Stiggy's analysis
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Ok. I'll hand it to Joe. This time he wrote something half-decent. THE Obama administration’s $500 billion or more proposal to deal with America’s ailing banks has been described by some in the financial markets as a win-win-win proposal. Actually, it is a win-win-lose proposal: the banks win, investors win — and taxpayers lose. NY Times article[^]. I find that I agree with him - the solution is nationalization. I dislike Obama's plan immensely. I do not think it is functional, I do not think it is fair, and I worry about the outcome. As Joey says - "ersatz capitalism" (with socialized losses). I'll even be more clear: Obama's plan is dumb. The last couple of paragraphs sum it up nicely: What the Obama administration is doing is far worse than nationalization: it is ersatz capitalism, the privatizing of gains and the socializing of losses. It is a “partnership” in which one partner robs the other. And such partnerships — with the private sector in control — have perverse incentives, worse even than the ones that got us into the mess. So what is the appeal of a proposal like this? Perhaps it’s the kind of Rube Goldberg device that Wall Street loves — clever, complex and nontransparent, allowing huge transfers of wealth to the financial markets. It has allowed the administration to avoid going back to Congress to ask for the money needed to fix our banks, and it provided a way to avoid nationalization.
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Ok. I'll hand it to Joe. This time he wrote something half-decent. THE Obama administration’s $500 billion or more proposal to deal with America’s ailing banks has been described by some in the financial markets as a win-win-win proposal. Actually, it is a win-win-lose proposal: the banks win, investors win — and taxpayers lose. NY Times article[^]. I find that I agree with him - the solution is nationalization. I dislike Obama's plan immensely. I do not think it is functional, I do not think it is fair, and I worry about the outcome. As Joey says - "ersatz capitalism" (with socialized losses). I'll even be more clear: Obama's plan is dumb. The last couple of paragraphs sum it up nicely: What the Obama administration is doing is far worse than nationalization: it is ersatz capitalism, the privatizing of gains and the socializing of losses. It is a “partnership” in which one partner robs the other. And such partnerships — with the private sector in control — have perverse incentives, worse even than the ones that got us into the mess. So what is the appeal of a proposal like this? Perhaps it’s the kind of Rube Goldberg device that Wall Street loves — clever, complex and nontransparent, allowing huge transfers of wealth to the financial markets. It has allowed the administration to avoid going back to Congress to ask for the money needed to fix our banks, and it provided a way to avoid nationalization.
So the real answer is to just turn over all economic authority to the central state to be managed by bureaucrats who have absolutely no business knowledge of any kind but do know what is best for the people - amazing how conveniently that all worked out for the left.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
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So the real answer is to just turn over all economic authority to the central state to be managed by bureaucrats who have absolutely no business knowledge of any kind but do know what is best for the people - amazing how conveniently that all worked out for the left.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
Stan Shannon wrote:
So the real answer is to just turn over all economic authority to the central state to be managed by bureaucrats who have absolutely no business knowledge of any kind
Government appointed administrators can easily be --- and almost certainly would be --- people with a business background. The notion that there is a class of people called bureaucrats and a class of people called business people, with no overlap, is just silly.
Stan Shannon wrote:
amazing how conveniently that all worked out for the left.
So far it hasn't worked out at all. Obama, the great redistributionist, is thus far mainly redistributing to wealthy investors.
John Carson
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Ok. I'll hand it to Joe. This time he wrote something half-decent. THE Obama administration’s $500 billion or more proposal to deal with America’s ailing banks has been described by some in the financial markets as a win-win-win proposal. Actually, it is a win-win-lose proposal: the banks win, investors win — and taxpayers lose. NY Times article[^]. I find that I agree with him - the solution is nationalization. I dislike Obama's plan immensely. I do not think it is functional, I do not think it is fair, and I worry about the outcome. As Joey says - "ersatz capitalism" (with socialized losses). I'll even be more clear: Obama's plan is dumb. The last couple of paragraphs sum it up nicely: What the Obama administration is doing is far worse than nationalization: it is ersatz capitalism, the privatizing of gains and the socializing of losses. It is a “partnership” in which one partner robs the other. And such partnerships — with the private sector in control — have perverse incentives, worse even than the ones that got us into the mess. So what is the appeal of a proposal like this? Perhaps it’s the kind of Rube Goldberg device that Wall Street loves — clever, complex and nontransparent, allowing huge transfers of wealth to the financial markets. It has allowed the administration to avoid going back to Congress to ask for the money needed to fix our banks, and it provided a way to avoid nationalization.
