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93 Comments
- Feenix566, on 01/08/2009, -2/+45It's kinda silly to expect people on Wall Street not to be greedy. Nobody goes to Wall Street because they want to help out the needy. People go there to make money. If the system is designed based on the assumption that people in Wall Street are going to be looking out for everyone else's interests, then the system is seriously flawed. The popular alternative these days seems to be to design a system that depends on selfless heroes in the federal government keeping those greedy motgage lenders at bay with stacks of regulations. That assumption is equally silly, because it presupposes that beurocrats are a.) good at their jobs and b.) not currupt. Neither is true. Most of the time, the people appointed to regulate Wall Street are the same greedy traders everyone's blaming for creating the problems in the first place.
What the system needs is a natural automatic way to check the mistakes of Wall Street. Here's a novel idea: how about when the financial insitutions make mistakes and end up losing boatloads of money, how about if we just let them fail? I know, I know, it sounds totally crazy. But hear me out. Imagine a world in which failure was punished and success was rewarded. I know, it's almost impossible to do. It seems like an alien concept. Most people seem to think it's impossible. But maybe, just maybe, if we tried it, it might work.
Oh and by the way, greed on Wall Street is not what caused the current situation. Fannie Mae and Freddie Mac bought up risky mortgages, which removed the fear of risk from the lenders. This caused lenders to lend more and more and more, which caused the prices of houses to go up, and up, and up, until they couldn't go up any more. Once they hit that point, there was nowhere to go but down. Once they went down, people who had borrowed more than their houses were worth just stopped making their payments. Thus the snowball began tumbling downhill. The foreclosed houses went onto the market, causing prices to go down, down, down. As prices went down, more and more people found themselves with negative equity, and more and more people stopped making the payments on their loans. The more people stopped making payments, the more risky those mortgages seemed to be, the less they were worth. Banks ended up owning a whole lot of houses they paid too much for.
If Fannie and Freddie had never existed, house prices never would have gotten inflated in the first place, and none of this would have happened. - bennyshoham, on 01/08/2009, -8/+35greed. Also, It will not change.
- ZackScott, on 01/08/2009, -1/+21The end of Wall Street might be a bad thing for the Wall Street Journal...
- inactive, on 01/08/2009, -1/+17I'll tell you what didn't happen...
...me winning the bailout lottery. I kept buying tickets for the drawing, but they gave it to a bank and some car dealers instead!
Like they needed it more than me and my family. - emazur, on 01/08/2009, -1/+16I've only watched Ch 1 so far but it's good to see they're placing blame where it belongs - on the government. The Fed is a cabal of private banks authorized by the federal government to control the money supply and control interest rates who dangled the carrot of cheap credit before the American consumer by setting interest rates artificially low. Fanny and Freddy, two government chartered entities backed by power and faith of the federal government, were able to undertake risky loans to homeowners who themselves were being pushed into home ownership by government housing acts. The ***** hit the fan, and after years of making private profits, the taxpayer is on the hook to socialize the losses.
Interest rates set artificially low by the Federal Reserve... Government chartered entities making risky loans gauranteed by the government... Housing Acts... Bailouts... You call that free market capitalism gone wild? The economy was directed by the government central planning, and just like the Soviet Union, it has collapsed. Instead of learning learning the lesson that government needs to stay the hell out of the way of the economy, they have decided to intervene even more. The more the plans fail, the more the planners plan. Do you seriously think the people who got us into this mess are going to get us out? They can only delay the collapse, while profiting from decisions made behind the scenes at the expense of the taxpayer, whose children and and grandchildren will be left with a black hole of debt that they will be chained to for the rest of their lives. But in the meantime, the honest pillars of society will be left asking "Who is John Galt?":
http://digg.com/business_finance/Atlas_Shrugged_In ... - branndon, on 01/08/2009, -1/+15Thank God for the captions, I was having trouble understanding their thick wall street accents.
- gaqua, on 01/08/2009, -2/+16I've got a warehouse full of 32" LCD TVs in 50" LCD TV boxes. Let's say that a Judge states that I can legally sell them as 50" LCD TVs without telling the consumer. Yeah, the consumer could open the box and look - but the vast majority don't.
Since the Judge says I can do that, let's say I just start doing it. I sell tons and tons and tons of 32" LCD TVs for about double what they're actually worth. People are getting ripped off all over the place.
