The curruption will (did) prevail - rant
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I think it just needs tighter regulation and more accountability. Part of the problem is people genuinely thought by giving market free reign was a good idea in the 80s. Well its not (Ronald and Maggie). Now we have to live with the consequences.
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Apparently the long term spin-off benefits from the Hadron Collider experiment are bound to solve this problem, so I'm not sure why anybody should be concerned about this...
(Although the impact on shares in the dog food market cannot be ignored.) -
obviously
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@unknownuser said:
Well its not (Ronald and Maggie).
Now that You mentioned this, I remember back in those days there was a signing of Kyoto protocol and United states was the only developed country that didnât sign it. Ok they signed it eventually but never ratified it. So I said at that time what has president Reagan have agains planet earth . Actually he probably didnât have anything but the signing was against the interests of multinational companies and the centers of financial powers and we can talk here as much as we like as long as the interests of individuals ( countries,companies ,etc..) prevail over the interests of majority there is not much hope , how can we change that , I donât know, any suggestionsâŠ
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On a serious note Mateo,
It is the 'we can't do anything about it' attitude which enables politicians and multi-nationals to develop a stranglehold over people and uphold the interests of a small minority over the common good. We need to be more involved and knowledgeable about what is actually happening, develop an active opinion about it and support pressure groups that fight this kind of thing physically and financially. As long as we sit in the comfort zone of non-involvement and are afraid of being criticized for being non-conformist, unpatriotic etc. etc., nothing can change.
But history has examples where accumulated pressure over a long period can bring real change. A simple way to start is to force you local politicians to answer questions about why things are happening. When they start to worry about consensus at ground level which may threaten their re-election, they will start putting pressure on national leadership which in turn will modify policy as soon as they sense that common consensus starts to threaten re-election prospects. Keep on asking difficult questions formally, demand a response, encourage those around you to do the same. It's a bottom-up approach based on democratic pressure. It works if it threatens the position of politicians and officials.
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Toxilvoxel,
Positive thinking , I am also impressed with Your answer. Although my experience is that the majority are not prepared for that struggle , at least not to the end . They will say they are against war in Iraq but if the price they have to pay is the double price of gallon they will think twice about it.
Although as You say we should all start at ground level , we probably will not get a chance to change the world but there will always be some little things that we can change and improve. -
It's always struck me that those great bastions of capitalism...the corporate headquarters of banks and insurance companies...are not so much a reflection of how "successful" they are, but more a reflection of how much of other people's money they siphon off for themselves. All that glass and steel, high salaries and fancy furnishings represents money that wasn't payed back in claims, or interest or share dividends.
After all, throughout this current "crisis", people in the real world are still cranking out cars, sowing crops, designing and constructing everything under the sun. As Modelhead says, it's all smoke and mirrors.
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As far as i can tell its all about people gaming the system, exploiting i to their advantage. I reckon whatever we do this will always happen. People will always look for ways to be better of than other people, and if that means exploiting other people so be it (thats not my personal outlook however, just an observation.)
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And then those same people that are accusing the governments of this and that , the banks and insurance companies for ripping them off but when thinking of themselves the think they are entitled to a certain standard of life , material things . If only people in the world were more modest . Modelhead said at the beginning that âIt is obvious to most that our private government members are into stocks way over their headsâ. So they are greedy and thatâs what got us/them there , well arenât we all, they made the rules of the game and we accepted them. Like in my country just recently people were buying stocks, cars , houses everything on loans and now when the world economy is down they are accusing everybody .
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In my country of origin the following principle is probably more apparent than elsewhere but the same principle is universal:
There are a few very large investment companies that make their business out of selling a fairly modern invention called a pension scheme. We are conditioned into thinking that every responsible person should make provision for their old age. Typically the marketing of these pension products include projections based on expected inflation over periods of 10-20 years. When they tell you how much you will need to survive your last 10 years after retirement it is enough to scare the milk out of anyone.
What you do not realise when you buy into this system is that these companies re-invest your money by buying out things like grocery chains, medical companies and many other businesses that deliver products on which common folk like you and me depend. In order to deliver a yield on your pension these investments are engineered to provide products and services at ever increasing inflation year on year.Because of the size of these investments this affects inflation in a national economy directly. By virtue of their buying power these companies are in a position where they dictate the market at the the expense of primary producers like the farming community.
And so we finance the enterprise that increases our cost of living over time through our monthly pension contributions, ironically through our fear that inflation will overtake our needs when we are in our old age. And then having done so diligently for most of our working life these companies often fail in producing any yields anyway even if they have not gone bust during the period.