73Zeppelin wrote:
I find that I agree with him - the solution is nationalization
We need a way of semantically differentiating between something like the FDIC's rescue of the folks who had entrusted WAMU with their savings and Senor Chavez's takeover of going industries in Venezuela. Using "nationalization" to describe both doesn't seem to make sense. I'm not sure that investment banks have to buy FDIC insurance to cover their assets, but I'm guessing that such regulation would have been deemed as unacceptable during the Bush administration. If that's the case, I'm wondering why we do not force the worst of these institutions into bankruptcy, exercise eminent domain over any assets that might have value and give them to institutions that either are solvent, or can prove that they have a plan to become so if they are given some assets. If three investment banks are going down the tubes, isn't it better that we abandon two of them to their fate and strengthen the third with whatever we can glean from the carcasses of the other two?
Jon Smith & Wesson: The original point and click interface
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So the real answer is to just turn over all economic authority to the central state to be managed by bureaucrats who have absolutely no business knowledge of any kind but do know what is best for the people - amazing how conveniently that all worked out for the left.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
Stan Shannon wrote:
turn over all economic authority to the central state to be managed by bureaucrats who have absolutely no business knowledge of any kind
And the 'experts' did such a good job? Come on Stan, if a bank is going to take tax payers money then at least the govt has to become a shareholder in that bank at a level commensurate with the money given. Even if it means that over half tha bank is state owned. The benefits are huge. The govt gets to controll bank policy, like no reposessions, instead renegotiate the mortgage so that at all costs the owner stays in the home. (The alternative is an ecconomic catastrophe with houses being repoed and auctioned for any proce, and in a dry credit situation that means cash buyers only with proces at a third of the bok value. Imagine THAT effect on your economy). And the govt gets to make money for the tax payer on dividends and stock value increase when times get back to normal. Right now the tax payer is paying out for the incompetence of the banking world. And of this continues without any recompense for the tax payer then civil unrest, as has been seen in the UK, will be the result.
Morality is indistinguishable from social proscription
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Stan Shannon wrote:
So the real answer is to just turn over all economic authority to the central state to be managed by bureaucrats who have absolutely no business knowledge of any kind
Government appointed administrators can easily be --- and almost certainly would be --- people with a business background. The notion that there is a class of people called bureaucrats and a class of people called business people, with no overlap, is just silly.
Stan Shannon wrote:
amazing how conveniently that all worked out for the left.
So far it hasn't worked out at all. Obama, the great redistributionist, is thus far mainly redistributing to wealthy investors.
John Carson
John Carson wrote:
Government appointed administrators can easily be --- and almost certainly would be --- people with a business background.
One problem, John, would be that a lot of those people might not be interested in the job. After the treatment of the head of AIG, and the newly-demonstrated propensity of Congress to pass bills of attainder, when it came time to shop the job of head of GM around - no-one wanted it(reported by Arianna Huffington on Joe Scarborough's show). and it ended up by default in Waggoner's chosen successor's hands.
Jon Smith & Wesson: The original point and click interface
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Ok. I'll hand it to Joe. This time he wrote something half-decent. THE Obama administration’s $500 billion or more proposal to deal with America’s ailing banks has been described by some in the financial markets as a win-win-win proposal. Actually, it is a win-win-lose proposal: the banks win, investors win — and taxpayers lose. NY Times article[^]. I find that I agree with him - the solution is nationalization. I dislike Obama's plan immensely. I do not think it is functional, I do not think it is fair, and I worry about the outcome. As Joey says - "ersatz capitalism" (with socialized losses). I'll even be more clear: Obama's plan is dumb. The last couple of paragraphs sum it up nicely: What the Obama administration is doing is far worse than nationalization: it is ersatz capitalism, the privatizing of gains and the socializing of losses. It is a “partnership” in which one partner robs the other. And such partnerships — with the private sector in control — have perverse incentives, worse even than the ones that got us into the mess. So what is the appeal of a proposal like this? Perhaps it’s the kind of Rube Goldberg device that Wall Street loves — clever, complex and nontransparent, allowing huge transfers of wealth to the financial markets. It has allowed the administration to avoid going back to Congress to ask for the money needed to fix our banks, and it provided a way to avoid nationalization.