So whose fault is that? Is it the Judge's for making the law? Is it mine for taking advantage of it? Or is it the consumer's fault for not being more cautious?
The correct answer is: it's everyone's fault. Every person along the way should have acted differently. Nobody is blameless here.
- exspasticcomics, on 01/08/2009, -0/+14they ran out of pavement?
- Oniobn, on 01/08/2009, -0/+13Clinton and Bush wanted houses to be available to everybody, even people who couldn't pay for them. They used Freddie and Frannie to finance these houses. Other non-government banks had to compete, so they got into subprime mortgages, creating the housing bubble, the start of our current recession.
To me it seems that the current situation all goes back to government regulation. - ctiger2, on 01/08/2009, -0/+13The bubble was created by the US Federal Govt. The Fed set interest rates too low for too long. Freddie Mac and Frannie Mae are creations of govt. The housing collapse and credit crunch we're experiencing now isn't the problem, these are the results of the problem. We borrowed and spent too much money. Americans need to stop spending and start saving. The Federal Govt needs to STOP spending. The Govt needs to get way way smaller. The Govt is a burden upon it's citizens. We do NOT need any stimulus package. That is NOT the answer to the problems. A stimulus package is like telling someone who has $50K in credit card debt that they can't pay off and they just lost their job that to fix their credit problem is to take out a loan for $50K and buy a new BMW. It doesn't make any sense. We need to bring ALL of our Military personal stationed around the world back home. They are costing us too much money that we can't afford. Ron Paul seems to be the only one on the hill that understands this.
- mshtml, on 01/08/2009, -5/+17Government intervention happened. Ridiculous regulations that aided in bankrupting the counry. America's economic might had to be reduced to cinders so its people would accept socialism, world government, global taxation and being dictated to by foreign powers via the UN.
- inactive, on 01/08/2009, -1/+12The end of wall street and the end of credit is what we need to save our economy.
A credit based economy that relies on growth for survival cannot survive. It has gotten to the point where you NEED good credit for everything, even if you are like myself and do not use credit. To get a cell phone I have to put down a $500 deposit because I choose to use cash, check, and debit for everything.
I couldn't rent a car, even when I had a little over $1000 cash in my pocket, was stranded in Oregon, and willing to put down a cash deposit. They wouldn't even consider it because I did not have a credit card.
Something needs to change. - kaelyiesta, on 01/08/2009, -2/+11More specifically, the government wanted to get everyone their own home for cheap prices, unaware of the reality of economics. They gave the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation advantages over other banks they had to compete with, causing the moral hazard that pushed banks to try riskier ventures to stay profitable. Then the federal reserve artificially reduced interest rates to create another moral hazard, this time a false assessment of investment and lending risk. Then many groups, banks and individual investors, began to exploit these artificial pressures on the market by buying cheap houses as investments they could later sell for a profit, like stocks. Regulators often colluded with these acts and did more than 'look away'.
Greed has always existed, artificial manipulation of the housing market has not. It's not a coincidence that this failure occurred when the later arose. Banks are always trying to make money, that's what the employees and the clients expect and want, the problem is what methods of profit government closes and opens for them. I think Greenspan's testimony about fundamentally misunderstanding the reality of economics goes further than what the WSJ argues. Manipulative regulation that allow the moral hazards we see today must stop. Watching for fraud is one thing, and as long as it isn't intrusive I fully support it to ensure quicker defense of the victims of fraud but encouraging and forcing the kind of behavior that led to this isn't what regulation should be about. - kaelyiesta, on 01/08/2009, -2/+10Greed is good to everyone. Prove me wrong by giving me all your stuff. Come now, don't be greedy. Share your stuff with me.
See? It's not greed that's bad, but the willingness to steal rather than to produce to satisfy that greed. Wanting things is not immoral. Taking things which you have no right to take is. - inactive, on 01/08/2009, -0/+7Greed is balanced by fear in the market place.
The government keeps removing the fear with the bailouts. Saving & Loan in the 80s, Mexico and LTCM in the 90s, and Wall St late last year just to name a few big ones.
Want to see greed curbed? Let corporations fail.
If people cannot accept the downside of capitalism, then they should call themselves socialists or communists. - ghendric, on 01/08/2009, -0/+7Oh and by the way, greed on Wall Street is not what caused the current situation. Fannie Mae and Freddie Mac bought up risky mortgages, which removed the fear of risk from the lenders.