The point is that as long as we rely on the system whether political, financial, or otherwise, to act in our interest without being involved and interrogating it, we will always continue to strengthen the process that exploits us through our complacency. None of us can make a difference on a macro-economic level, but we can choose not to keep feeding the machine that is exploiting us.
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@mateo soletic said:
And then those same people that are accusing the governments of this and that , the banks and insurance companies for ripping them off but when thinking of themselves the think they are entitled to a certain standard of life , material things . If only people in the world were more modest . Modelhead said at the beginning that âIt is obvious to most that our private government members are into stocks way over their headsâ. So they are greedy and thatâs what got us/them there , well arenât we all, they made the rules of the game and we accepted them. Like in my country just recently people were buying stocks, cars , houses everything on loans and now when the world economy is down they are accusing everybody .
There is no need to sally forth, for it remains true that those things which make us human are, curiously enough, always close at hand. Resolve then, that on this very ground, with small flags waving and tiny blasts of tiny trumpets, we have met the enemy, and not only may he be ours, he may be us.
Walt Kelly
US animator & cartoonist (1913 - 1973) -
The News Hour had three economics professors on tonight...all said the bailout plan being debated is bubkus: scary amount of spending power to one man with no accountabily and a toss up if it will work at all. One was totally against any action at all, or at the least not at this time, and in defense of this revealed some interesting things (one I hadn't heard from any of the other media): Besides Lehman Bros. and others being purchased just days after declaring bankrupcy, so their "scary" situation self corrected, AIG TURNED DOWN 3 BIDS TO BUY THEM HOPING THE GOVERNMENT WOULD MAKE A BETTER OFFER (THREE!) Since we didn't, several of the major stockholders have already joined forces to buy the company back.
What kind of crap is that...?
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The root of the problem (in the US) comes down to leftist politicians who required banks to lend more money more often to higher-risk borrowers* (originates in the 1970s under Carter, expanded under Clinton in the 1990s).
More (unqualified) borrowers looking to buy houses fueled a housing construction boom.
The boom created a large demand for labor and materials, causing the cost (and valuation) of homes to rise higher than inflation (the bubble). About this time, conservative politicians started to see the end result on the horizon, and pushed to scale back the high-risk lending requirements and more closely regulate the high-risk instruments. The liberals (pocketing money from the pseudo-government companies pushing and insuring the high-risk instruments) said everything was fine, leave it alone (around 2005).
The housing boom eventually led to an oversupply of houses, though this was not so obvious quite yet, as people kept buying.
Expanded crude oil demand from China, India, and other developing nations (plus a growing number of less-efficient vehicles in the US) resulted in higher oil prices.
Rising fuel prices caused the price of everything to increase (due to shipping, raw materials costs, etc).
Rising interest rates caused borrowers with initially low variable-interest-rate loans to pay more each month to service their excessive debt.
The combination of inflated prices of fuel, goods, services, and debt repayment caused the overextended borrowers to default because they could not pay their monthly bills.
As the homes went into foreclosure, it became clear that there were more homes than people to buy them, thus there was no relief for the banks left holding the property - no way to liquidate the assets, since there was no one willing (or able) to buy them.
The banks then lost share price (and thus more liquidity) as it became obvious that the defaults were destroying shareholder dividend profits.
The losses exceeded the ability of some banks to absorb, causing those banks to fail.
However, the free market can take care of itself - Citibank is purchasing Wachovia, Chase is purchasing WaMu, and other deals will likely be in the works. They are doing this without $780 billion from the government.
The bottom line is interest rates will go up for a while, the economy will slow down for a while, the dust will settle, and life will go on. The free market works fine if the government will refrain from meddling with it in stupid attempts to create "legacy" for a few selfish, greedy politicians.
*** Higher-risk borrowers are of any income level where their debt-to-income ratio and/or creditworthiness are insufficient for a prudent lender to expect the borrower to be able to repay the loan without defaulting. Anyone of any income level could become overextended, not just the poor.**
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@unknownuser said:
I know this will stir a few but I cant help it. The stock market, like most religion these days has grown to have such legitimacy when really it is all smoke and mirrors.
@unknownuser said:
Short-selling involves borrowing a company's shares, selling them at a lower price, and pocketing the difference.
@unknownuser said:
"The emergency order temporarily banning short-selling of financial stocks will restore equilibrium to markets."
Actually, short selling is borrowing shares to sell immediately at the current higher price, then purchasing at a lower price to replace the borrowed shares. This involves as much (or more) risk as normal stock purchases, because if the price does not drop enough (or the price goes up) before the deadline to settle the short, the investor loses money.