Should have let the baqd banks fail and let the shareholders carry the can rather than the tax payer. Caveat emptor and so on. At leats the pain would have been sharp, quick, and focused. The way it is now the tax payer is going to be paying for this fiasco for decades to come. With a resulting negative effect on the economy.
Morality is indistinguishable from social proscription
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John Carson wrote:
Government appointed administrators can easily be --- and almost certainly would be --- people with a business background.
One problem, John, would be that a lot of those people might not be interested in the job. After the treatment of the head of AIG, and the newly-demonstrated propensity of Congress to pass bills of attainder, when it came time to shop the job of head of GM around - no-one wanted it(reported by Arianna Huffington on Joe Scarborough's show). and it ended up by default in Waggoner's chosen successor's hands.
Jon Smith & Wesson: The original point and click interface
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Stan Shannon wrote:
So the real answer is to just turn over all economic authority to the central state to be managed by bureaucrats who have absolutely no business knowledge of any kind
Government appointed administrators can easily be --- and almost certainly would be --- people with a business background. The notion that there is a class of people called bureaucrats and a class of people called business people, with no overlap, is just silly.
Stan Shannon wrote:
amazing how conveniently that all worked out for the left.
So far it hasn't worked out at all. Obama, the great redistributionist, is thus far mainly redistributing to wealthy investors.
John Carson
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Ok. I'll hand it to Joe. This time he wrote something half-decent. THE Obama administration’s $500 billion or more proposal to deal with America’s ailing banks has been described by some in the financial markets as a win-win-win proposal. Actually, it is a win-win-lose proposal: the banks win, investors win — and taxpayers lose. NY Times article[^]. I find that I agree with him - the solution is nationalization. I dislike Obama's plan immensely. I do not think it is functional, I do not think it is fair, and I worry about the outcome. As Joey says - "ersatz capitalism" (with socialized losses). I'll even be more clear: Obama's plan is dumb. The last couple of paragraphs sum it up nicely: What the Obama administration is doing is far worse than nationalization: it is ersatz capitalism, the privatizing of gains and the socializing of losses. It is a “partnership” in which one partner robs the other. And such partnerships — with the private sector in control — have perverse incentives, worse even than the ones that got us into the mess. So what is the appeal of a proposal like this? Perhaps it’s the kind of Rube Goldberg device that Wall Street loves — clever, complex and nontransparent, allowing huge transfers of wealth to the financial markets. It has allowed the administration to avoid going back to Congress to ask for the money needed to fix our banks, and it provided a way to avoid nationalization.
73Zeppelin wrote:
it is ersatz capitalism, the privatizing of gains and the socializing of losses
I read somewhere that the problem with capitalism was the privatization of profits, and the problem with communism was the sharing of losses (or something like that, this was in my school days). This sounds like the worst of both worlds.
Cheers, Vıkram.
Carpe Diem.
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Should have let the baqd banks fail and let the shareholders carry the can rather than the tax payer. Caveat emptor and so on. At leats the pain would have been sharp, quick, and focused. The way it is now the tax payer is going to be paying for this fiasco for decades to come. With a resulting negative effect on the economy.
Morality is indistinguishable from social proscription
Not saying what the Govts are doing is the best way out, but letting the banks fail is going to hurt many more than just their shareholders and employees. People will see their savings wiped out. There will be serious contractions in credit (there already are, in fact, but I'm talking about much worse). Pretty much all other industries will start going down because their credit lines will freeze up.
Cheers, Vıkram.
Carpe Diem.
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Not saying what the Govts are doing is the best way out, but letting the banks fail is going to hurt many more than just their shareholders and employees. People will see their savings wiped out. There will be serious contractions in credit (there already are, in fact, but I'm talking about much worse). Pretty much all other industries will start going down because their credit lines will freeze up.
Cheers, Vıkram.
Carpe Diem.
Vikram A Punathambekar wrote:
People will see their savings wiped out.