...let's not forget that the Federal Reserve and Congress were pushing these banks into do this too.. They new what they were doing.. now look what they scarfed up... thieves... - mshtml, on 01/08/2009, -1/+8Its amazing politicians and public figures can regulate the country into oblivion with things like Sarbanes Oxley and have the nerve to claim deregluation is taking place and its making things worse. When in fact all they do is create more regulations to patch up the mess they create in the first place, which in turn makes things worse yet.
Even Greenspan you say? You say his name like he's someone to admire and look to for answers. His policies and recommendations are part of the philosophy that are responsible for the ongoing US collapse. - Aliwalla, on 01/08/2009, -0/+7it was just a big pyramid scheme that eventually collapsed when there was no one left to sell the MBO's to.
- inactive, on 01/08/2009, -1/+7good riddance
- ctiger2, on 01/08/2009, -0/+6True, but the Fed Govt enabled the consumer to overconsume by setting interest rates too low. If the "market" would have been setting these rates there's no way this would have happened. You think the market would want to risk their money with hardly any rewards? There's LOTS of dumb people in this country. LOTS of them. Blaming the consumer is like blaming and addict for taking drugs and not blaming the person they're getting the drugs from. The Fed govt is the drug dealer. They think the solution to the US consumers current withdrawals from overspending is to give the consumer more money to spend. Maybe an overdose is coming.
- Feenix566, on 01/08/2009, -0/+6If you made each customer sign a piece of paper stating exactly what was in the box, then I don't see how any of them could blame you for what was in the box.
Now I know a lot of people are saying that the paperwork is too hard to read, and I agree with that. However, it only costs about $800 to get an attorney to review all of your documents concerning a home purchase. Given that you're making an financial commitment in the hundreds of thousands of dollars, it would be foolish not to do this. If you can't afford an attorney, then you can't afford a house. - ABadPerson, on 01/08/2009, -0/+5are u on crack?
- inactive, on 01/08/2009, -0/+5A great video related to this issue featuring some of the people who predicted this problem:
http://www.youtube.com/watch?v=8PIEGK0IbA4&fmt ... - spiderbaby138, on 01/08/2009, -1/+6Why? Because greed is good to these f**kers.
http://www.entertonement.com/clips/13548/Wall-Stre ... - regeya, on 01/08/2009, -0/+5are u dum?
- inactive, on 01/08/2009, -0/+5And a great video exposing the media's complicity in creating this problem:
http://www.youtube.com/watch?v=2I0QN-FYkpw - ozborn, on 01/08/2009, -1/+6Ahh no, real estate bubbles occurred outside the US and thus without Freddie and Fannie equivalent organizations.
- inactive, on 01/08/2009, -0/+5@dalittle:
Let's take your argument one step further -
Can you guess what enabled those loans to be made? The Fed with their easy money policy.
And can you guess who was buying up those loans as CMOs and creating the demand in the secondary market? Fannie and Freddie with the implicit government backing.
If anyone needs more regulations, it is the Fed, Fannie, and Freddie. - jasonalangraves, on 01/09/2009, -0/+5It's called 3 Gymnopedies, 1 Lent et douloureux, originally created by Erik Satie, but popularized, probably into it's current form known now, by Claude Debussy. Just a few weeks ago, Amazon had this on their free section, but I can no longer find it there, but, at any rate, here is a list of other tracks at amazon for preview. Probably iTunes has it as well.
http://www.amazon.com/s/ref=nb_ss_dmusic?url=searc ... - rif42, on 01/08/2009, -0/+5Alan Greenspan, he was one of the center players in preparing this credit crisis train wreck. The fund rate was set and kept as low as 1% for far too long. He should 2003-2005 have adjusted the rate to cool down the housing market, instead he helped to inflate a housing price bubble, creating wealth and spending based on thin air. Party-on!
Greenspan was however clever enough to leave the party before the house of cards came tumbling down. - BESTenemy, on 01/08/2009, -0/+4Here's a good explanation by Fred Thompson. Doesn't get any better than that:
http://www.theospark.net/2008/12/fred-thompson-exp ... - bigposer, on 01/08/2009, -1/+5Freddie Mac and Fannie May were only one piece of the equation. Gaqua's explanation is solid.
The consumers looking for a lower mortgage payment were duped by the slick salesmen not thoroughly reviewing the loan terms, instead getting them to focus on the immediate rather than the long term. The fact that a consumer was signing into an ARM loan and the fact that their payments would double in 2 years was either ignored by the consumer themselves and/or a very small focal point not reviewed by the mortgage broker.
