone else's fault and nobody has the ability to withstand temptation.
 

First

Lifer
Jun 3, 2002
10,518
271
136
Originally posted by: bamacre

You completely miss the point, the big picture. There was no risk. It was a no-lose situation. If they win, big profits. If they lose, hey, here come the bailouts, the taxpayers suck up the losses.
The majority of people who made those decisions, at the top, lost their jobs, it has happened during this very crisis so there's plenty of incentive not to do a piss poor job. And if banks know they'll get bailed out then why didn't every bank in the U.S. fail like the rest did, why didn't they all peddle risky mortgage securities? You can't answer any of these questions because what you're saying doesn't actually make any sense; if the moral hazard was there then every bank would have collapsed. Did Lehman think that way too? Guess they badly miscalculated.

LOL, it was the regulators that helped create the problem in the first place. So, what, we have regulators regulating the regulators? Who's gonna regulate the regulators regulating the regulators? :laugh:
Huh? So why have regulators at all? Why not just run a financial system without any government?

Well, his book has been on the best seller list, where's your book? :laugh:
And Ann Coulter and Bill O'Reilly have outsold that dimwit 10 times over. Guess they must all know what they're talking about.

Man you're bad at this. But hey, at least you're not wimping out of this. Though you still wimped out of addressing how banks leveraged far and away more than they actually took in, through no prodding on the part of the U.S. gov't. Good call there. :laugh:

Yes, they did contribute, to a small degree. And I stated nothing otherwise. Just another small piece of the big picture, which you refuse to grasp.
CRA contributed to less than 0.5% of the financial crisis. Gee, now there's a real winner for you. lmao.

:confused: Uhh, yeah, recommend ARM's when interest rates are low. Great idea. :roll:

Know anyone with half a brain that bought a house during that time and got an ARM? :laugh:
Please explain how the U.S. gov't forced ARM's down people's throats. I await another layman cop-out.

It has everything to do with it. It is just more government-fueled encouragement for people to go out and not just buy a home, but borrow a whole bunch of money to do it.
Tax incentives increase the attractiveness of owning a home. If people are irresonsible enough to overextend themselves by taking out jumbo loans based on shaky assets and shaky employment prospects, to then conclude that the gov't is more at fault than the individual is just about the saddest sort of logic I've heard, and I've heard quite a bit from a few fringe loonies on this board. Seriously, gov't tax incentives caused people to overextend themselves? No reasonable person can think that was anything approaching a significant factor in this meltdown. Or is this another case of "But CRA still did contribute to this crisis man!" sort of hysteria?

WOW! You ARE starting to learn! :shocked:

And I say that because, unless my memory fails me, and I don't think it does, you have previously pointed NO fingers at Greenspan and his policy of low interest rates for so long.
I have in fact stated that Greenspan was partially responsible. This has been known for (depending on your perspective) years, and became much more clear in the last 10-12 months. I'm not sure where you've been, but certainly not reading the paper. And I'll post this again: " Gee, I wonder how they avoided getting sucked into the gov't plot to increase investment. Yet something else you can't properly explain."

But what you fail to see, and obviously because you can never see the big picture, is that the "terribly risky leverage decisions by private banks," was terribly risky for US taxpayers, not the private banks. Am I repeating myself? :D
And I'll say it again; if this were so obvious, why didn't every major bank and financial institution in the U.S. just make risky investments knowing they'd get bailed out? A question you simply cannot answer for obvious reasons.

And obviously you haven't read a newspaper or turned on a damn TV. Because were they right? Were they? Damn right, they certainly were 100% correct. They got bailed out. All the risk they took wasn't a risk to them, it was a risk for US tax payers. They knew it, and that's why they did it.
Conveniently ignoring the parts of my post you don't like. Classic bamacre. :laugh:

And yet, again, you fail to acknowledge that this mess was not caused by anything that even resembles a free market.
Yes, it was, because the federal gov't was not on the board making these financial decisions nor did they give them incentive to make risky decisions, a concept you simply are not well educated enough to understand. Keeping CDS essentially unregulated was far and away the biggest reason for collapse. You don't understand any of it and like to believe in well debunked Mises/Austrian economics. Yeah, we know, good for you. Thing is, no one takes you seriously when you post any of it.
 

bamacre

Lifer
Jul 1, 2004
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:laugh:

There's just no sense in arguing with someone who will fault the "free market" for this mess, instead of the government when it is just so blatantly obvious that nothing even resembling a "free market" existed. Your admission, finally, that Greenspan and the Federal Reserve played a key role should be enough of an admission that this mess wasn't caused by "free markets." But you can't even see that. You can only lead a horse to water...
 

ohnoes

Senior member
Oct 11, 2007
269
0
0
both the gov't and the 'free market,' along with some unscrupulous jackasses, are to blame for this mess.
 