Peoples savings are protected by the FDIC (up to $250,000 per account, double that if a joint account). AFAIK no one has lost money in a bank failure since the 1930's unless they foolishly had more than the insured amount on deposit in a single account, and even then only the uninsured excess. As you pointed out, credit is frozen now, even though trillions have been poured in to the banks, mostly because of the bad assets held by the banks, so it would appear that merely dumping capital into the banks is not helping.
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Oakman wrote:
After the treatment of the head of AIG, and the newly-demonstrated propensity of Congress to pass bills of attainder, when it came time to shop the job of head of GM around - no-one wanted it
Are you implying a correlation?
led mike wrote:
Are you implying a correlation?
To tell the truth, I thought I was doing more than implying. I do not necessarily claim that I've cited the only reason Obama couldn't find folks eager to take on a 60 day rescue of the ailing giant, but I feel sure it was a major factor in the decisions.
Jon Smith & Wesson: The original point and click interface
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Not saying what the Govts are doing is the best way out, but letting the banks fail is going to hurt many more than just their shareholders and employees. People will see their savings wiped out. There will be serious contractions in credit (there already are, in fact, but I'm talking about much worse). Pretty much all other industries will start going down because their credit lines will freeze up.
Cheers, Vıkram.
Carpe Diem.
Vikram A Punathambekar wrote:
People will see their savings wiped out.
I take it there is no deposit insurance in India? It probably demonstrates how used to that I've become when it took me a second to realise that must be the case. People who gamble either on the stock market, a roulette wheel, or by buying houses because they believe their value will go up, should not expect the rest of us to bail them out.
Jon Smith & Wesson: The original point and click interface
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Not saying what the Govts are doing is the best way out, but letting the banks fail is going to hurt many more than just their shareholders and employees. People will see their savings wiped out. There will be serious contractions in credit (there already are, in fact, but I'm talking about much worse). Pretty much all other industries will start going down because their credit lines will freeze up.
Cheers, Vıkram.
Carpe Diem.
But people are already seeing this. Not to the degree you suggesting I think, but along FAT's line, the recovery process would be quicker, right now it looks like it'll draw out for a couple of decades and we still might see the scenario you're worried about. But here's an idea. Most of the bad money is a bet on a default. So why not protect the default instead of covering the bad bet? We're talking about a couple hundred thousand instead of a few million per loan.
This statement is false
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Vikram A Punathambekar wrote:
People will see their savings wiped out.
Peoples savings are protected by the FDIC (up to $250,000 per account, double that if a joint account). AFAIK no one has lost money in a bank failure since the 1930's unless they foolishly had more than the insured amount on deposit in a single account, and even then only the uninsured excess. As you pointed out, credit is frozen now, even though trillions have been poured in to the banks, mostly because of the bad assets held by the banks, so it would appear that merely dumping capital into the banks is not helping.
Rob Graham wrote:
As you pointed out, credit is frozen now, even though trillions have been poured in to the banks, mostly because of the bad assets held by the banks, so it would appear that merely dumping capital into the banks is not helping.
I must be really stupid. There's something I am not getting. Are banks really not lending money they have because they also have assets that they have overvalued? It is my impression that they are not lending money because they don't think they're going to get paid back. If I'm right, the banks will gladly sell their bad assets to the hedgefunds that have climbed in bed with the government, but until and unless they start to believe that their customers are credit-worthy, they won't suddenly start lending money to everyone who thinks they might like a new car, house, boat, or porch. Now, if people start depositing real savings into the banks, that will increase the supply of money and might drive the intrest rates down a bit, but so long as the assumption is that many of their customers may lose their livelihoods long before the end if the loan, they'll still only want to deal with people who have very high credit scores. And, if I am an investor in the bank either directly or thanks to the intervention of the Administration, I don't want them to lend to people who aren't going to pay it back, Do I? :confused:
Jon Smith & Wesson: The original point and click interface
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Rob Graham wrote:
As you pointed out, credit is frozen now, even though trillions have been poured in to the banks, mostly because of the bad assets held by the banks, so it would appear that merely dumping capital into the banks is not helping.