The banks continued to lend money to the consumer through the mortgage broker because they were able to ship them off the books quickly through complex financial instruments like CDO's. The ratings agency are to blame for slapping a AAA rating on these financial instruments that carried toxic debt (for the record, the US government treasury bills carry a AAA rating...compare that to a high risk sub-prime mortgage). The Wall Street investments banks are then to blame for A) Selling the complex debt instruments with AAA ratings to pension funds and endowments knowing full well that they were toxic the entire time and B) Investing shareholder money into purchasing these instruments themselves.
I was a private equity associate for a period of time (the good ole days) and I know due diligence tactics well, especially when it comes to loan portfolios. The fact that the Wall Street analysts were complicit (they had to know that these debt instruments were not AAA insurable) instead of raising the red flags like they were paid to do lends another contribution.
In short...blame follows the dollar. - picciano, on 01/08/2009, -0/+4you forgot to pay your cable bill last month, too?
- ctiger2, on 01/08/2009, -0/+4LOL. Fred Thompsons a genius... NOT!
- HellifIno, on 01/09/2009, -0/+4You're standing too close to the crazy. Please step away a bit.
- koolox, on 01/08/2009, -0/+4are u Bush?
- ricer333, on 01/08/2009, -0/+4I agree it's everyone's fault, but come on... there is a reason why Credit Scores and assessments exist in the first place!
Why in the world would someone loan out $300,000 to a person that is barely making $60,000!!! Failure to look over the real world facts AND love of the quick buck is the problem!
And that video was right. I'm a young adult that has done everything by the book. I have a higher than average credit score and now I see these people/businesses getting bailed out! WTF? So now we reward the idiots that took the risk? When was the last time you saw a casino pay back the idiot that gambled away his shirt and paycheck..... Ummm never! - scamper22, on 01/08/2009, -0/+4true, but everyone is dependent on a debt based economy... including... and especially... the government.
Don't try and mess with that system. You know they can't pay down the debt they have... so they need to print to lower it. - 83JB, on 01/08/2009, -0/+4does anyone know the name of the song that is being played on piano near the end of the 3 portion? I have heard it before, I just don't know what it is. It sounds very beautiful.
- djaybe, on 01/09/2009, -0/+3my comment to WSJ:
"looks like typical reporting on what you think you see or what you are paid to report. (hopefully you figure this out b4 your newspaper goes under) hopefully parts 2 and 3 get to the real core of the problem and open it up. take a step back and look at what has REALLY been going on.
was Peter Schiff interviewed?
was Jim Rodgers interviewed?
if not, WHY NOT? why did Jim move his family and business out of america?
why not research where money comes from? why is there a federal reserve? what is the federal reserve, REALLY? why are we still listening to the groups that created this problem? why is Obama planning on creating MORE inflation???
this should get you started:
http://video.google.com/videosearch?q=zeitgeist+ad ... - ScienceDoc, on 01/09/2009, -0/+3Pretty kind to the neocons that enabled the paper trading and turned a blind eye.
- MasterMynd, on 01/08/2009, -0/+3i love how the very next video after the 3rd chapter is about expensive high tech gadgets
- 67Cowboy, on 01/09/2009, -0/+3Preach on brother, I DO NOT HAVE CREDIT CARDS or bank accounts because I know the crimes they are committing and will have no part with them !!! I have a Net 10 phone, pay as I go, because I live by the motto my Dad taught me: " if ya can't pay for it you don't need it". Besides if you have a credit card you are wearing a tag (GPS) like your dog and you are already giving them money !!!
- fishshogun, on 01/08/2009, -0/+3So now they slap a few regulations on Wall Street and the big boys move on to the CCX and start anew.
Unregulated by membership and invitation only. This next one is going to be interesting. - censormagnet, on 01/08/2009, -0/+3wonder if this article mentions a thing about the inflation 'bubble' that the federal reserve is inflating right now
you cant create trillions of dollars of currency out of thin air a month and have the value of the dollar be worth anything - 67Cowboy, on 01/09/2009, -0/+3What I see that is so sad with all the financial problems is that people in our country have lost all perspective. In my Father and Grandfather's day only a very few people even dealt with Wall street or financial institutions. Most people use to work hard and save their own money and bought only what they had to have or needed.