GarfieldtheCat

Diamond Member
Jan 7, 2005
3,708
1
0
Originally posted by: winnar111
Originally posted by: IGBT
Originally posted by: ericlp
Uh, if the government can regulate a heater, refrigerator, light bulb that can be made more efficient and save consumers more money by paying a few bucks more on up front costs.... Then why can't they do that with automobiles. Hey, well, I got a used hummer that gets between 3-5 MPG I'll sell you.

I fail to see your point with this post. Your 2000.00 tata is Death Trap and they don't even have emission controls at that cost. Basically it's a coffin on wheels. TaTa is suppose to make the car available in the USA but will cost more because it will have to be a much more safer car.

Maybe the government will stay out of telling companies that they can just sell a 1000 dollar card board box with a lawn mower engine in it? What next? Government should stay out of making your car safe? Yeah, that's right, they don't know anything about that either.

..the eco-KOOKS want you to get rid of your frig.and any other electrical appliance that uses steady or intermittent power. Nothing pluged in. That's the way they want it.
Yep. Personally, I can't wait to buy a new SUV this year depending on whether this tax credit goes through.

Not everyone wants do drive a shitty Prius.
Since when did you become old enough to drive?
 

First

Lifer
Jun 3, 2002
10,518
271
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Originally posted by: bamacre
:laugh:

There's just no sense in arguing with someone who will fault the "free market" for this mess, instead of the government when it is just so blatantly obvious that nothing even resembling a "free market" existed. Your admission, finally, that Greenspan and the Federal Reserve played a key role should be enough of an admission that this mess wasn't caused by "free markets." But you can't even see that. You can only lead a horse to water...
This crisis was obviously caused by unregulated (i.e. nearly entirely free) markets, letting private investors make risky decisions, spread that risk around, and expose the entire market to collapse. You haven't anywhere near adequately argued otherwise, be it with other people's research or your (limited) own words. Expect to continue to be called out on it. Especially that CRA garbage.
 

First

Lifer
Jun 3, 2002
10,518
271
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An ABC News investigation found that Cassano set up some dozens of separate companies, some off-shore, to handle the transactions, effectively keeping them off the books of AIG and out of sight of regulators in the U.S. and the United Kingdom.

"This is the other very important issue underneath the AIG scandal," said Blum. "All of these contracts were moved offshore for the express purpose of getting out from under regulation and tax evasion."

And nobody in the United Kingdom was monitoring AIG's actions either, according to a member of Parliament there.

"There was a culture that was called light touch regulation," MP Vince Cable told ABC News, "which meant that these activities could go on and nobody kept a close eye on it."
Hooray free markets.

:roll:
 

bamacre

Lifer
Jul 1, 2004
21,030
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Originally posted by: Evan
Originally posted by: bamacre
:laugh:

There's just no sense in arguing with someone who will fault the "free market" for this mess, instead of the government when it is just so blatantly obvious that nothing even resembling a "free market" existed. Your admission, finally, that Greenspan and the Federal Reserve played a key role should be enough of an admission that this mess wasn't caused by "free markets." But you can't even see that. You can only lead a horse to water...
This crisis was obviously caused by unregulated (i.e. nearly entirely free) markets, letting private investors make risky decisions, spread that risk around, and expose the entire market to collapse. You haven't anywhere near adequately argued otherwise, be it with other people's research or your (limited) own words. Expect to continue to be called out on it. Especially that CRA garbage.
Wow, I have thoroughly shown how much government involvement there was in this mess.

Even if you just want to blame "deregulation" and ignore EVERY other cause, it is still proof that government cannot manage it's house of cards. Why? Because government is corrupt, and corporations have the government by it's balls. However powerful you wish to make government, that is exactly how powerful you make corporations over the masses of people. You look to government to protect you from the evil corporations, when they themselves lay in bed with them.
 

bamacre

Lifer
Jul 1, 2004
21,030
1
61
Originally posted by: Evan
An ABC News investigation found that Cassano set up some dozens of separate companies, some off-shore, to handle the transactions, effectively keeping them off the books of AIG and out of sight of regulators in the U.S. and the United Kingdom.

"This is the other very important issue underneath the AIG scandal," said Blum. "All of these contracts were moved offshore for the express purpose of getting out from under regulation and tax evasion."

And nobody in the United Kingdom was monitoring AIG's actions either, according to a member of Parliament there.

"There was a culture that was called light touch regulation," MP Vince Cable told ABC News, "which meant that these activities could go on and nobody kept a close eye on it."
Hooray free markets.

:roll:
All you're doing is showing how much of a failure government is at regulating.
 

sandorski

No Lifer
Oct 10, 1999
68,369
3,490
126
Originally posted by: bamacre
Originally posted by: Evan
An ABC News investigation found that Cassano set up some dozens of separate companies, some off-shore, to handle the transactions, effectively keeping them off the books of AIG and out of sight of regulators in the U.S. and the United Kingdom.

"This is the other very important issue underneath the AIG scandal," said Blum. "All of these contracts were moved offshore for the express purpose of getting out from under regulation and tax evasion."