I must be really stupid. There's something I am not getting. Are banks really not lending money they have because they also have assets that they have overvalued? It is my impression that they are not lending money because they don't think they're going to get paid back. If I'm right, the banks will gladly sell their bad assets to the hedgefunds that have climbed in bed with the government, but until and unless they start to believe that their customers are credit-worthy, they won't suddenly start lending money to everyone who thinks they might like a new car, house, boat, or porch. Now, if people start depositing real savings into the banks, that will increase the supply of money and might drive the intrest rates down a bit, but so long as the assumption is that many of their customers may lose their livelihoods long before the end if the loan, they'll still only want to deal with people who have very high credit scores. And, if I am an investor in the bank either directly or thanks to the intervention of the Administration, I don't want them to lend to people who aren't going to pay it back, Do I? :confused:
Jon Smith & Wesson: The original point and click interface
Oakman wrote:
There's something I am not getting. Are banks really not lending money they have because they also have assets that they have overvalued? It is my impression that they are not lending money because they don't think they're going to get paid back.
I have the same impression. They seem to be willing to lend to good credit risks who have assets to back up the loans.
Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. --?
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Oakman wrote:
There's something I am not getting. Are banks really not lending money they have because they also have assets that they have overvalued? It is my impression that they are not lending money because they don't think they're going to get paid back.
I have the same impression. They seem to be willing to lend to good credit risks who have assets to back up the loans.
Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. --?
Chris Austin wrote:
I have the same impression. They seem to be willing to lend to good credit risks who have assets to back up the loans.
And is there something in Obma's plan - or in nationalization - that will create more creditworthiness among their customers? Even if they sucker Uncle Sugar into buying up all the toxic assets, why would they immediately forget how and why they got into this fix and start repeating the same stupid behavior that cause their problems in the first place? I certainly believe that Barney Frank is dumb enough to want to repeat all the mistakes of the last couple of decades, but I am not sure that Ken Lewis is.
Jon Smith & Wesson: The original point and click interface
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Stan Shannon wrote:
So the real answer is to just turn over all economic authority to the central state to be managed by bureaucrats who have absolutely no business knowledge of any kind
Government appointed administrators can easily be --- and almost certainly would be --- people with a business background. The notion that there is a class of people called bureaucrats and a class of people called business people, with no overlap, is just silly.
Stan Shannon wrote:
amazing how conveniently that all worked out for the left.
So far it hasn't worked out at all. Obama, the great redistributionist, is thus far mainly redistributing to wealthy investors.
John Carson
John Carson wrote:
Government appointed administrators can easily be --- and almost certainly would be --- people with a business background.
Perhaps you could name a few...
John Carson wrote:
Obama, the great redistributionist, is thus far mainly redistributing to wealthy investors.
Not really.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
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Chris Austin wrote:
I have the same impression. They seem to be willing to lend to good credit risks who have assets to back up the loans.
And is there something in Obma's plan - or in nationalization - that will create more creditworthiness among their customers? Even if they sucker Uncle Sugar into buying up all the toxic assets, why would they immediately forget how and why they got into this fix and start repeating the same stupid behavior that cause their problems in the first place? I certainly believe that Barney Frank is dumb enough to want to repeat all the mistakes of the last couple of decades, but I am not sure that Ken Lewis is.
Jon Smith & Wesson: The original point and click interface
Oakman wrote:
Even if they sucker Uncle Sugar into buying up all the toxic assets, why would they immediately forget how and why they got into this fix and start repeating the same stupid behavior that cause their problems in the first place?
I hope not. But, there was that little savings and loan fiasco just about 2 decades ago. Not really the same thing but, I think more of a symptom of our flaws in our systems.
Oakman wrote:
And is there something in Obma's plan - or in nationalization - that will create more creditworthiness among their customers?
I have no idea. I have a very rough idea that a real percentage of people who were deemed unworthy of credit prior to this credit bubble inflating were they type of people who would always be poor credit bets. I don't think we should be expecting the banks to lend to them in the near future. I am just hoping that we return to a situation based or reality rather than wishful thinking.
Oakman wrote:
I certainly believe that Barney Frank is dumb enough to want to repeat all the mistakes of the last couple of decades, but I am not sure that Ken Lewis is.
Hopefully we can move to more long term planning. When the whole country is only planning the next two or four quarters we are bound to see this repeat itself in some way.
Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. --?