Today everyone is rushing to buy and trade Futures (?), how much real world gain is there in trading a future ??? Also what value can be assured in buying a Future ???
In my grandfathers day you hauled the grain you didn't need for seed or feed to town and sold it there in your town for a honest price for real dollars that were backed by gold or actual gold coins. Nothing fake, nothing made up, nothing based on some pencil-pusher's guess.
I think we need to outlaw Wall Street and everyone could go back to basing our economy on the men who actually want to work (sweat of their brow) for an honest living, instead of this government run Pozi scheme .
Think about everything in our current economy is based on what some guy in an office somewhere says, imagines, dreams up or maybe even more accurately plots and plans to fill his own pocket !!! What are you really going to regulate in the current system; THOUGHT ?, because as long as it is fake or based on something other than hard work it is just that, THOUGHT.
As far as loaning money, it is easy to see they loaned money to millions of people who couldn't afford what they got for the fake money they borrowed, if you ask me they both committed a crime and should loose their ass and all the fixtures to people who know how to manage their hard earned money and run this country right the way it use to be !!! http://www.restoretherepublic.com/ - 83JB, on 01/09/2009, -0/+2wow! now that's what I call a reply! thanks!
- williamalston, on 01/10/2009, -0/+2Here's a harsh fact. America's citizens, as a whole, already each individually owe more money in interest (mortgages, credit cards etc) and taxes (just wait to see who really pays for the war, the bailouts etc) then they are ever likely to earn (above and beyond their actual day to day living expenses). So here's a little gift to their children and grandchildren.. mounting debt. Let's free ourselves from this indentured servitude by an act of civil disobediance.
Here's a novel solution.
Every single person that owes money on mortgages or credit cards just notify the banks that you are electing to stop paying the bill. The banking system is already overloaded and it will entirely collapse when this happens. Once the Federal Government steps in due to triggers such as the FDIC they can just write the debt down ( where have we heard this before ). At the same time they can buy back the Federal Reserve system for the one billion dollars they are obligated to pay should they elect to actually follow the constitution and return the issuance of our currency to Congress.
And did I mention to also put a freeze on the 700 billion bailout to the banks because they would not exist anymore.
We save as a nation 699 billion, (less what has already been handed out) we erase the debt owed by its citizens making them shareholders in the country instead of being "shares" held by the mostly foreign nationals and corporations that currently own the Federal Reserve System.
And if Congress doesn't want to read their lines in this great drama then let's overthrow the Government of the United States by peaceful, nonviolent means, without shedding a drop of blood, we can vote the scum out of office at the next elections.
Supreme Court you say? What if they declare the whole scheme null and void? Remember the citizens can change the constitution that the Supreme Court can only interpret.
Is it possible that the same citizenry that ignored their televisions and radios, that went on the internet and talked, chatted and emailed one another to overwhelming elect the first black president could actuially come together to take back their country?
Naw probably not because we all gotta be at work in the morning.. those of us that still have jobs. - LyzRusso, on 01/10/2009, -0/+2Jwoulf I could KISS you!!! SO true.. a debt-based society cannot survive, much less flourish. Because debt is Vapourware! Debt is selling your freedom tomorrow for inane little luxuries (or not so inane necessities) today. If you live cash, hand-to-mouth like many of us here in South Africa do, you may end up hungry a lot, but you don't end up having your children's lives belong to someone else.
I also vote for Williamalston's post - guys this doesn't only concern Americans. We as citizens of Planet Earth need to take back our personal power from those who meant to steal it from us and turn it into more profit for themselves!! In London they are rallying for maximum sentences for murderers - and no time off for good behaviour, as their victims don't get to come alive again for good behaviour! If that rally succeeds, WOW what a step forward for humanity!
What I as an uninformed bystander feel America needs more of right now is entepreneurship and small businesses that don't need bank loans to start up. Roll up yr sleeves, learn a second trade (such as: plumbing or fixing cars), set a reasonable price and get advertizing. It's this entrepreneurship of the "small person" that has rescued South Africans from that gloomy situation they feared would come about after the liberation in 1994. Yes we have a lot of problems but if the individual hadn't become inventive and gone into business, those problems would be infinitely larger. - AlbinoRaven, on 01/10/2009, -0/+2Wait until Obama starts creating ditch digging jobs for the feds. Want to see what a phony economy looks like when freshly minted money not borrowed from anyone to pumped into an economy.
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