One investor buys, expecting the price to go up so he can sell and make a profit. Another investor borrows and sells, expecting the price to go down so he can buy and return, and make a profit. In both cases, the goal is to sell at a higher price than the purchase price - one investor just buys before selling, the other after selling.
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I find all this finger pointing halirious. What we are witnessing here isn't a new phenonmena. People have short memories. The Boom & Bust cycle is a natural part of the capitalist system. If you mobilise capital to a individual level (often concentrated in the hands of few) people are going to over invest in boom times to maximise profit and withdraw investment when the tables are turned, no fancy equations just pure common sense. Without intervention free market economies tend to go heads up every now and then. I find it really funny how people have short memories, have you forgotten the economic turmoil of the early Ninties? What about the Oil Crisis at the end of Seventies? The Great Depression anyone? It ruins people's financial security and is no way for civilised and responsible good governance to behave. This rediculous belief that somehow the free market is going sort out everything is profoundly superstitious. Anyone who advocate it is either one of those few who have the most capital who are in a position to benefit most from this economic cycle or a brain-washed twit who doesn't question the status quo and deserve a good kicking up the groin.
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I think Rick Wilson has summed this mess up. I would add that both Clinton and President Bush both touted the "ownership" society, further compounding the subprime problem. And, as I mentioned in another thread, the repeal of the Glass-Stegall Act in 1999 contributed. There is plenty of blame to go around on BOTH sides of the aisle.
Nancy Pelosi makes me sick. She should be horse whipped! Same for Barney Frank. Do a search on You Tube for Frank and you'll find a Committee hearing in which he, Maxine Waters and others were ridiculing those who feared Freddie Mac and Fannie Mae were heading for trouble.
President Bush has be embarrassingly absent. It's too late now, but he should have come out and calmed the nation and explained things. Instead we were all left to get our information from the internet and other media, and we know how objective they are. We needed a "Kennedy" moment from him, but he is incapable of such things.
This bailout will pass creating more of a bloated and gluttonous federal government than we already have. This is why I'm voting Libertarian. I get the feeling I'm not alone.
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Rick, Ron: this situation now was caused by creed, fraud, and conspiracy...no need to stretch so far for lame political blame. This situation now will be fixed by once again acknowledging there are vile crooks everywhere...and all aspects of society need to be policed.
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One thing few seem to pick up on is the fact that in a normal economy banks would not be allowed by the competition authorities to merge in the way that they do right now. Banks are caching in on the opportunity to create new super-banks with less competition which will be to the detriment of the consumer when the fracas settles down.
The real losers in all this will be anybody considering retirement now or in the next 3-5 years. Some pensions may take a decade to recover from the hit taken over the last 12 months.
Many will be forced to work until they die. In countries where retirement is mandatory at a certain age, folks are going to find themselves between a rock and a hard place.
Nobody seems to be talking about a bailout plan for these people. -
Banks aren't stupid (generally). There were reasons why they had to be coerced by the government into lending to high-risk borrowers, and that is they didn't want to lose money. Surely you've heard the old adage, "the bank won't lend you money unless you don't need it."
But having been coerced into making more high-risk loans, their only recourse was to do the best business they could to cover their potential losses. The problem is that their best wasn't good enough - especially for those who decided to specialize in those high-risk instruments/borrowers, and didn't have enough legitimate investments to cover their risk.
I will say this, though, that in Carter's case, I have no doubt that he had nothing but good intentions when he signed the "Community Reinvestment Act", even though the banking community vehemently opposed it (so much for the corporate greed theory). And even then, there wasn't the level of potential disaster there was in the '90s when it was expanded by Clinton.
The irony is that the libs who opposed (and defeated) the 2003 proposal for stricter oversight over Fannie Mae and Freddie Mac claimed they were protecting the ability of people to get "affordable housing" - while their policies were forcing housing prices up and out of reach, causing more people to be high-risk borrowers.
All in all, considering a government program opposed by the banking sector started this process of failure, I'd say political responsibility is valid. No stretching necessary, and it certainly lacks lameness - it has the weight of history behind it.
@unknownuser said:
"These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis," said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."
Representative Melvin L. Watt, Democrat of North Carolina, agreed.
"I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing," Mr. Watt said.
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@tomsdesk said:
I repeat: creed, fraud, and conspiracy! If you want to call the politicians stupid for not anticipating corruption...no argument from me. But this problem was caused by crooks!
Crooks who reside on Wall Street, Main Street AND K Street.
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