Banks speed billions to get around regulations. Look at madoff 50 billion stolen and the SEC knew about it for years but didn't stop it.
Second this isn't a US only problem ever large bank in the free world is bankrupt at this point.
Banks speed billions to get around regulations. Look at madoff 50 billion stolen and the SEC knew about it for years but didn't stop it.
Second this isn't a US only problem ever large bank in the free world is bankrupt at this point.
Hedge funds are marginally regulated and Madoff's fund wasn't even under those auspices. This was one aspect that many people have been discussing for new regulations.
BoomerD
No Lifer
- Feb 26, 2006
- 65,979
- 14,369
- 146
On the surface, letting these companies go under as a result of their bad business practices just SEEMS right...
BUT, underlying the problem (as has been mentioned numerous times) is the problem of:
1) Massive job loss, not only from the business that folds, but from the myriad of businesses that depend on that business: suppliers, customers, etc.
2) The ensuing loss of credit for consumers and businesses would create a MASSIVE loss of jobs and business closings...even businesses that are otherwise doing fine.
I don't like the idea of bailing these folks out. Most of them have pissed away billions of $$$ in bonuses, parties, "seminars" and the like.
I don't like the concept of privatizing profits but socializing losses. The companies HAVE to be held responsible for their own losses...
I do NOT know how to best make that happen however. Government has no place in running businesses.
I'd MUCH rather see the government bail out the "little guy" and private citizens than the big banks and corporations, but it ain't gonna happen.
(we don't have the lobbying power!)
BUT, underlying the problem (as has been mentioned numerous times) is the problem of:
1) Massive job loss, not only from the business that folds, but from the myriad of businesses that depend on that business: suppliers, customers, etc.
2) The ensuing loss of credit for consumers and businesses would create a MASSIVE loss of jobs and business closings...even businesses that are otherwise doing fine.
I don't like the idea of bailing these folks out. Most of them have pissed away billions of $$$ in bonuses, parties, "seminars" and the like.
I don't like the concept of privatizing profits but socializing losses. The companies HAVE to be held responsible for their own losses...
I do NOT know how to best make that happen however. Government has no place in running businesses.
I'd MUCH rather see the government bail out the "little guy" and private citizens than the big banks and corporations, but it ain't gonna happen.
(we don't have the lobbying power!)
Schadenfroh
Elite Member
- Mar 8, 2003
- 38,416
- 4
- 0
It is sad that companies fail and people lose jobs. But, they are corporations and should live and die by the hand of capitalism. I fully expect the companies that I hold stock in to receive zero aid from the government beyond chapter 11 "protection" if they fail. Similar things can be said for the companies that my friends and family work for as almost none of them have politicians in their pockets and lobbyists that can help them steal tax dollars from the American people to perpetuate their failed business practices all the while lining their pockets with bonuses.
So, one guy goes to the SEC and claims fraud, yet the SEC isn't responsible for daily regulation of HF/PE/PWF, but then the SEC chairman says they should be done something. Wow, so he's falling on the sword despite not having the strong burden of regulation.
You're willing to point out that fraud that isn't regulated shouldn't be regulated because the non-regulators didn't regulate?
How fucking stupid is that?
If they didn't regulate and everybody in that market knows they won't regulate, then how did the "free market" not regulate?
Good Point. If a regulator might have said to the banks, investment banks and insurers you cannot utilize 30, 50 100:1 leverage and you can not set up off balance sheet items to get around the low capital requirements, would we be anywhere close to where are now?
bamacre
Lifer
- Jul 1, 2004
- 21,029
- 2
- 61
Way to redirect the argument. :roll:
And now you are suggesting that this is a case of free market failure when in fact it was people's dependency on government to do it's job that failed them. How stupid is that?
Can you just at least admit that the SEC dropped the ball and that Madoff should have been arrested years ago? I mean, the SEC can, and has, but you can't? Or do you want to keep redirecting the argument?
As I have asked you many times. Who were the investors? Do you know any of them? I know them secondarily and I know what they thought. Do your research and come back to me.
Please, the SEC is prostrating itself in front of Congress. Sure, they could have done something, but it really wasn't their job. There was a lot of talk about regulating hedge funds 2 years ago. Why would there be discussions to regulate them if they were already regulated? use your fucking brain.