And nobody in the United Kingdom was monitoring AIG's actions either, according to a member of Parliament there.

"There was a culture that was called light touch regulation," MP Vince Cable told ABC News, "which meant that these activities could go on and nobody kept a close eye on it."
Hooray free markets.

:roll:
All you're doing is showing how much of a failure government is at regulating.
Yes, when Governments fail to Regulate, the Market collapses.
 

bamacre

Lifer
Jul 1, 2004
21,030
1
61
Originally posted by: sandorski
Originally posted by: bamacre
Originally posted by: Evan
An ABC News investigation found that Cassano set up some dozens of separate companies, some off-shore, to handle the transactions, effectively keeping them off the books of AIG and out of sight of regulators in the U.S. and the United Kingdom.

"This is the other very important issue underneath the AIG scandal," said Blum. "All of these contracts were moved offshore for the express purpose of getting out from under regulation and tax evasion."

And nobody in the United Kingdom was monitoring AIG's actions either, according to a member of Parliament there.

"There was a culture that was called light touch regulation," MP Vince Cable told ABC News, "which meant that these activities could go on and nobody kept a close eye on it."
Hooray free markets.

:roll:
All you're doing is showing how much of a failure government is at regulating.
Yes, when Governments fail to Regulate, the Market collapses.
And government fails at regulating.

If you want real regulation, then get rid of the Fed. Implement honest money, 100% reserve banking, and let people regulate with their wallets. This entire mess would have been prevented.
 

First

Lifer
Jun 3, 2002
10,518
271
136
Originally posted by: bamacre

Wow, I have thoroughly shown how much government involvement there was in this mess.
I asked you originally in this thread "If someone thinks something other than free markets was the main reason for collapse...those people will first have to actually address specifically what the gov't did". You listed CRA, ARMs, and tax incentives, which basically had almost nothing to do with this collapse. You made a moral hazard argument with no stats and references that would make any well informed economist/financial analyst laugh, but did have one good point about Greenspan's interest rates. Which, again, can't possibly be argued was the main reason for collapse (and you didn't do so). So no, you failed utterly and miserably, while I conclusively showed that private banks peddled mortgage securities into CDS/CDO contracts with absolutely no gov't interference and nearly ZERO regulation/oversight (exacerbating the problem). I listed conclusive evidence of their asset leverage to actual bad mortgage loan ratio. You listed, well, CRA stats and the fact that Fannie and Freddie are GSEs and that's, uh, "bad".

Even if you just want to blame "deregulation" and ignore EVERY other cause, it is still proof that government cannot manage it's house of cards. Why? Because government is corrupt, and corporations have the government by it's balls. However powerful you wish to make government, that is exactly how powerful you make corporations over the masses of people. You look to government to protect you from the evil corporations, when they themselves lay in bed with them.
I hate to break it to you, but you're horribly confused. Gov't is evil and corrupt and private corporations are, uh, too? What the hell is free market capitalism supposed to advocate if not private corporations that are allowed to make decisions on their own? Your own sentences are so contradictory it's just comical.
 

sandorski

No Lifer
Oct 10, 1999
68,369
3,490
126
Originally posted by: bamacre
Originally posted by: sandorski
Originally posted by: bamacre
Originally posted by: Evan
An ABC News investigation found that Cassano set up some dozens of separate companies, some off-shore, to handle the transactions, effectively keeping them off the books of AIG and out of sight of regulators in the U.S. and the United Kingdom.

"This is the other very important issue underneath the AIG scandal," said Blum. "All of these contracts were moved offshore for the express purpose of getting out from under regulation and tax evasion."

And nobody in the United Kingdom was monitoring AIG's actions either, according to a member of Parliament there.

"There was a culture that was called light touch regulation," MP Vince Cable told ABC News, "which meant that these activities could go on and nobody kept a close eye on it."
Hooray free markets.

:roll:
All you're doing is showing how much of a failure government is at regulating.
Yes, when Governments fail to Regulate, the Market collapses.
And government fails at regulating.

If you want real regulation, then get rid of the Fed. Implement honest money, 100% reserve banking, and let people regulate with their wallets. This entire mess would have been prevented.
No. Your plan is Fail. Who is going to ensure this, the Consumer? How will they do that?
 

retrospooty

Platinum Member
Apr 3, 2002
2,031
74
86
Originally posted by: Xellos2099

What I want to say is, if the gas price is high and no one is buying gas guzzler, won't the auto maker develop fuel efficient vehicle even without government mandate?
That's the problem. Once the economy improves, people will go back to thier hummers and SUV's and we will again have a gas crisis, and it will hit well over $5 a galon, then we will be right where we weere last summer, only worse. We HAVE to get off oil for 3 reasons, as a matter of national security, economics and the environment. and the market wont do it until its a dire emergency. Then it will be too late. It will take a decade to move over to the next gen energy once a viable energy source is created - It has to be mandated, or it wont happen until its a crisis and 10 years is too long to react.
 

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