As far as their effectiveness, I would agree with Markopoulos they need more REAL finance people there, not bureaucrats, lawyers, and political appointees. He mentioned CFA charterholders (like me) who can actually understand what's going on.
Correct, it was 2004 de-regulation that allowed the i-banks to exceed traditional leverage ratios.
As far as Off-BS items, some are good, some are bad. In general I hate the idea you can hide anything from investors, even if they were "sold" to other people. Simply valuing what you "kept" (the equity tranche of the Off-BS entities) doesn't let people actually understand the risk inherent in the held piece.
Many Off-BS entities are OK, provided they are regulated correctly. However, the idea of taking a bunch of shit and shoving it into a SIV, was garbage.
Short answer- you could end up killing millions of people, and that isn't a joke.
Forget high finance sector and executives making millions in bonuses- how are you going to buy a gallon of milk or a loaf of bread?
You may have millions tucked under your mattress at home, companies don't. I work in distribution, the company I work for has over a billion in liquid assets which are utilzed as a credit line to move product, we have had one quarter with a loss in the last ten years(we have been quite profitable even in the current situation)- but if the banks were to fail outright, my company shuts down. Given, we just distribute- but one of the items we distribute is grocery products(we handle everything from jars of baby food to TVs and pharmecueticals).
Banks go under collection of food stops immediately- companies have no funds available to purchase. Collection of food stops, production stops at all the food manufacturers(Kellogs, Kraft etc) shipments from the manufacturers to the distributors stops(that's me
) and shipments from distribution to store level stops. The amounts of money we are talking about moving are several billions of dollars per day(nationwide, not just my company), yes our liquidity is not tied up in a bank account, but being able to turn the liquidity into moveable product we need a very large bank to back it via a credit line.The amount of time it would take to build a new financial backbone for the amounts of dollars we are moving under normal circumstances would take years, but let's say we get some insanely fast movement by the government and large corporations and that got trimmed down to one month. You would have a one month gap with no production of food products. I'm not sure what most people think that stores carry for on hand inventory, but two weeks worth of product is the norm for a grocery store(about 8-12 weeks for retail). Half way to getting a system put in place all of the grocery stores in the nation would be out of food. Due to regulations, I honestly have no idea how long it would be before medical supplies dried up, in terms of scripts(government regulations don't allow us access to store level inventory on those items for numerous reasons), but I can tell you that most of our customers get 3-4 deliveries per week, so it can't be too high.
So, letting banks fail has you about two weeks out from not being able to buy any food. If some things got worked out in a month we could clear the channel of what we had left for inventory(which would give you about another two weeks for staple items, far more if you want to load up on hot sauce and marinades
). Two weeks without any food would thin out the population a bit, but you would still be dealing with roughly a month to get production back up to speed- probably would be a few more days worth of inventory that the producers had on hand that we could push out to the populace, but you still have about a week delay transit time from when the wheels start moving again until when you are able to actually purchase goods from a grocer again. So about two weeks with food, two weeks with none, a week maybe two with some, then about three more weeks with none.Planning on eating out- restaraunts will run out of food long before the grocers will
This is not paranoia, this is what I do for a living. The banks failing was never a viable option for the powers that be, we need them as a functioning society far too much. If we had another way to move large amounts of cash very quickly it would be a bit different, but we don't. Consolidation and the large corporate structure of the US business world demands we have large banks backing our credit lines or everything falls apart. I don't think it is wise to bash the corporations for being so dependant on the system, what happened if you got up tomorrow and there were no roads when you were going to work? Same general idea on how fvcked we would be if the major banks all failed.
Because if you can dig your claws deep enough into the American economy via de-regulation you can hold America hostage and threaten to take everyone with you if you "fail".
Because we're not a republic, we're a corporatism, and our owners are cowardly chicken-hawk fascists.
Locut0s
Lifer
- Nov 28, 2001
- 22,205
- 43
- 91
Because the worlds financial system does not run on common sense and real life logic. It runs to a great extent of fear and speculation. Letting those companies fail might be the right thing to do for the companies themselves, their managers, ceo's and all the rest but the trillions upon trillions of dollars that might be pulled out of the market in mass panic if all of the big ones fell would NOT be good!
There's nothing wrong at all unless they made political contribution to someone in the White House or Capitol Hill! Politicians will not allow their big time contributors to go belly up- obviously for the next election!
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